Household electricity subsidies and investments in energy efficiency

Households will be randomized into two treatment arms: base discount group (T1) and base discount PLUS energy efficiency discount (T2). T1 will receive a base discount of Rs. 2000 for the purchase of any model AC. T2 will receive the same base discount, plus an additional discount of Rs. 4000 for the purchase of an energy efficient model AC (specifically, a 5-star rated AC according to India's BEE standards). This discount is provided through a physical voucher provided to the household, eligible to be redeemed at selected partner retailers in the city. The household will have approximately 4-6 weeks to purchase an AC and redeem the discount directly from the retailer.

2026-03-21

2026-04-30

For each treatment group (Control, T1, T2), our key outcomes of interest include:
a. What proportion of households purchased an AC?
b. What proportion of households purchased a 5-star AC?

This information will be collected as binary variables for each household during the endline data collection (e.g. Did you purchase (5-star) AC?) and then aggregated within each group to report the percent take-up. We will then use these take-up rates to map the demand curve for energy efficiency (T1 vs. T2 take up). This information will also be collected from our partner retail stores. These stores will document and share which household IDs have redeemed the discount and what type of AC they purchased, so we will be able to triangulate self-reported endline data with the retailer data.

Heterogeneity in treatment effects by pre-treatment electricity utilization levels.

Difference in stated WTP and revealed WTP.

Characteristics of ACs purchased, by treatment group.

We will merge this RCT data with historical electricity consumption data to understand heterogeneity in the treatment effect by the household's relative consumption to the subsidy threshold. The main hypothesis is that households previously far below the threshold will exhibit a lower WTP for energy efficiency given the zero operating cost they pay, compared to households closer to or above the threshold.

At baseline, we ask all households about their stated willingness to pay for 3-star and 5-star AC units, and their expectation of market prices. We will compare their actual price paid with their stated WTP and expected prices.

We are also interested in the following characteristics of AC purchases and how they vary with the treatment assignment: Type: inverter, non-inverter, Capacity, Star rating (ISEER), Price paid.

This study involves a baseline and endline survey and the provision of a discount voucher to randomly selected households in our sample. Households will be assigned to one of three groups: Control, Treatment arm 1, or Treatment arm 2. Control households will only complete the baseline and endline surveys and will not receive any discount vouchers. Treatment arm 1 will receive a discount of Rs. 2000 for the purchase of any type of AC (purchased from a participating partner retailer). Treatment arm 2 will receive the same discount offer of Rs. 2000 for the purchase of any type of AC, plus an additional bonus discount of Rs. 4000 if the purchased AC is a 5-star rated appliance (according to India's official BEE ratings). For example, a respondent in T2 that purchases a 5-star AC will receive a total discount of Rs. 6000.

Typical AC prices for the most common star rating (3 star) fall in the range of Rs. 25-30K and this price increases to 35-40K for 5-star. A discount of Rs. 4000 therefore covers about 40% of the price differential, though this may vary across brands and models. Our study aims to measure the willingness to pay for energy efficiency by observing the 5-star take-up rate across T1 and T2 households.

Consumers will be visited at baseline to complete the survey and will be given a physical voucher for them to maintain and redeem at partner retail stores. They will have approximately 4-6 weeks to redeem the voucher for a discount. The partner retailer will verify the voucher and participant details (to ensure the voucher is being redeemed by the same household it was provided to) and provide the discount directly to the consumer at the time of purchase. The retailers will then request payment from the project.

Consumers will be visited again at endline to complete a survey about their AC purchase decisions. We will triangulate endline data with the data received from retail partners on discount vouchers redeemed.

Not available

Households are randomly pre-assigned to a treatment group using Stata following a non-weighted, sampling-without-replacement method.

Surveyors are informed of this treatment assignment toward the end of the survey through Survey CTO, which uses prefills based on the household ID entered by the surveyor at the beginning of the survey.

Household

No

225 households

225 households

Control: 75 households, T1: 75 households, T2: 75 households

We have three respondent groups: control, treatment group 1, and treatment group 2. In order to precisely measure willingness to pay in this setting, we need sufficient take-up of the vouchers across groups. Using prior studies that estimate a willingness to pay of 10% of the purchase price of a lower energy efficiency model in order to upgrade to the higher energy efficiency model, and current market prices for AC models, we estimate requiring a sample size of at least 75 participants in each group. T1 vs T2: Assuming baseline take-up of 5-star is 20% and this increases to 40% from the Rs. 4000 subsidy. Power calculations suggest this gives us about 85% power with a sample size of 75 in each group. Control vs (T1+T2): Assuming baseline take-up of ANY AC is 20% and this increases to 40% from the Rs. 2000 subsidy. Power calculations suggest this gives us about 80% power with a sample size of 75 in control and 150 in T1+T2.