Paying the Price for Unreliable Power Supplies : In-House Generation of Electricity by Firms in Africa
This paper documents the prevalence of in-house generation of electric power by firms in Sub-Saharan Africa and attempts to identify the underlying causes. The analysis is based on two data sources. The UDI World Electric Power Plants Data Base (WE...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090430142027 http://hdl.handle.net/10986/4116 |
| Summary: | This paper documents the prevalence of
in-house generation of electric power by firms in
Sub-Saharan Africa and attempts to identify the underlying
causes. The analysis is based on two data sources. The UDI
World Electric Power Plants Data Base (WEPP), a global
inventory of electric power generating units, provides a
detailed inventory of in-house generation at the country
level. The World Bank's Enterprise Survey Database
captures business perceptions of the obstacles to enterprise
growth for 8,483 currently operating firms in 25 African
countries. Overall, so-called own generation by firms-which
has been on the rise in recent years-accounts for about 6
percent of installed generation capacity in Sub-Saharan
Africa (equivalent to at least 4,000 MW of installed
capacity). However, this share doubles to around 12 percent
in the low-income countries, the post-conflict countries,
and more generally on the Western side of the continent. In
a handful of countries own generation represents more than
20 percent of capacity. Rigorous empirical analysis shows
that unreliable public power supplies is far from being the
only or even the largest factor driving generator ownership.
Firm characteristics have a major influence-in particular,
the probability of owning a generator doubles in large firms
relative to small ones. Our model predicts that the
prevalence of own generation would remain high (at around 20
percent) even if power supplies were perfectly reliable,
suggesting that other factors, such as emergency back-up and
export regulations, play a critical role in the decision to
own a generator. |
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