The Effects of Electricity Subsidies in Cape Town, South Africa

This research seeks to understand the effect of electricity subsidies on households. The project will consider a number of potential impacts, including electricity use, use of other energy sources, financial hardship/well-being, other expenditures, and political attitudes.

In Cape Town, subsidies are targeted to households with low property values and low electricity use. Both of these targeting criteria are implemented using thresholds (cutoffs). These create an opportunity for causally measuring the impacts of these subsidies. We will collect survey data to measure differences in outcomes between households on either side of the targeting thresholds, to recover the causal effect of these subsidies on outcomes that cannot be observed in the administrative data. Specifically, we will use municipal electricity records to construct a sample of households on either side of the eligibility thresholds. The study will analyse both the effect of the subsidy on electricity use and on a suite of other household outcomes, measured using surveys.