Abstract
Many small businesses in Lagos, Nigeria struggle with unreliable electricity from the power grid. To keep operating, these firms often rely on fuel-powered generators, which are expensive to run, create air pollution, and generate noise. Solar power systems could offer a cleaner, quieter alternative that might also help businesses save money and operate longer hours. We want to estimate small businesses' demand for small solar power systems, and how adopting solar systems might affect their operations and the local environment. Specifically, we're examining: (1) how much businesses are willing to pay for solar systems, (2) whether providing information about generator inefficiency or offering a free trial increases demand for solar power, (3) whether solar power helps businesses change their business practices, and (4) whether reduced generator use benefits neighboring businesses through less air and noise pollution.
Methods: We're working with approximately 400 small businesses in Lagos markets, randomly divided into three groups. The control group receives basic information about the solar product. The information treatment group additionally receives detailed information about how generators operate inefficiently and waste fuel when used for small loads like phone charging or lighting. The free trial group receives a free one-month trial of a solar system. All businesses will then participate in a pricing BDM mechanism to elicit their willingness to pay for solar systems. We'll survey businesses before and after the intervention, conduct monthly phone surveys for six months, and measure air quality in the markets.
Expected impact: This study will provide evidence on whether solar power can be a practical solution for small businesses facing electricity challenges, while also reducing environmental pollution. The findings could inform policies to support clean energy adoption in Nigeria and other developing countries with similar electricity access challenges.