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DIWA Summit 2025

Solar Lantern Program: Sensitization and Willingness to Pay by Rural Households in Ghana

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August 26-27, 2025| Accra, Ghana

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Hamdiyah Alhassan | University for Development Studies, Tamale, Ghana / Professor

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• Hamdiyah Alhassan (PhD), Professor, University for Development Studies, Tamale, Ghana

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• Isabelle Cohen, (PhD), Assistant Professor, University of Washington, USA.

• Isaac Doku (PhD), University of Education, Winneba, Ghana

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• Ishaque Mahama (PhD), Associate Professor/ Simon Diedong Dombo University of Business and Integrated Development Studies, Wa, Ghana

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• Oyeteju Odufuwa (PhD), University of Ibadan, Ibadan, Nigeria

TEAM MEMBERS

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What we will be discussing:

How does willingness to pay (WTP) for solar lanterns differ between individuals exposed to:

• health and financial sensitization alone, and
• health and financial sensitization combined with a flexible, credit-based payment option?

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• Ghanaians in rural communities face major disparities accessing electricity:
• 27% of households lack access, 5 times higher than rates in urban areas (Ghana Statistical Service, 2022).

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• Ghana launched the Solar Lantern Promotion Program (SLPP) in 2013 to increase access to modern, affordable, and dependable energy services by replacing kerosene lanterns with solar lanterns.
• Goal: 2 million solar lanterns distributed to rural communities by 2030

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• Challenge: solar lanterns are not as widely utilized due to inadequate information on the benefits and lack of liquidity (Wong et al., 2022).

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• Expanding the SLPP’s subsidy model must begin with an evaluation of beneficiaries’ willingness to pay (Sharma et al., 2021; Yoon et al., 2016).

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MOTIVATION & BACKGROUND

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• Limited information on the:
• Impact of sensitization,
• Willingness to pay (WTP)
• Payment options for solar lanterns (Best, 2023; Wong et al., 2022; Dhaka et al., 2020; Banerjee et al., 2017)

SCIENTIFIC CONTRIBUTIONS

ZM Solar Lantern

Kerosene Lantern

• We use the Becker-DeGroot-Marschak (BDM) bidding mechanism to:
• Elicit consumers’ WTP
• Evaluate how WTP is affected by exposure to sensitization and flexible payment options for solar lanterns.

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• Rural households in northern Ghana who are not connected to the national grid
• Highest incidence of poverty nationally (Ghana Multidimensional Poverty Index, 2020)
• Most households are liquidity constrained

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• 70% of the economically active population is engaged in agriculture and related activities (Molini and Pierella, 2015).

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TARGET POPULATION

Figure 1: Map of the study area, Northern part of Ghana

Source: Harmattan Geo-Spatial, 2024

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Randomly assigned households into 1 of 2 treatment groups or a control group:

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• Treatment 1 (T1): WTP elicited after sensitization
• Respondents offered only full payment option

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• Treatment 2 (T2): WTP elicited after sensitization
• Respondents pay 20% as a down payment, and the remaining 80% in weekly instalments

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• Control (C): WTP elicited without sensitization
• Respondents offered only full payment option

DESCRIPTION OF TREATMENT ARMS

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SAMPLING STRATEGY

CAPTION OR PHOTO CREDIT: RIGHT HERE

Multistage sampling to select study population:

1. 5 regions purposively selected
2. 10 districts selected, 2 form each region
3. 6 communities selected in each district using simple random sampling
• Probability of assignment to treatment group was proportional to the size of the community
4. Household-level randomization to assign to treatment and control groups
• 366 households in each group

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ANALYSIS FOR WTP

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Information provision on the health and financial benefits of using solar lantern increased WTP by more than 20%, with no additional effects of credit-based payment.

• Mean WTP among the control group was GH₵65.51 / $4.96 USD
• With information provision, the mean WTP increased to GH₵81.77 / $6.19 USD
• With both information and a credit payment option, the mean WTP increased to GH₵79.65 / $6.03 USD

PREVIEW OF RESULTS

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Single survey conducted to elicit WTP at a point in time to help capture preferences and demand

Results: 4 of the 8 covariates differ across groups, implying that they are imbalanced

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Note: T1 = BDM + Information + Full Payment; T2 = BDM + Information + Installment Payment; C = BDM + Full Payment. Legends: ***, **, & * indicate p<0.01, p<0.05 & p<0.1.

Source: Author’s compilations of field data, 2024

DEMOGRAPHIC INFORMATION ABOUT THE SAMPLE

Flexible payment options, such as credit, do not affect WTP above and beyond the effects of information.

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• Information increased WTP by GH₵16.26 / $1.23 USD
• roughly 25% of the control mean: GH₵65.51 / $4.96 USD

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• Information + a credit payment option jointly increased WTP by GH₵14.14 / $1.07 USD
• roughly 21.5% of the control mean: GH₵65.51 / $4.96 USD

NB: Standard errors in parentheses: * p<0.10, **p<0.05 and ***p<0.001

EFFECT OF HEALTH & FINAL SENSITIZATION + FLEXIBLE PAYMENT ON WTP

There is no true significant relationship between the random price and the final bid price.

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• Model 2, which accounts for community fixed effects, is more appropriate given our community-level stratification
• Random price is statistically insignificant

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We conclude that our experimental procedure was valid.

NB: Standard errors in parentheses: * p<0.10, **p<0.05 and ***p<0.001

EXPERIMENTAL PROCEDURE IS VALID:

PLACEBO TEST RESULTS

• Local WTP is roughly twice the government-subsidized price for solar lanterns.

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• Provision of financial and health information significantly increases WTP by more than 20%

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• Households’ WTP for solar lanterns depends on their level of awareness and knowledge of the benefits of solar lanterns -- aligns with ”innovation decision process” (Rogers, 2003)

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• No additional effect of offering credit-based repayment
• Contradicts (Mekonnen et al. 2023): reported that subsidies and credit access increase households’ WTP for solar lanterns + information reduces the likelihood of adoption
• Potentially due to factors such as differences in the quality of the solar lantern, or that the technology may be more novel in this setting, leading to larger effects of information.

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SUMMARY OF RESULTS

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The Ministry of Energy should educate rural communities on the health and financial benefits of solar lanterns to promote adoption and sustainable energy use.

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• Information provision/sensitization is important for the success or failure of policy efforts to encourage clean energy technology.

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• Raising awareness about the health and financial benefits of solar lanterns increases WTP by more than 20%.

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• Offering credit-based payment options has no significant effect on WTP for solar lanterns.

POLICY TAKEAWAYS & RECOMMENDATIONS

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Let’s keep

in touch.

THANKS FOR LISTENING!

ahamdiyah@uds.edu.gh/abena567@yahoo.co.uk

imcohen@uw.edu

idoku@uew.edu.gh

imahama@ubids.edu.gh

oyetejuodufuwa@gmail.com