Nonincome factors behind the purchase decisions of solar home systems in rural Bangladesh

The main objective of this research is to determine the characteristics of households installing solar photovoltaic (PV) systems in Bangladesh, a developing country, where rural electrification, improvement of rural livelihoods and sustainable development constitute the primary development agenda. This article attempts to determine quantitatively the factors that affect the two main purchase decisions of PV systems, or solar home systems (SHS). The first purchase decision is the adoption of SHS, the determinants of which are examined using a binary probit model that analyzes the characteristics of households with SHS and without SHS. The second purchase decision is the size of the SHS, the determinants of which are assessed using an ordered probit model for the households using SHS. The results indicate that household income, ownership of rechargeable batteries, kerosene consumption, and the number of mobile phones are the key determinants of the adoption of SHS. While household income is identified as one of the key determinants, this study shows that household income alone cannot explain adequately the variation in households' SHS adoption. Moreover, the analysis of the choice of SHS capacity also finds that the size of SHS chosen by households is related significantly to the level of kerosene consumption, the number of children, the concern about indoor pollution, and the need for electric lighting in addition to household income.A key message from the findings of this research is that nonincome factors play a significant role in the dissemination of SHS in rural Bangladesh as the level of kerosene consumption is found to have a strong influence on the decision to start using SHS. This research argues that household income is not a sufficient basis for determining the latent demand for SHS in rural Bangladesh.

Research highlights
► Household income alone does not adequately determine the demand for SHS.
► Nonincome factors play a significant role in the dissemination of SHS.
► Kerosene consumption seems to be a key factor in determining future users.