Electricity Infrastructure

Expanding electricity access is an important global development priority. Across low- and middle-income countries (LMICs), large-scale initiatives aim to increase electrification rates, recognising that access to reliable electricity is a driver of economic growth, human capital development, and overall welfare. 

Recent initiatives such as the "Mission 300 Africa" - a joint effort by the World Bank and the African Development Bank (AfDB) - have set ambitious targets to connect 300 million people to power by 2030 (World Bank 2025a) with an additional focus on integrating cleaner energy sources. The effort goes beyond merely new connections and seeks to revamp the sector, with investment in generation, transmission, and distribution infrastructure, alongside regional interconnection and reforms, to enhance reliability, affordability, and economic growth. This more recent investment in Africa builds upon earlier large-scale efforts, such as India’s Rajiv Gandhi Grameen Vidyutikaran Yojana, which aimed to achieve universal rural electrification (Khandker et al. 2014). In addition to the concerns around cleaner and more sustainable energy sources, these past efforts have highlighted the significant challenges that remain, several of which have been examined in economic research, including: institutional constraints, electricity distribution companies’ financial viability, unreliable electricity supply, low electricity demand, and growing concerns about climate resilience in the power sector (Burgess et al. 2020, Meeks and Pokhrel 2024).

The relationship between electricity access and economic development is complex and multifaceted. Studies such as Burlig and Preonas (2024) in India and Dinkelman (2011) in South Africa indicate that the development effects of electrification may materialise unevenly across time and space. However, when they do materialise, the benefits of electrification range from improved labour force outcomes (Dinkelman 2011, Lipscomb et al. 2013), better health (Barron and Torero 2017) and educational outcomes (Lee et al. 2020a), and some household (Burlig and Preonas 2024, Lee et al. 2020a) and firm improvements (Kassem 2024). From a policy perspective, merely increasing the number of communities with electricity connections is not sufficient and can also create bad incentives for policymakers. For example, a single grid connection within a village may qualify the village as being electrified, but that is not equivalent to every household being connected and receiving reliable power.

Electricity reliability and quality play a crucial role in determining the benefits of electricity access, influencing household and firm outcomes as well as the financial sustainability of utilities. Even in regions with high electrification rates, many LMICs continue to struggle with uncertainty in future demand patterns (Gertler et al. 2016) and persistent issues such as poor power quality, intermittent service due to loadshedding and breakage, financial instability of utilities (see e.g. Burgess et al. 2020, Carranza and Meeks 2021, Mahadevan 2025, Ahmad et al. 2024). The reliability of power connections shape consumer demand for electricity, investment in appliances, and willingness to pay. These factors, in turn, affect utility financial health and grid stability, perpetuating a complex relationship between consumption and reliability (Burgess at al. 2020, Meeks and Pokhrel 2024). When utilities struggle with cost recovery - often due to non-payment and electricity theft - they may underinvest in infrastructure maintenance and upgrades (Meeks et al. 2023), exacerbating service quality issues and further discouraging consumer payment. Finally, electricity utilities do not function in a vacuum - they exist in a complex political and policy landscape where not all actors’ incentives may be aligned with providing reliable power. For instance, as is widespread in many developing countries, electricity provision is often state owned and managed, opening the potential for political exploitation (Mahadevan 2024a). This dynamic underscores the importance of moving beyond thinking of electrification as being limited to expanding connections alone, but rather as a complex system. Policymakers should consider how such a complex system functions within their setting.

On the supply side, unreliable electricity negatively impacts firm productivity, labour outcomes, and broader economic growth. Research highlights how outages force firms to adopt costly coping mechanisms such as self-generation or adjustments in production processes, often leading to long-term productivity losses (Fisher-Vanden et al. 2015, Allcott et al. 2016, Fried and Lagakos 2023). Households, too, are significantly affected, with unreliable electricity leading to lower demand for grid connections (Bajo-Buenestado 2021) and investment in backup power sources when they are grid-connected (Burgess et al. 2023). The financial health of utilities remains central to addressing these challenges, as revenue recovery influences investment decisions. Prepaid meters and smart meters have emerged as potential solutions, with evidence suggesting improvements in bill payment rates possible with the former technology (Jack and Smith 2020, Meeks et al. 2023).

Understanding electricity demand and its determinants is central to planning sufficient electricity infrastructure. Demand is shaped by a range of factors, however, including pricing structures, household wealth and income, appliance ownership, electrification of end uses (e.g. cooking and transportation), and temperature or weather. Electricity tariff reforms can influence consumption patterns. At the same time, seasonal and daily fluctuations in electricity demand - driven in large part by heating and cooling needs - can strain infrastructure and impact grid stability (Auffhammer 2014, Davis and Gertler 2015). And temperature and income together affect air conditioner ownership and use. These complexities highlight the challenge for policymakers when it comes to predicting and planning for future demand, while simultaneously expanding access, maintaining affordability, and ensuring the financial viability of utilities through carefully structured tariff and pricing mechanisms (McRae 2024, Ahmad et al. 2024, Alberini et al. 2022a).

Beyond pricing, patterns of appliance adoption and use fundamentally shape electricity demand (Wolfram et al. 2012, Gertler et al. 2016). Efforts to electrify stoves are expected to increase electricity demand (see e.g. Pattanayak et al. 2019, Gould et al. 2023). At the same time, energy-efficient technologies, such as efficient lighting, refrigeration, and air conditioning, aim to lower costs for consumers while reducing strain on the grid. However, the adoption and use of these technologies may not have the expected effects (Davis and Gertler 2015, Ryan 2018, Carranza and Meeks 2021). Furthermore, infrastructure constraints and power reliability issues may inhibit uptake. Improvements in power quality can drive increased appliance use, creating feedback loops that affect overall system stability (Meeks et al. 2023). Understanding these interdependencies is critical for designing policies that effectively balance demand growth with infrastructure capacity, ensuring that expanded electricity access translates into tangible welfare gains.

Given the substantial investments required for electricity infrastructure, it is essential to understand the benefits and limitations of various electrification interventions. Policymakers need rigorous evidence on which approaches yield the most significant and sustainable impacts. This VoxDevLit synthesises existing research on electricity infrastructure, providing a comprehensive overview of the economic and social effects of electrification, the determinants of electricity demand and supply, consumer behaviour in relation to electricity, the challenges faced by utilities, and the role of alternative off-grid solutions and modern technology. We seek to highlight the major variations across contexts, institutions and policy environments which are important to account for when attempting to generalise findings from existing research. This review also highlights key evidence gaps and outlines policy-relevant research directions that would help to inform future investments in electricity access.

The structure of this VoxDevLit is as follows: Section 3 discusses research on access to electricity and its socioeconomic impacts. Section 4 examines the financial health of utilities and challenges related to electricity supply. Section 5 explores consumer demand for electricity and the uncertainties associated with future energy needs. Section 6 presents the evidence on off-grid electricity solutions, including mini-grids and decentralised renewable energy sources. Finally, Section 7 concludes with a discussion of research gaps and policy implications for future electrification efforts.

For full reference list see the end of the conclusion chapter.