Journal of Energy and Development, Volume 48, Number 1

THE JOURNAL OF ENERGY
AND DEVELOPMENT
Volume 48, Number 1

Autumn 2022
I C E E D
The Journal of
ENERGY AND DEVELOPMENT
Volume XLVIII Autumn 2022 and Spring 2023 Numbers 1 and 2
CONTENTS
NUMBER 1
ARTICLES
Green Crypto Mining: A Quantitative Analysis of the Profitability of

Bitcoin Mining Using Excess Wind Energy
John Dorrell, Abhilash Kancharla, and Matthew Ambrosia . . . . . . . . . . . 1
Is Access to Electricity a Relevant Determinant of Subjective Well-being

in Developing Countries?
Jacques Simon Song, Georges Ngnouwal Eloundou, and
Jocelyne Ayang Mimbang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Environmental Life Cycle Assessment of Using Electric Vehicles Compared

to Conventional Internal Combustion Engine Vehicles: A Case Study in
Jordan
Ghassan Tashtoush, Osama Saadeh, and Ashraf Dawagreh . . . . . . . . . 51
On the Effects of Access to Electricity on Health Capital Accumulation
in Sub-Saharan Africa
Idrissa Ouedraogo, Alex Nester Jiya, and Issa Dianda . . . . . . . . . . . . . . 83
Estimation of the X-Factor in the Colombian Electric Power Distribution

Sector: A Competition with Just Three Winners
Andres Ramırez-Hassan, Estefanıa R ua-Ledesma, and
John Garcıa-Rendon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Renewable Energy Consumption, Poverty, and Inequality in

French-Speaking African Countries: An ARDL Panel Data Analysis
Jean Aristide Biloa Essimi, Laurent-Fabrice Ambassa,
Faustine Kede Ndouna, and Jean Marie Gankou . . . . . . . . . . . . . . . . . . 129
Dedication: This volume is dedicated to Dr. Fred Rufus Glahe, Professor of

Economics at the University of Colorado, Boulder, and his family: his wife Nancy
Suzanna Glahe, his son Charlie Dixon Glahe, his daughter-in-law Brie Daniels
Glahe and grandchildren Asher Caelan Glahe and Rowan Lucile Glahe.
Dr. Glahe was a long-time contributor to the work of the Journal of Energy
and Development and has had a lasting impact on the Journal’s mission that
continues to this day.
The Journal of Energy and Development is indexed or abstracted in A Matter of Fact; Abstracts in
Environmental Management; Contents of Recent Economic Journals (Her Majesty’s Stationary
Office, London); Current Contents: Social and Behavioral Sciences; EconLit, e-JEL; Environmental
Abstracts; Environmental Periodicals Bibliography; Journal of Economic Literature; Linguistics &
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GREEN CRYPTO MINING: A QUANTITATIVE
ANALYSIS OF THE PROFITABILITY OF BITCOIN
MINING USING EXCESS WIND ENERGY
John Dorrell, Abhilash Kancharla, AND Matthew Ambrosia*
Introduction
C ryptocurrency and wind energy are rapidly expanding throughout the world.
These two technologies have enormous potential, but they also present mas-
sive new challenges for society to overcome. Cryptocurrency mining consumes a
*John Dorrell is an economics professor at the University of Tampa. He holds a Ph.D. in economics
from Pusan National University in South Korea, an MBA in international business from California
State University, and a bachelor’s degree in real estate management and development from Virginia
Tech University. The author’s areas of expertise are cryptocurrency, blockchain technology, real estate,
and international economics. Dr. Dorrell is currently the Chairman of the University of Tampa
Cryptocurrency and Blockchain Club. The author’s academic research focuses on projects in
economics such as relating to Bitcoin, renewable energy, and blockchain technology.
Abhilash Kancharla is currently working as an Assistant Teaching Professor in the Computer
Science department at the University of Tampa. Prior to his teaching at the University of Tampa,
Dr. Kancharla has also taught computer science courses at Oklahoma State University, where he
received his master’s and Doctorate degrees in Computer Science. He has worked closely with
blockchain for more than 5 years designing/modifying the source code for Ethereum and Hyperledger
blockchains. Dr. Kancharla also works as an ad-hoc reviewer for blockchain and queueing related
papers at MDPI Journal.
Matthew Stanley Ambrosia earned a B.S. degree in Physics from Sam Houston State University in
Huntsville, Texas, a master’s degree in mechanical engineering from the Texas A&M University, and a
Ph.D. degree in mechanical engineering from Pusan National University. Dr. Ambrosia currently is
teaching in the Department of Environmental Administration at the Catholic University of Pusan. His
research interests include cryptocurrencies, renewable energy, computational fluid dynamics, and
molecular dynamics.
The Journal of Energy and Development, Vol. 48, Nos. 1-2

Copyright # 2023 by the International Research Center for Energy and Economic Development
(ICEED). All rights reserved.
1
2 THE JOURNAL OF ENERGY AND DEVELOPMENT
substantial amount of electricity to power the advanced computing required for

mining new coins and verifying transitions.1 Wind energy has added a significant
amount of new energy into the grid, but it is an intermittent energy resource. Peak
supply does not match peak demand. In times of high wind energy production
and low consumer demand, electricity goes to waste, because large scale energy
storage batteries are still not cost-effective solutions to handle industrial scale
wind farms.
Blockchain is a technology that has the potential to impact nearly every indus-
try in the world.2 The possibilities are endless, however there are problems that
need to be addressed. Cryptocurrencies such as Bitcoin mine new coins by compu-
ters solving equations in a process called “mining.”3 Bitcoin mining requires mas-
sive amounts of energy.4 The energy consumption can be even higher than mining
precious metals, when measured in a per dollar calculation.5 The high electricity
expense limits the profitability of Bitcoin mining.6
Bitcoin was established in 2008 when Satoshi Nakamoto7 (a pseudonym) wrote
a white paper explaining the concept of the digital money based on Proof of Work
(POW) blockchain technology.8 This technology operates using the SHA-256
encryption technology created by the National Security Agency (NSA). Bitcoin is
the most secure payment system in the realm of cryptocurrencies.9 These advanced
computers use lots of electricity.10 Bitcoin’s proof of work system requires a mas-
sive amount of electricity. Bitcoin transactions are verified by solving complex
mathematical and cryptographic problems.11
Making cryptocurrency mining “Greener” would be greatly beneficial for all
parties involved.12 A recent paper recommends using phase change material to
help with making the cooling process more efficient and reduce electricity con-
sumption while mining with renewable energy.13 More environmentally friendly
energy sources such as geo-thermal are also intriguing options.14 Overall, mining
Bitcoin can provide renewable energy producers a significant form of capital
generation.15
Approximately 74% of Bitcoin’s electricity usage is from renewable energy
sources.16 Switching even more of the mining to renewable energy such as wind
farms, would reduce the carbon emissions even further.17 This is not just theoreti-
cal; it is working in practice in the real world. The government of Paraguay has
created partnerships with crypto mining companies, to install their mining facilities
next to hydroelectric stations.18 This strategic partnership is similar to the proposal
brought forth in this paper for wind energy and Bitcoin mining.
From a financial perspective, there is a lot of profit to be made in mining Bitcoin.
The money being made is driving the explosion of mining worldwide. Bitcoin
miners are very sensitive to the cost of electricity,19 most of the costs associated
with mining Bitcoin are from electricity. If electricity for mining was free, then costs
would be substantially cut, and mining would be more profitable.20 More accurate
price predictions reduce investors risk.21 To accurately predict profits to be made by
GREEN CRYPTO MINING WITH WIND ENERGY 3
mining Bitcoin with excess wind energy, we have to accurately forecast the price of
Bitcoin into the future. Bitcoin price projection is complex, and cannot be done by
simply calculating mining price, because the price of mining is affected by price,
not vice versa.22 For the sake of our experiment, we recommend selling at the end
of the four-year cycle for Bitcoin. Historically, a bull market develops at the end of
the four years because of the nature of the algorithms.
Understanding Bitcoin price formation is extremely important.23 There are mul-
tiple factors involved in the price of Bitcoin, the hash rate, halving, the advance-
ment of mining technology, and market structure.24 Many papers and financial
analysts have tried to predict Bitcoin price, and there are a broad range of price
points. We also must consider the inherent biases, for or against, Bitcoin for each
source of prediction. These fundamentals are based on the algorithms that deter-
mine supply of Bitcoin and the difficulty for mining. Recent research has con-
cluded that the mining costs have remained stable since 2010 when taking into
account volume of transactions.25 However volatile the price of Bitcoin is, the fact
remains that Bitcoin has outperformed Apple, Amazon, Google, and Microsoft
over the past 10 years.26 We are currently in a bear market for Bitcoin and other
assets due the Federal Reserve interest rate increases and overall economic head-
winds, causing asset price decreases across the board. Historically, this is not
uncommon for Bitcoin. There have been crashes over 90%, but the cryptocurrency
has always recovered and gone on to new all-time highs. To gain a more balanced
perspective, it is important to observe long-term trends. Table 1 shows the 10- and
5-year return on a $1,000 investment.
Estimates for Bitcoin mining energy consumption vary greatly because they are
difficult to precisely quantify.27 But a few of the estimates are as follows, Bitcoin
energy consumption is estimated to use around 77.8 terrawatt-hours (TWh) per
Table 1
RETURN ON A $1,000 INVESTMENT IN VARIOUS ASSETS (CURRENCY IN
U.S. DOLLARS)
June 15, 2012-June 15, 2022, June 15, 2017-June 15, 2022,
Companies 10-Year RIO on $1,000 5-Year RIO on $1,000
Bitcoin 3,381,692 8,994
Amazon 9,890 2,240
Google 7,561 2,039
Apple 6,429 3,971
Microsoft 8,400 3,877
Gold 1,116 1,450
Ethereum N/A 6,044
Real Estate 1,796 1,347
Source: Yahoo Finance, NasdaqGS - NasdaqGS Real Time Price, https://finance.yahoo.com/quote.

year.28 This translates into approximately 0.59% of total worldwide consump-

tion.29 Annual global CO2 emissions from Bitcoin mining are as high as 22.9 mil-
lion metric tons.30 The Bitcoin environmental impact is difficult to calculate, but
Bitcoin is now attracting the ire of environmentalists.31
Growth of Cryptocurrency and Wind Energy: The market cap for Bitcoin
passed one trillion dollars in only 12 years. To put this in perspective, it took
Microsoft 44 years, Apple 42 years, Amazon 24 years, and Google 21 years to
accomplish the same feat. Proponents of Bitcoin have seen this feat as an incredi-
ble achievement, while opponents view this rapid growth as a threat to the estab-
lished global financial system. Bitcoin has the potential to be the most disruptive
financial technology in history.32
Wind energy has followed a similar upward trajectory during the same time
period that Bitcoin has been experiencing massive growth. The first Bitcoin,
referred to as the Genesis Block, was mined in 2009. At that time there was
157.9 GW of installed wind energy capacity in the world.33 Now there is 837 giga-
watt (GW) installed global wind energy capacity.34 Figure 1 shows the growth of
wind energy capacity for leading countries. The growth trends for both technologies
Figure 1
GROWTH OF WIND ENERGY CAPACITY FOR LEADING COUNTRIESa
(in megawatts—MW)
a
Chart data compiled from the Wind Technologies Market Reports (2010-2019), the Land-Based
Wind Market Report, 2021 Edition, and the Global Wind Energy Council for Brazil data (2010–
2013). The United States has the second greatest total of installed wind power capacity with 121,985
GW as of 2020.
have significant near- and long-term growth trajectories. By partnering wind energy
and cryptocurrency we can create wealth by harnessing wasted wind energy and
solving the energy consumption problem of Bitcoin.
The primary method of critiquing Bitcoin has been to highlight its energy con-
sumption. Figure 2 shows the growth of energy consumption from Bitcoin mining,
the data are obtained from Cambridge Bitcoin Electricity Consumption Index. This
paper offers a sustainable solution to the problem of Bitcoin’s energy consumption.
Lost Energy from Wind Farms: The curtailment data for this paper comes
from the Electric Reliability Council of Texas (ERCOT). Wind energy is an intermit-
tent power source. The supply does not match consumer demand. There are times
when more supply is produced than is needed for consumption, so the turbines are
curtailed. In Texas, an average of 3.69% of wind energy production was lost due to
curtailment according to hourly data in 2020. Instead of wasting this electricity, it can
be used for cryptocurrency mining operations. The 3.69% statistic is actually quite
low. Many countries have wind energy waste at significantly higher rates, which
would increase the amount of electricity that could be used to mine Bitcoin onsite.
Negative Media Coverage Based on Energy Usage: Bitcoin has been a very
hot topic over the past few years. A reporter for the Guardian wrote that Bitcoin min-
ing is “killing the planet,”35 another CNN reporter believes that Bitcoin is a “disaster”
for the environment.36 It should be noted that these articles are not necessarily the
views of the entire editorial board. Even the positive price growth of Bitcoin has been
used as an attack, with news outlets saying that the exploding price of Bitcoin has trig-
gered doubts about the financial sustainability of the cryptocurrency.37 The talking
Figure 2
GROWTH OF ENERGY CONSUMPTION OF BITCOIN MINING: TOTAL BITCOIN
ELECTRICITY CONSUMPTION, JULY 2010 — MARCH 2022
Source: Cambridge Bitcoin Electricity Consumption Index, available at https://ccaf.io/cbeci/index/,

and C. Mooney and S. Mufson, “Why the Bitcoin Craze Is Using Up So Much Energy,” Washington
Post, December 19, 2017.
point that Bitcoin uses as much energy as Switzerland was highly popular.38 This has
led to calls to adopt other cryptocurrencies that use less energy.39
Some in the media may not understand what Bitcoin technology actually is, but
there is a real issue of energy consumption that needs to be solved. Using wind
energy that would otherwise go to waste is one way to make Bitcoin mining more
sustainable. Using this mining strategy can also generate positive press to offset
the corporate media attacks on Bitcoin.
Former head of the Federal Reserve Bank, Ben Bernanke, is on the record as
saying that the “underlying use value of a Bitcoin is to do ransomware or some-
thing like that.”40 Another former head of the Federal Reserve Bank, Janet Yellen,
was even more harsh in her comments about Bitcoin. She says, “It’s an extremely
inefficient way of conducting transactions, and the amount of energy that’s con-
sumed in processing those transactions is staggering,” and that it’s “often for illicit
finance.”41 European Central Bank President Christine Lagarde has also jumped
on the central banker bandwagon in bashing Bitcoin, saying that Bitcoin and other
cryptocurrencies are “worth nothing.”42 It is true that the technology of Bitcoin has
problems, but the central bankers Bitcoin are also developing their own Central
Bank Digital Currencies (CBDC).
The banker critiques of Bitcoin come from the private sector as well. Berkshire
Hathaway CEO, Warren Buffett had this to say about Bitcoin and other cryptocur-
rencies, “I can say with almost certainty that they will come to a bad ending.”43
J.P. Morgan CEO, Jamie Dimon is one of the most passionate critics of Bitcoin. In
2017 Dimon said, “It won’t end well. Someone is going to get killed,” and
“eventually it will be closed.” He also said that Bitcoin “will not survive,” it is
“worthless,” “terrible store of value,” and that it “will be stopped.”44 These are the
comments that Dimon makes in public about Bitcoin, but when advising investors,
J.P. Morgan predicts that Bitcoin will be worth $146,000 in the future,45 and has a
cryptocurrency department devoted to crypto investing and making their own ver-
sion of a cryptocurrency. This department has over 100 employees.46
CEOs, with more technical savvy understand the technology and support efforts
to reduce energy consumption.47 MIT educated engineer Michael Saylor, and
SpaceX CEO, Elon Musk, both understand the technology of Bitcoin and the pur-
pose it serves. These two CEOs are two of the most vocal supporters of Bitcoin,
and both are pursuing more sustainable energy usage for Bitcoin networks. Reduc-
ing the carbon footprint of Bitcoin would greatly benefit the world. This paper
offers a real-world solution to this complex problem.
Purpose
The contribution of this research is multifaceted. There is a lack of peer reviewed

research on cryptocurrencies and renewables working together. We project the
number of Bitcoin miners that could be operating using ERCOT wind farm curtail-
ment data. With that information we use current trends to evaluate a time period to
sell at which the price of Bitcoin is expected to peak if current trends continue. The
impact of these technologies is significant for the future of society. We explain how
cryptocurrency mining companies can leverage their expertise to take advantages
and work with wind farms across the world. The methods quantified in this paper
can also be used to mine other proof of work (PoW) cryptocurrencies as well.
Materials and Methods
Model: Our model combines multivariate analysis to determine the financial

returns for green Bitcoin mining. Although this energy could be used to mine any
proof of work cryptocurrency Bitcoin was chosen for its longer history, more sta-
ble prices, acceptance by companies and countries as a reserve asset, and more
clarity in legislation in many jurisdictions. Using time series data from 2011–2020,
we are able to chart into the future returns for wind power facilities. Our model
accounts for changes in mining technology, wind energy production, Bitcoin min-
ing difficulty, and changes in the Bitcoin price in order to project realistic returns
and a payback price for the time period.
This paper provides a model and quantifiable data for these variables to show
that wind farms can generate enough residual energy to profitably mine Bitcoin and
can be used as a financial battery which can store wasted wind energy by changing
it into financial energy. It will prove that Bitcoin can run profitably on green energy.
In 2020, 3.69% of the Texas ERCOT wind farms’ power was lost due to curtail-
ment. That totaled 4,210,189 megawatt hours (MWh). That is enough electricity, if
provided evenly over 2020, to power over 154,043 of Bitmain’s Antminer S19J Pro
with 104 terahashes per second (TH/s), which consume 3,120 W each. An astound-
ing 16.02M TH/s could be produced by the 154,043 S19J Pro miners, which is over
8.0% of today’s total Bitcoin network hash of 199.91M TH/s. That would earn
$1.4 million a day even at the price of $20,000 per Bitcoin. This is an idealistic pro-
jection under perfect circumstances with the energy distributed evenly over time.
The final results presented have a lower projection due to the consideration of addi-
tional factors that play a role in this scenario but these numbers show a great poten-
tial to be tapped.
Realistically, curtailment fluctuates greatly but even with these fluctuations and
inconsistencies of the power, considerable profit can be made using Bitcoin miners
powered by wind farm curtailment. Considering the fluctuations in curtailment our
findings show that approximately 10,000 miners could be operating 66.38% of the
time and 1,000 miners could be operating 93.33% of the time. These projections
are based on the ERCOT Texas electricity system as a whole, but the results can
be applied to smaller wind farms by simply adjusting the ratio and percentages to
match the scale of energy production. We present the cost of these miners and
how many Bitcoin they can produce and show how each variable affects the result-
ing profit. Instead of curtailing electricity, it can be used by the miners essentially
for free.
There are several variables to consider when trying to profitably mine Bitcoin.
Our paper will consider each of these variables, model them, and predict the profit-
ability of mining Bitcoin using residual electricity from a wind farm. The variables
to be considered in detail are: (1) price of Bitcoin, (2) price of the miner and hous-
ing container, (3) hash rate of the miner relative to the network hash rate, (4) the
block reward, (5) Bitcoin transaction fees awarded to the miners, (6) mining pool
fees, (7) the cost of the electricity, and (8) percentage of time the miners will be
running. An overview of each one will be discussed.
Bitcoin Price Projection: In order to accurately forecast the return on invest-
ment, the price for Bitcoin must be projected into the future. Immediately selling
Bitcoin that has been mined is needed for many mining operations to pay for the
electricity. But if the Bitcoin can be securely stored profits can be multiplied if
they are sold at the 4-year cycle peak in price.
Bitcoin miners solve extremely difficult math problems which help verify trans-
actions between wallets. The first miner that solves the problem is awarded some
Bitcoin called the block reward. The block reward is automatically cut in half
every 210,000 blocks or about every 4 years so the decreased supply of new Bit-
coin coming into the market helps increase the price. Therefore, the halving of the
block reward pushes Bitcoin into a bull market every 4 years. Several studies have
been published related to this 4-year cycle caused by the Bitcoin block reward
halving.48 This cycle is driven by supply constraints, and the economic principle of
future expectations.
After the Bitcoin block reward halving in November 2012 the price of Bitcoin
went from $12 to $1,217 in 13 months in December 2013. After the Bitcoin block
reward halving in July 2016 the price of Bitcoin went from $647 to $19,800 in
17 months later December 2017. After the most recent halving in May 2020 the price
started at $8,787 and peaked twice at $64,899 and $69,000 11 months later in April
2021 and 18 months later in November 2021, respectively. This shows a great overall
increase in the value of Bitcoin but as time goes on there are diminishing returns.
Several models have been developed using fundamental and technical analysis.
One price model called the Stock-to-Flow model by PlanB, a pseudonym for a
Dutch forex trader, was developed in 2019 and it followed the price action of
Bitcoin in the past. It predicted the price of $55,000 after the Bitcoin block reward
halving in 2020.49 Subsequently, he refined his equation, projecting a price target of
$100,000 following the 2020 halving event. However, this target remained elusive,
leading to diminished confidence in his model among many. However, the price
exceeded PlanB’s original prediction and topped out at $69,000. His original model
predicts a price of over $400,000 after the halving in 2024 as seen in figure 3.
Figure 3
STOCK-TO-FLOW METHOD FOR PREDICTING BITCOIN’S PRICE, 2009–2028
Source: PlanB@100trillionUSD -PlanBTC.com.
For this study, to model this increase of value with diminishing returns, the price
of Bitcoin was plotted and a quadratic equation was used to connect peak values as
seen in figure 4. The thinner black vertical lines in figure 4 represent dates the Bit-
coin block reward was halved or is projected to half. The thicker vertical black line
is the projected sell date of November 1, 2025, which is 19 months after the pro-
jected halving date of April 1, 2024. This is similar to the number of months from
the two previous Bitcoin block reward halving to the following peak in price. As
price tends to be volatile, 19 months was chosen to give ample time for the price to
cross the price peak curved trend line connecting cycle tops. The price may cross
the price peak curved trend line described in table 2 earlier than 19 months as in
previous cycles in which it would be advantageous to sell at that time.
The Bitcoin price peaks at the close in November 2013, December 2017,
and March 2021 provide data to estimate a peak in the future using p(t) 5 a * t2 1
b * t 1 c, where t represents time on the x-axis and p(t) represents the price of
Bitcoin at time, t seen in figure 4. Each data point is the price of Bitcoin at the start
of each month. The actual price went higher so these data points give conservative
values to project into the future. The coefficients a, b, and c were calculated and
are shown in table 2.
Using this historical price data, we project that the price of Bitcoin will peak at
$190,436 on at least November 1, 2025, 579 days after the projected halving
date of April 1, 2024 assuming the trend continues. This is 26.96 percent above JP
Morgan’s long-term prediction of $150,000.50 Our prediction is not unreasonable
Figure 4
STOCK-TO-FLOW METHOD FOR PREDICTING BITCOIN’S PRICE, 2012–2025
Source: PlanB@100trillionUSD -PlanBTC.com.
considering we are trying to time the peak of the 4-year market cycle which histor-
ically overshoots moving averages considerably. This will be the price target and
date to sell all the Bitcoin mined.
Projected Bitcoin Network Hash Rate: The total Bitcoin mining network
hash rate is projected into the future. Once a miner has bought its hash rate is con-
stant if maintained well but the network hash rate fluctuates over time depending
on the numbers of miners operating and the hash rate of each of those miners. His-
torically the network hash rate increases over time, but there are certain times in
the market when the network hash rate may drop. More recently this occurred in
2021 when China outlawed Bitcoin mining. All of those miners had to relocate to
another country which caused the network hash rate to drop until they were operat-
ing again. A miner that continued operating during that period of time became more
profitable since their percent of the total Bitcoin hash rate increased. Overall, the
Table 2
CALCULATED COEFFICIENTS A, B, AND C FOR THE PRICE PEAK CURVED TREND
LINE vðxÞ ¼ a t2 þ b t þ c
Date t Value p(t) a b c
t1511/2013 p(t1) 5 $ 1,158 20.00006937 0.02595 2.996
t2512/2017 p(t2) 5 $ 13,900
t353/2021 p(t3) 5 $58,779
network hash rate has grown linearly since 2017 at a rate of 111.255 Th/s per day.
This growth is similar to adding one Bitmain S19J Pro Antminer a day which has a
hash rate of 104 Th/s. If this linear growth continues at the current rate, the Bitcoin
network hash rate is expected to be 330.801 exahashes per second (Eh/s) or
330.801M Th/s at our projected sell date of November 1, 2025, shown in figure 5.
Block Reward: The block reward to the miners for mining a block is cut in
half every 210,000 blocks added to the blockchain which amounts to approxi-
mately four years. This affects the profitability of mining operations. The halving
of the block reward is also an indicator of when the next bull market will start.
The current block reward for Bitcoin is 6.25 BTC and a block is mined about every
10 minutes. The block reward will likely be cut in half again around April 1, 2024.
The following Bitcoin halving will be approximately 4 years after that.
Transaction Fees Earned: The Bitcoin transaction fees awarded to the miners
fluctuates over time. As the Bitcoin network traffic increases, transaction fees
increase to incentivize miners to include the transactions in the soonest possible
block. Transaction fees spike in price as the price of Bitcoin increases and there
are large volumes of Bitcoin changing hands. Employing the best Bitcoin miners
during this spike in transaction fees will be very advantageous to earn extra profit.
Spikes in the transaction fees have been rare and isolated events mainly when the
price of Bitcoin surges. From January 1, 2014 to December 31, 2021 the average
Figure 5
BITCOIN NETWORK HASH RATE’S GROWTH AND ITS PROJECTION INTO THE FUTURE
TO THE PROPOSED SELL DATE OF NOVEMBER 1, 2025
has been 0.5538 Bitcoin per block mined earned for the transaction fee. We will
assume no growth in this earned fee to give a more conservative profit target but
during those 8 years the transaction fee has slightly increased by 0.0279 Bitcoin
per block per year on average.
Mining Pool Fees: The mining pool fees are somewhat constant but may range
from 1% to 4% depending on the mining pool used. In this study a mining pool
fee of 2% is used.
Percentage of Time Bitcoin is Mined: The percentage of time the miner will
be running is a major factor in our research. We want to only use curtailed electricity.
Considering the efficiency of the wind farms and the grid at supplying electricity dur-
ing peak demand miners will not be used all the time. It was calculated how much of
the electricity could be used and what percentage of time the miners could be run.
Since peak demand occurs during the morning and evening and the peak supply of
wind energy is at night, ample electricity is available to be used to power the Bitcoin
miners for a meaningful amount of time. With the ERCOT hourly data for 2020 it
was found that 10,000 miners 66.38% of the time and 1,000 miners 93.32% of the
time could have been operating. Calculations were made assuming miners were
turned on or off on the hour corresponding to the ERCOT data. Figure 6 shows the
percentage of time a certain number of miners could have been operating in 2020
according to the ERCOT hourly data. The data shows this amount of curtailment is
Figure 6
PERCENTAGE OF THE TIME A NUMBER OF MINERS COULD HAVE BEEN
OPERATING IN 2020
low compared to many wind farms and has not changed significantly over time.
These numbers were held constant over the mining time period but the amount of
curtailment may increase in the future as ERCOT wind farms are expected to
increase capacity in the coming years.
Bitcoin Miner Price: The price of Bitcoin miners also changes over time
depending on the hash rate and the technology used in the miner. If there is a break-
through in technology, newer miners will make older miners obsolete. Early on,
CPUs and GPUs could be used to mine Bitcoin but with the development of ASIC
miners, CPUs and GPUs are too slow and use too much electricity to be effective
at mining Bitcoin. Technology has increased steadily since ASIC miners were
first developed in 2013 which is also a factor in the increase in Bitcoin network hash
rate mentioned earlier. The Bitcoin miner considered in this study is the Bitmain
S19J Pro Antminer with a hash rate of 104 Th/s and can be bought for $5,360
at Viperatech.51 Its specifications are considered one of the best on the market.
The lifetime of this miner is expected to extend beyond the period needed but
we will consider the lifetime is the number of days discussed for each case in this
study.
Bitcoin Miner Housing Container: Bitcoin miners are housed in a large con-
tainer to mount, protect, and allow for easy transport to the site. In our research we
will refer to the Bitmain Antbox N5 Mobile Mining Container 20HQ 658KW Out-
door V2. This container costs $63,000 at Viperatech52 and can house 207 Bitmain
S19J Pro Antminers. This will add an expense of $304.35 per miner if the number
of miners is a multiple of 207. ASIC miners are responsive to environmental fac-
tors, yet this housing unit is designed to guarantee a minimum miner lifespan of
5 years.53 In a poor environment the lifetime of a miner may be much less, but it
has been reported it could extend to 20 years if conditions are favorable.54 This
housing unit has large exhausts with inlet filters and is excellent at heat dissipation.
In some cases, it may be important to use air conditioning. Even in these cases the
cost of air conditioning units needed would be less than 0.1% of the total costs so
are not considered in the calculations here. In addition, the cost of electricity
powering the air conditioning units would be zero since the miners are using just a
fraction of the electricity available. It would be most cost effective to use a number
of miners, which is a multiple of 207, the number of miners to be housed in one
container.
Electricity Cost: Electricity is a primary cost for mining Bitcoin. Our method
uses wasted electricity from wind farms which reduces this factor to zero. Purchas-
ing extra electricity may be considered depending on the profitability of the miners
being used at the time. However, in this study electricity will be considered free as
we propose wind farms buy and run miners completely off the wind farm curtail-
ment. As long as there is a market for Bitcoin and the miners are run long enough,
Bitcoin miners using free electricity will be profitable whereas miners paying for
electricity could operate at a loss depending on the price of Bitcoin.
Empirical Methodology
The factors mentioned above are shown in equation form to calculate the amount
of Bitcoin mined per day. A Bitcoin block is mined every 10 minutes on average, so
there are 144 blocks mined each day. Equation (1) shows the daily profit for a miner
which is then added up for the total number of days in the period used. We propose
not to sell the Bitcoin each day but to sell all of the mined Bitcoin once the price
exceeds the price peak curved trend line. The variables are defined in table 3.
h M1C
/ 5P ðR1TÞ 144 ð12FÞ X 2 2E (1)
H d
Results
The results predict that mining Bitcoin using wind farm curtailment is very
profitable considering all of these variables. The challenge is to project the differ-
ent variables into the future which cannot be done without assumptions. However,
considering historical data a range of profitability can be calculated assuming
Table 3
VARIABLE DEFINITIONS
Variables Symbol Comment
Selling price of Bitcoin P Projected from the 3 previous peaks assuming
($/Bitcoin) the trend is maintained.
Profit per day ($/day) / To be calculated
Miner’s hash rate (h/s) h 104 Th/s for the Bitmain S19J Pro Antminer.
Network hash rate (h/s) H Growing linearly since 2017
Block reward (Bitcoin/block) R 6.25 btc/block until about April 1, 2024, when it
will be halved.
Transaction fees/block T 0.5538 BTC on average.
(Bitcoin/block)
Mining pool fees (%) F Most are around 1–4%.
% of time miner operates (%) X Dependent on the number of miners used.
Miner cost ($) M $5,360 for the Bitmain S19J Pr Antminer.
Container cost per miner C $63,000 for Bitmain Antbox N Mobile Mining
($/miner) Container housing 207 miners.
Number of days used (days) D The lifetime of the miner is expected to exceed
the time period used in this study so the
number of days of the study will be used.
Electricity cost / day ($/day) E $0 if using wind farm’s curtailment.
current trends continue. We consider our projected price of $190,436 if the trend
continues and JP Morgan’s long-term prediction of $150,000 as well as if the Bit-
coin price is $20,000. We also consider two different start dates of November 1,
2021 and November 1, 2022. In addition, we consider 1,000, 10,000, and 50,000
Bitcoin miners operating at different percentages of time according to the ERCOT
wind curtailment data. We used the number of days in each period to calculate
number of Bitcoins mined for each case of number of miners using the equation
above. We found it easiest to calculate the revenue in two steps, before and after
the Bitcoin block reward halving. Then those values were added together and
divided by the expenses of the Bitcoin miners and miner housing containers.
Figure 7 shows the return on investment (ROI) for 1,000 miners used to 50,000
miners used if the miners started on November 1, 2021. The best ROI of 1,347%
is the case with 1,000 miners used selling the Bitcoin at our target of $190,436.
Indeed, the optimal scenario for every selling price corresponds to the configura-
tion with the fewest number of miners. This is reasonable since adding miners
reduces the percentage of time miners can operate as seen in figure 6. All cases are
profitable except as the number of miners used increases for the sell price of
$20,000, losses are incurred beyond 10,000 miners.
Figure 7
RETURN ON INVESTMENT (ROI) WITH START DATE AS OF NOVEMBER 1, 2021
FOR DIFFERENT NUMBER OF MINERS USED AT SELL PRICES OF $190,436,
$150,000, AND $20,000
Figure 8
RETURN ON INVESTMENT (ROI) WITH START DATE AS OF NOVEMBER 1, 2022
FOR DIFFERENT NUMBER OF MINERS USED AT SELL PRICES OF $190,436,
$150,000, AND $20,000
Figure 8 shows the return on investment for 1,000 miners used to 50,000 miners
used if the miners started on November 1, 2022. When starting at the later date,
the best case is 40% less profitable than starting on November 1, 2021. Like the
November 1, 2021 start date, the best ROI is the case with 1,000 miners used sell-
ing the Bitcoin at our target of $190,436. The difference is so large because mining
before the block reward halving is twice as effective and the miner will have a
greater percent of the total network hash rate than after the halving. For this start
date every case selling Bitcoin at $20,000 records a loss. Figures 7 and 8 show
ROI dropping considerably as the number of miners increase from 1,000 to
10,000. This follows what is seen in figure 6. As the number of miners used
increases from 1,000 to 10,000 the percentage of time the miners are being used
drops from 93.3% to just 66.4%.
While figures 7 and 8 show the possibility of a great return on investment, espe-
cially for the case of 1,000 miners, it is important to consider opportunity cost as well
as other risk factors. Table 4 shows the return on investment if Bitcoin were bought at
$20,000. This shows that most of the return is due to Bitcoin expected appreciation
instead of a direct advantage of mining. This may indicate a bottoming in the Bitcoin
price. Buying Bitcoin at $20,000 is slightly more profitable than starting mining on
Table 4
RETURN ON INVESTMENT (ROI) FOR BUYING BITCOIN AT $20,000 WITH CASH
(NOT MINING)
Sell Price Return on Investment (ROI)
$190,436 852%
$150,000 650%
$20,000 0%
November 1, 2022 as shown in figure 8. However, it is more than 58% more profit-
able to start the miners on November 1, 2021 than to buy Bitcoin at $20,000.
Break Even Prices: Usually the time period it takes to return one’s investment
is of great interest. However, in the case of Bitcoin mining, the best time to sell
Bitcoin happens every four years. The question is at what price will be the peak
following the Bitcoin block reward halving. Considering that prices at which min-
ing operations would break even were calculated if the Bitcoin mined were sold on
November 1, 2025. The results are found in table 5 for the operation that start on
November 1, 2021 and 2022 for 1,000, 10,000, and 50,000 miners.
Discussion
Potential Profit Sources for Wind Farms: This paper is not investment
advice. The purpose of our research is to investigate the synergy between wind
energy and Bitcoin mining. Prices of the input variables can fluctuate significantly
over time. Our empirical methodology analyzes data and historical trends to predict
potential future return on investment. The returns could be significantly more or
less based on the future price of Bitcoin.
Our wind energy data is from the entire ERCOT network. The assumption for
the model is system wide adoption for the entire network to use the wasted elec-
tricity to power Bitcoin miners, but the percentage returns offer ratios for adoption
of this method on a smaller scale.
The future of money is cryptocurrency.55 Adoption of Central Bank Digital
Currencies will also grow over the next decade. The techniques described in this
paper can be used to mine other cryptocurrencies as well.
Table 5
BREAK EVEN PRICES FOR VARIOUS MINING OPERATIONS
Number of Miners November 2021 Start November 2022 Start
1,000 $13,160 $21,039
10,000 $18,501 $29,579
50,000 $29,461 $47,099
Turning Excess Energy into Money: Mining Bitcoin with excess energy is an
idea that will become more mainstream over the next few years. Even the IMF has
discussed the idea in their recent report.56 Specifically they said that Bitcoin min-
ing “will allow countries to monetize their energy resources outside of the financial
system.” By mining Bitcoin, countries can directly turn their energy resources into
money. This is a revolutionary new economic concept that has broad implications.
Further Studies: Further issues may be brought up related to our study. Usu-
ally, Bitcoin miners are left on continuously so there is no data on the dependabil-
ity of Bitcoin miners being turned on and off regularly.
Conclusions: Our research quantifies the potential return on investment that
can be made through harnessing excess electricity generated by wind turbines to
power Bitcoin mining equipment. Electricity is the largest cost associated with the
mining of Bitcoin, so by utilizing electricity that is essentially free, return on
investment for mining will be significantly higher than traditional cryptocurrency
mining operations. Based on the findings from our econometric analysis, wind
farms can reduce curtailment and increase profits by mining for Bitcoin with
excess wind energy.
The massive energy consumption of Bitcoin is a real problem that will only
become even more significant in the future as the calculations required for mining
become more complex. The intermittency of wind energy is a major problem that
will become more significant as the more countries shift towards renewable energy.
By combining the strengths of wind energy and Bitcoin we can compensate for the
weaknesses of the technologies and create a synergy that can create a more sustain-
able future for cryptocurrency mining.
The return on investment is determined by the future price of Bitcoin. The
future price projections in this paper are based on historical trends and the best
practice methods used within the field. As with any form of investing, there are
risks and a certain level of uncertainty. Predicting the future price of stocks, real
estate, commodities, and other assets is uncertain, but the entire financial invest-
ment system is based on making strategic investments based on historical data, to
project future returns on investments. Our Bitcoin price projection of $190,436
may seem extreme to those who have not spent significant time researching the his-
tory of Bitcoin and the technology on which it is based, but these projections are
right in line with the banking experts at JP Morgan, who predicted a price of
$146,000,57 and have recently updated their projection to $150,000.58 The fact
remains that over the course of its existence, Bitcoin has outperformed all other
assets, including Tesla, Apple, Google, Microsoft, oil, gold, and silver.
Our research helps to fill the void in peer reviewed literature to give empirical
analysis of potential profits from mining Bitcoin with wind energy. The model
seeks to create realistic expectations for potential investors based on long-term
trends. The implications of cryptocurrency mining with renewable energy have sig-
nificant global implications. We hope to do our small part to contribute to an
academic foundation in this field. The profits associated with Bitcoin mining based
on the methods described in this paper are higher than the current mining opera-
tions because of the use of electricity at near zero cost. The return on investment
using these methods leaves a significant margin for error in Bitcoin price
projections.
Mining Bitcoin with excess energy is not just a concept. It is currently happen-
ing around the world with multiple energy sources.59 This paper helps to create an
econometric structure by which to plan future cryptocurrency mining operations.
Bitcoin offers a new form of money for the future digital economy. Wind energy
offers a green renewable alternative to fossil fuels for a cleaner energy future. Min-
ing Bitcoin with excess wind energy can create a more sustainable future for both
technologies.60
NOTES
1
J. Truby, “Decarbonizing Bitcoin: Law and Policy Choices for Reducing the Energy Con-
sumption of Blockchain Technologies and Digital Currencies,” Energy Research & Social Science,
vol. 44 (2018), pp. 399–410, 2018.
2
D. Galeon, “Mining Bitcoin Costs More Energy Than What 159 Countries Consume in a
Year,” Futurism, November 28, 2017, available at https://futurism.com/mining-bitcoin-costs-more-
energy-159-countries-consume-year.
3
J. Lloyd and M. Woods, “How Much Electricity Does Bitcoin Mining Use?” Be (in) Crypto,
updated June 7, 2023, available at https://beincrypto.com/learn/how-much-electricity-bitcoin-mining/.
4
O. Faridi, “Bitcoin (BTC) Mining Is a ‘Dirty Business’ Because it Wastes Massive Amounts
of Energy,” Crowdfund Insider, January 27, 2021, available at https://www.crowdfundinsider.com/
2021/01/171642-bitcoin-btc-mining-is-a-dirty-business-because-it-wastes-massive-amounts-of-energy-
industry-analyst-argues/.
5
A. Hern, “Energy Cost of ‘Mining’ Bitcoin More Than Twice That of Copper or Gold,” The
Guardian, November 5, 2018, available at https://www.theguardian.com/technology/2018/nov/05/
energy-cost-of-mining-bitcoin-more-than-twice-that-of-copper-or-gold.
6
B. E. C. I. Staff, “Bitcoin Energy Consumption Index,” Digiconomist, available at https://
digiconomist.net/bitcoin-energy-consumption.
7
S. Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,” available at https://bitcoin.
org/bitcoin.pdf.
8
M. Grabowski, Cryptocurrencies: A Primer on Digital Money (London and New York: Rou-
tledge, 2019).
9
J. Jobanputra, “Bitcoin ‘is the most secure blockchain that exists right now,’ Venture Capital-
ist Says,” Yahoo Finance, April 11, 2022, available at https://finance.yahoo.com/video/bitcoin-
most-secure-blockchain-exists-151549408.html?guccounter=1.
10
D. Roberts, “Why Bitcoin Mining Sucks Up So Much Electricity,” Yahoo Finance, January 10,
2018, available at https://finance.yahoo.com/news/bitcoin-mining-sucks-much-electricity-140843956.html.
11
E. Rosenberg, “How Much Power It Takes to Create a Bitcoin,” The Balance, updated Sep-
tember 15, 2022, available at https://www.thebalance.com/how-much-power-does-the-bitcoin-
network-use-391280.
12
D. Galeon, op. cit.
13
S. E. Hosseini and H. Kamyab, “Sustainable Energy and Digital Currencies: Challenges and
Future Prospect,” Future Technology, vol. 1 (May 2022), pp. 26–32.
14
S. Kumar, “Review of Geothermal Energy as an Alternate Energy Source for Bitcoin Mining,”
Journal of Economics and Economic Education Research, vol. 23, no. 1 (2022), pp. 1–12.
15
C. Bastian-Pinto, F. V. de S. Araujo, L. Brand~ao, and L. Lima Gomes, “Hedging Renewable
Energy Investments with Bitcoin Mining,” Renewable and Sustainable Energy Reviews, vol. 138,
no. 3 (2020).
16
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https://coinshares.com/research/bitcoin-mining-network-june-2019\#mailmunch-pop-794720.
17
A. Roy, “Is There a Solution to Bitcoin’s High Energy Consumption?” AMB Crypto, February
6, 2021, available at https://ambcrypto.com/is-there-a-solution-to-bitcoins-high-energy-consumption/.
18
L. Tassev, “How Big Hydro Power Partners with Bitcoin Miners to Prevent Energy Waste,”
Bitcoin.com, July 22, 2019, available at https://news.bitcoin.com/how-big-hydro-power-partners-
with-bitcoin-miners-to-prevent-energy-waste/.
19
P. Thompson, “Bitcoin Mining’s Electricity Bill: Is It Worth It?” Cointelegraph, June 2,
2018, available at https://cointelegraph.com/news/bitcoin-minings-electricity-bill-is-it-worth-it.
20
A. Lynx, “Bitcoin Mining with Free Electricity – Is It Still Worth It in 2022?” Cryptalker,
accessed June 9, 2023, available at https://cryptalker.com/free-electricity/.
21
S. A. Gyamerah, “Two-Stage Hybrid Machine Learning Model for High-Frequency Intraday
Bitcoin Price Prediction Based on Technical Indicators, Variational Mode Decomposition, and
Support Vector Regression,” Complexity, vol. 2021 (2021), article ID 1767708.
22
J. E. Marthinsen and S. R. Gordon, “The Price and Cost of Bitcoin,” The Quarterly Review
of Economics and Finance, vol. 85 (2022), pp. 280–88.
23
P. Ciaian, M. Rajcaniova, and D. Kancs, “The Economics of Bitcoin Price Formation,”
Applied Economics, vol. 48, no. 19 (2016), pp. 1799–815.
24
D. Fantazzini and N. Kolodin, “Does the Hashrate Affect the Bitcoin Price?” Journal of Risk
and Financial Management, vol. 13, no. 11 (2020).
25
Y.-D. Song and T. Aste, “The Cost of Bitcoin Mining Has Never Really Increased,” Fron-
tiers in Blockchain, vol. 3 (October 22, 2020).
26
M. Grabowski, op. cit.
27
P. Garg, “Bitcoin Mining Profitability, Electricity Consumption, and Efficiency—New Data
from the University of Cambridge,” CryptoSlate, July 3, 2019, available at https://cryptoslate.com/
bitcoin-mining-profitability-electricity-consumption-university-cambridge/.
28
H. Partz, “Surge in Bitcoin Energy Consumption Sparks Debate in Crypto Community,”
Cointelegraph, February 5, 2021, available at https://cointelegraph.com/news/surge-in-bitcoin-
energy-consumption-sparks-debate-in-crypto-community.
29
C. Baraniuk, “Bitcoin’s Energy Consumption ‘Equals That of Switzerland,’” BBC, July 3,
2019, available at https://www.bbc.com/news/technology-48853230.
30
U. Irfan, “Bitcoin Is an Energy Hog,” Vox, June 18, 2019, available at https://www.vox.com/
2019/6/18/18642645/bitcoin-energy-price-renewable-china,
31
P. Garg, op. cit.
32
G. Suyambu, M. Anand, and M. Janakirani, “Blockchain – A Most Disruptive Technology
on the Spotlight of World Engineering Education Paradigm,” Procedia Computer Science, vol.
172 (2020), pp. 152–58.
33
Renewable Energy World, “Global Wind Installations Boom, Up 31% in 2009,” Renewable
Energy World, available at https://www.renewableenergyworld.com/wind-power/global-wind-
installations-boom-up-31-in-2009/.
34
Global Wind Energy Council (GWEC), Global Wind Report 2022 (Brussels: GWEC, April
4, 2022), available at. https://gwec.net/wp-content/uploads/2022/03/GWEC-GLOBAL-WIND-
REPORT-2022.pdf.
35
E. Lou, “Bitcoin as Big Oil: The Next Big Environmental Fight?” The Guardian, January 17,
2019, available at https://www.theguardian.com/commentisfree/2019/jan/17/bitcoin-big-oil-environment-
energy.
36
D. Shane, “Bitcoin Boom May Be a Disaster for the Environment,” CNN, December 7, 2017,
available at https://money.cnn.com/2017/12/07/technology/bitcoin-energy-environment/index.html.
37
C. Mooney and S. Mufson, “Why the Bitcoin Craze Is Using Up So Much Energy,” Wash-
ington Post, December 19, 2017, available at https://www.washingtonpost.com/news/energy-
environment/wp/2017/12/19/why-the-bitcoin-craze-is-using-up-so-much-energy/.
38
C. Baraniuk, op. cit.
39
R. Browne, “Bitcoin’s Wild Ride Renews Worries about its Massive Carbon Footprint,”
CNBC, updated February 9, 2021, available at https://www.cnbc.com/2021/02/05/bitcoin-btc-
surge-renews-worries-about-its-massive-carbon-footprint.html.
40
R. A. Sorkin, “CNBC Exclusive: CNBC Excerpts: Former Fed Chair Ben Bernanke Speaks
with CNBC’s Andrew Ross Sorkin on ‘Squawk Box’ Today,” CNBC, May 18, 2022, available
at https://www.cnbc.com/2022/05/16/cnbc-exclusive-cnbc-excerpts-former-fed-chair-ben-bernanke-
speaks-with-cnbcs-andrew-ross-sorkin-on-squawk-box-today.html.
41
J. Cox, “Yellen Sounds Warning about ‘Extremely Inefficient’ Bitcoin,” CNBC, February 22,
2021, available at https://www.cnbc.com/2021/02/22/yellen-sounds-warning-about-extremely-
inefficient-bitcoin.html.
42
R. Browne, “Christine Lagarde Says Crypto Is Worth Nothing,” CNBC, May 23, 2022, avail-
able at https://www.cnbc.com/2022/05/23/ecb-chief-christine-lagarde-crypto-is-worth-nothing.html.
43
J. Remsburg, “Bitcoin to 500K,” Investorplace, October 13, 2021, available at https://
investorplace.com/2021/10/bitcoin-to-500k/.
44
P. R. La Monica, “Jamie Dimon Bashes Bitcoin Again, Calling It ‘Worthless,’” CNN,
updated October 12, 2021, available at https://www.cnn.com/2021/10/12/investing/jamie-dimon-
bitcoin/index.html.
45
B. Bambrough, “JPMorgan Doubles Down on Its Massive Bitcoin Price Prediction–But Adds
a Serious Warning,” Forbes, November 4, 2021, available at https://www.forbes.com/sites/
billybambrough/2021/11/04/jpmorgan-doubles-down-on-its-massive-bitcoin-price-prediction-but-adds-
a-serious-warning/?sh=7f2d193c4511.
46
H. Son, “JPMorgan Creates New Unit for Blockchain Projects, Says the Technology Is Close
to Making Money,” CNBC, updated October 27, 2020, available at https://www.cnbc.com/2020/
10/27/jpmorgan-creates-new-unit-for-blockchain-projects-as-it-says-the-technology-is-close-to-making-
money.html.
47
N. Bambysheva, “Elon Musk and Michael Saylor Lead Effort by Bitcoin Miners to Address
Environmental Concerns,” Forbes, May 24, 2021, available at https://www.forbes.com/sites/
ninabambysheva/2021/05/24/elon-musk-and-michael-saylor-lead-effort-by-bitcoin-miners-to-address-
environmental-concerns/?sh=3b8b3c1969b7.
48
J. E. Marthinsen and S. R. Gordon, op. cit.; P. Ciaian et al., op. cit.; D. Fantazzini and
N. Kolodin, op. cit.; A. Meynkhard, “Fair Market Value of Bitcoin: Halving Effect,” Investment
Management and Financial Innovations, vol. 16, no. 4 (2019), pp. 72–85; and D. Bernardi and
R. Bertelli, “Bitcoin Price Forecast Using Quantitative Models,” (March 2021), available at SSRN
http://dx.doi.org/10.2139/ssrn.3879700.
49
PlanB, “Modeling Bitcoin Value with Scarcity,” available at https://medium.com/@100trillionUSD/
modeling-bitcoins-value-with-scarcity-91fa0fc03e25.
50
CNBCTV18.com, “JPMorgan Predicts Long-Term Bitcoin Price May Reach $150,000,”
CNBCTV18, February 11, 2022, available at https://www.cnbctv18.com/cryptocurrency/jp-morgan-
predicts-long-term-bitcoin-price-may-reach-150000-12452972.htm.
51
Bitmain Antminer S19J Pro 104 Th/s 3120W available at www.viperatech.com/product/
antminer-s19j-pro-104th-s/.
52
Bitmain Antbox N5 Mobile Mining Container 20HQ 658KW Outdoor V2 available at www.
viperatech.com/product/antbox-v2-n5/.
53
Lumerin Protocol, “How to Prolong Your ASIC Miner’s Lifespan,” November 23, 2021, avail-
able at https://medium.com/lumerin-blog/how-to-prolong-your-asic-miners-lifespan-360b68140a04.
54
S. Zhai “Self-Sustained Bitcoin Mining—A Profitable and Sustainable Business Model,”
European Journal of Economics and Management Sciences, vol. 2 (2019), pp. 25–31.
55
J. Jobanputra, op. cit.
56
International Monetary Fund (IMF), Global Financial Stability Report (Washington, D.C.:
IMF, April 2022).
57
B. Bambrough, op. cit.
58
K. Helms, “JPMorgan Predicts Long-Term Bitcoin Price of $150K—Outlines Challenges
Ahead,” Bitcoin.com, February 10, 2022, available at https://news.bitcoin.com/jpmorgan-predicts-
long-term-bitcoin-price-150k-challenges.
59
L. Tassev, op. cit.
60
J. Truby, op. cit.
IS ACCESS TO ELECTRICITY A RELEVANT
DETERMINANT OF SUBJECTIVE WELL-BEING
IN DEVELOPING COUNTRIES?
Jacques Simon Song, Georges Ngnouwal Eloundou, AND

Jocelyne Ayang Mimbang*
Introduction
E conomists have become increasingly interested in the concept of Subjective

Well-Being (SWB) as an alternative and complementary indicator to conven-
tional measures of economic well-being, notably per capita gross domestic prod-
uct.1 The measurement of subjective well-being is based on three indicators of
*Jacques Simon Song, Lecturer at the Department of Development Economics of the Faculty of
Economics and Management of the University of Dschang in Cameroon, holds a Ph.D. in economics
from the University of Dschang. Dr. Song is an Associate Researcher at the Center for Studies and
Research in Management and Economics. His academic research interests include macroeconomics,
econometrics, energy economics, gender economics, urban economics, digital economics, and states
fragility.
Georges Ngnouwal Eloundou is currently a Ph.D. candidate at the Dschang School of Economics
and Management (DSEM) at the University of Dschang. He is a member of the Fundamental and
Applied Economics Research Laboratory (LAREFA) and the Research Association in Applied
Development Economics (ACEDA). His research covers a number of areas, including sustainable
economics, environmental economics, gender economics, public economics, energy economics, health
economics, transport economics, institutional economics, welfare economics, and the digital economy.
Jocelyne Ayang Mimbang is currently a Ph.D. candidate at the Dschang School of Economics and
Management (DSEM) at the University of Dschang and is a member of the Fundamental and Applied
Economics Research Laboratory (LAREFA) and the Research Association in Applied Development
Economics (ACEDA). Her academic research focuses on the economics of education, the economics of
crime, and the economics of energy.

23
well-being:2 life evaluations, positive emotions, and negative emotions.3 Interna-

tional assessments of SWB, as measured by life satisfaction or happiness, have
shown inter- and intra-country heterogeneity in SWB over time.4 The renewed
interest in SWB can be seen in the Sustainable Development Goals (SDGs), nota-
bly the United Nation’s SDG-35 by 2030.
SWB has been studied theoretically, and the emergence of this concept is situated
in the economics of happiness with the seminal contribution of R. Easterlin6
extended by A. Sen7 and then by A. Clark and A. Oswald8 who laid the groundwork
for an eudemonic, hedonic, objective, and subjective understanding of well-being.9
This understanding enhanced the emergence of the economy of happiness.10 Thus,
the OECD has launched the “Better Living” initiative by developing guidelines on
the measurement of SWB to improve quality of life measures. It is based on the
recommendations of the 2009 report of J. Stiglitz11 et al., which stresses that subjec-
tive indicators should be considered in measures of social progress. The literature
identifies financial development, access to energy, natural resources, information
and communication technologies (ICT), women’s political empowerment, and phys-
ical activity as determinants of SWB.12
Average levels of subjective well-being (life-evaluations) across countries have
increased at different rates for people living in urban and rural areas. The term
urban paradox”13 has been used to refer to the presence of both dynamic growth
and social exclusion in urban areas. But according to P. Morrison,14 it refers to the
mismatch between the popularity of cities as places to live and their lower levels
of well-being.15 This refers to the apparent contradiction between the higher pro-
ductivity and growth of urban centers in combination with being an attractive place
to live and their lower average level of welfare.16
Access to electricity is embodied in the United Nations’ SDG-7 contained in
the 2030 Agenda.17 In theory, access to electricity could improve socio-economic
conditions in developing countries by impacting the fundamental components of
poverty, namely, health, education, income, and the environment.18 According to
the International Energy Agency (IEA), by 2019, 90% of the world’s population
had access to electricity. Yet, 759 million people still live without electricity, with
almost half of them in fragile and conflict-affected environments, and almost all of
them in developing countries. The region most affected by lack of access to elec-
tricity is Africa, particularly Sub-Saharan Africa. While the electrification rate in
North Africa reached 99% in 2011, it was only 32% in Sub-Saharan African
countries.
Despite technological improvements and numerous calls to reduce energy con-
sumption, the Earth’s per capita energy consumption continues to rise. The world
is aware of the resource depletion, pollution, and atmospheric warming that can
accompany increased energy consumption.19 But many people are reluctant to
reduce their individual energy consumption because they believe that a country’s
well-being is linked to the amount of energy they use.20 Developing countries are
ELECTRICITY & WELL-BEING IN DEVELOPING COUNTRIES 25
facing strong population growth. According to the World Happiness Report, the
world’s urban population has grown from 30% of the total in 1950 to 55% in 2018
and is expected to continue growing to 68% by 2050. While the world’s rural pop-
ulation is expected to decrease from 3.4 billion in 2018 to about 3.1 billion in
2050, the urban population is expected to increase by 4 billion. This upward trend
in urbanization is expected to continue in the more developed regions (from 79%
in 2018 to almost 87% in 2050) and in the less developed regions (from 51% in
2018 to almost 66% in 2050).21
Population growth is leading to a growing demand for energy that cannot be
sustainably met by fossil fuels. The use of alternative sources of energy helps to
limit the climate shock and the spread of war over natural resources. Many authors
have argued that the 21st century will be largely defined by the way the global
community responds to energy-related issues.22 These energy issues remain a prob-
lematic reality, particularly for developing countries. Access to electricity is a basic
human right and an essential prerequisite for poverty eradication, as it fuels basic
economic activities.23 Without access to electricity, economic development is lim-
ited and modern public services, such as education and health care, cannot be
delivered to their intended beneficiaries. A mutual relationship between lack of
access to adequate and affordable energy services and indicators of well-being is
widely recognized.24 Lack of access to electricity is also widely understood to be
“energy poverty.”25 Thus, an increase in access to energy through electricity may
indicate a trend toward higher levels of human happiness.
With this intended goal, the United Nations (UN) has actively promoted the
sustainable energy agenda by launching the UN-Energy Initiative in 2004. This ini-
tiative was supported by announcing 2012 as the Year of Sustainable Energy for
All and by the Rio120 Summit, which aims to achieve universal access to sustain-
able and efficient energy by 2030.26 Access to affordable, reliable, sustainable, and
modern energy for all is still achievable, but much remains to be done, especially
for the poorest nations. After a decade of steady progress, the global electrification
rate has reached 89% of the world’s population. But the situation in the developing
world remains of particular concern with over 600 million people still living in
darkness according to the World Bank.
The Electricity Revolution has affected several critical sectors, namely, educa-
tion, health, transportation, and communication.27 Understanding the relationship
between access to electricity and indicators of happiness can help identify better
policy recommendations, implement appropriate monitoring mechanisms, justify
resource allocation, and prioritize competing objectives. The aim of this paper is to
extend the existing literature by analyzing the effects of access to electricity on
happiness. This extension of previous research focuses on three points.
Based on this theoretical framework and drawing on new methodologies, this
article’s goal is to examine the effect of access to electrical energy on the life
course. Two contributions stand out. First, we conduct a macroeconomic analysis
on a panel of 98 countries in the developing world. Second, we complement the lit-

erature on the potential determinants of happiness. The results of the study provide
a framework for scoping future policy recommendations and academic studies,
such as predicting access to electricity. Second, we provide empirical evidence that
access to electricity could also be a relevant determinant of happiness.
Some Stylized Facts
Three stylized facts emerge from the observation of access to electricity and
SWB in developing countries: SWB has deteriorated, access to electricity has only
slightly increased, and access to electricity and SWB are seen to be correlated.
SWB Continues to Deteriorate in Developing Countries: Based upon the
World Happiness Report’s index, which measures happiness on a scale from 0
(lowest happiness score) to 10 (highest happiness score), figure 1 shows that the
SWB has declined from 6 in 2005 to around 5 in 2020. Without claiming to be
exhaustive, three justifications can be given for the decline in happiness scores:
first, the subprime crisis of 2007-2008; second, the Chinese stock market crash in
Figure 1
EVOLUTION OF HAPPINESS OVER THE STUDY PERIOD, 2005–2020
(0 5 lowest level of happiness and 10 5 highest level of happiness)
Source: Authors’ compilation based on World Happiness Database (2021).

2015; and, third, the COVID-19 crisis. Happiness fell sharply in 2006 compared to
its previous level, but thereafter hovers around the average of 5.
The happiness index is increasingly seen as a measure of social progress.
According to the World Happiness Report 2021,28 based upon the perception of
happiness for 146 countries in the world with 10 being the highest and 0 the low-
est; the top rankings are held by developed countries such as Finland (7.821), Den-
mark (7.636), Iceland (7.557), Switzerland (7.512), and the Netherlands (7.415). In
the middle of the rankings are some high-income developing countries such as
Malaysia (5.711), Bolivia (5.600), China (5.585), Paraguay (5.578), and Peru
(5.559). And at the end of the ranking, we find mostly developing countries such
as Lesotho (3.512), Botswana (3.471), Rwanda (3.268), Zimbabwe (2.995), Leba-
non (2.955), and Afghanistan (2.404).
Access to Electricity Has Improved Only Slightly in Developing Countries:
Figure 2 shows that access to electricity has dropped from 90% in 2005 to 75% in
2012, ending up at 87% in 2020. Similarly, the happiness level also declined in
2006, echoing what was presented in figure 1. The average access to electricity is
in the range of 70% to 90% of the population for the period of our study, but it
fails to reach the height of the 2005 level.
Access to Electricity and SWB Are Correlated in Developing Countries:
Figures 3A-3D show that access to electricity is positively correlated with happi-
ness. This correlation favors the qualitative and quantitative improvement of peo-
ple’s living conditions in developing countries. Developing countries have made
efforts to improve people’s access to electricity, but this supply is mitigated by
high population growth in the developing world.
Figure 2
TRENDS IN ACCESS TO ELECTRICITY
(% of population)
Source: Authors’ compilation based on World Development Indicators (2021).

Figure 3
CORRELATION BETWEEN ACCESS TO ELECTRICITY AND HAPPINESS
(Vertical Axis represents mean life ladder: 0 5 lowest level and 10 5 highest level)
Figure 3A
CORRELATION BETWEEN ACCESS TO ELECTRICITY AND HAPPINESS:
ALL COUNTRIES IN THE STUDY
Figure 3B
LOWER INCOME COUNTRIES COMPARED TO ALL OTHERS
Figure 3C
LOWER-MIDDLE INCOME COUNTRIES COMPARED TO ALL OTHERS
Figure 3D
UPPER-MIDDLE INCOME COUNTRIES COMPARED TO ALL OTHERS
Source: Authors’ compilation.

As can be seen in figures 3A through 3D, the relationship between happiness

and access to electricity depends on the level of income development. Thus, lower
income countries are concentrated at the bottom of the line, i.e., they have a low
level of access to electricity and, therefore, a lower level of happiness (on the life
ladder scale from 0 to 10, with 0 being the lowest score and 10 being the highest),
as highlighted in figure 3B. Lower-middle income countries have medium access
to electricity and, therefore, medium levels of happiness as seen in figure 3C.
Finally, as is shown in figure 3D, upper-middle income countries are at the top of
the right-hand side, suggesting that access to electricity improves happiness.
Brief Review of the Current Research Topic
The theoretical roots of happiness go back to the seminal contribution of Adam

Smith in his 1776 book, An Inquiry into the Nature and Causes of the Wealth of
Nations, which laid the groundwork for well-being through labor productivity.29
Subsequently, the theoretical literature highlights four assumptions: (i) the growth
hypothesis, which emphasizes that energy consumption, in addition to capital and
labor factors, has a significant impact on SWB; (ii) the conservation hypothesis
indicates the existence of a unidirectional causality from economic growth to
SWB; (iii) the feedback hypothesis reveals the existence of a bidirectional causality
between energy consumption and SWB; and (iv) the neutrality hypothesis indicates
the absence of a causality between energy consumption and SWB. These hypothe-
ses enhance the emergence of behavioral economics and the economics of happi-
ness with the seminal contributions of Arthur Cecil Pigou in 1920 and Daniel
Kahneman (Nobel Prize in Economics 2002), which made it possible to measure
happiness by means of opinion polls, but also to look at the determinants of this
subjective feeling of individual happiness. Thus, happiness is understood as a dis-
crete and subjective state of individuals.30
Empirically, many countries have been phasing out fossil fuel-based electricity
generation and phasing in renewable energy.31 Electricity from renewable sources
avoids the disadvantages of conventional power generation but often meets local
resistance.32 For example, P. Nie et al. studied the impact of fuel poverty (FP) on
SWB in Chinese adults and showed that FP leads to higher levels of depression.33
However, renewable energy installations can be expected to have their own effects
on well-being, such as visual or acoustic impairments.34 There are significant wel-
fare externalities for solar, wind, and biomass plants that differ in their temporal and
spatial characteristics.35 Regarding nuclear power, H. Welsch and P. Biermann36
suggest that while the SWB of European citizens was statistically unrelated to the
share of nuclear power before the Fukushima disaster, it was negatively related to
the share of nuclear power after the disaster. As the restructuring of the energy sys-
tem implies higher costs, the issue of energy affordability has gained importance.
In another article by H. Welsch and P. Biermann, the authors found that energy
prices have statistically and economically significant effects on subjective well-
being according to income level.37 Above-average effects are found for individuals
in the lowest income quartile. Some consumers, especially households, are not
willing to cope with electricity price volatility and may perceive unfair price differ-
entiation within the same local area. Non-flexible traditional consumers can
co-exist with flexible users in a local distribution area. Flexible users will pay
nodal prices, while non-flexible consumers will be charged a fixed price derived
from the underlying nodal prices.38
From the non-exhaustive synthesis of the literature review, three findings
emerge. First, the work focuses more on investigating the direct effects of energy
accessibility on the SWB in developed countries. Second, very few studies have
focused on developing countries at the macro level. Third, the non-consensus find-
ings of the empirical work warrant further investigation in a context of increasing
welfare and energy constraints.
Methodological Strategy
In this section we present the empirical model, the estimation technique, and
the data.
The Empirical Model: To analyze the empirical relationship between access
to electricity and happiness, we opt for a basic econometric specification that takes
the following form in equation (1):
LLi, t 5 a 1 Xi9, t b 1 gEleci, t 1 mi 1 dt 1 «i, t (1)
In equation (1), LL is subjective well-being as measured by the scale-of-life

index,39 Elec is access to electricity (urban and rural) as a percentage of the popu-
lation, X is the matrix of control variables including per capita GDP (GDP), infla-
tion (Inf ), population growth (Pop), and life expectancy (Exp). mi and dt indicate
unobserved individual and time effects, respectively. a, b, and g are the vectors of
coefficients to be estimated and « is the error term.
Since happiness is a dynamic process that exerts a strong inertia on its past
values, it is important to take this inertia into account. We then introduce the
lagged value of the scale-of-life index into equation (1) to obtain equation (2):
LLi, t 5 a 1 LLi, t1 1 bðGDP=hbti, t 1 Inf i, t 1 Popi, t 1 Expi, t Þ

(2)
1 gEleci, t 1 mi 1 dt 1 «i, t
The introduction of the lagged dependent variable on the right-hand side of

equation (2) transforms our model into a dynamic model. Dynamic models have
the advantage, unlike static models, of capturing more information about the
dynamics of the life scale.
The Estimation Technique: Based on the current empirical literature, this study
chooses the OLS as the basic empirical strategy. However, the risk of a strong corre-
lation between the error term and the lagged dependent variable, known as Nickell
bias, is high. This could produce biased estimators if equation (2) is estimated with
traditional estimators. In addition, access to electricity as a percentage of the popula-
tion may be endogenous with development outcomes. We estimate a linear dynamic
panel data model using the two-stage generalized method of moments (GMM) esti-
mator in the system of Arellano & Bover (1995) and Blundell & Bond (1998).40 In
particular, the GMM estimator in system assumes that there is no contemporaneous
correlation between the cross-sectional error terms, so period dummies are used to
control for this. Thus, in order to mitigate the spillover problems induced by instru-
ment proliferation, D. Roodman suggests that, as a minimally arbitrary rule of
thumb, the instrument should be smaller than the number of country-level observa-
tions.41 Indeed, too many instruments relative to the number of country-level obser-
vations in estimations of GMM in system can lead to over-fitting of endogenous
variables and weaken the test for over-identifying restrictions.
The Data: The data descriptions and sources are provided in table 1 of the
appendix. Our sample consists of 98 developing countries at different income
levels according to the World Bank classification (see “List of Countries” in
appendix table 2). We have chosen the period 2005-2020 because of the constraints
given on a large number of countries.
The happiness index is approximated by the scale-of-life index, a widely used
measure42 in the happiness literature.43 The index is based on survey averages of
citizens’ perceptions of well-being. Respondents are asked to think about their
lives in terms of a scale and are asked to rate their livelihoods from 0 (i.e., the
worst possible life) to 10 (the best possible life). The main source for this index is
the Gallup World Poll and the data used are from the World Happiness Database
for the year 2021. This database has the advantage of covering a large sample of
countries (156 countries) in the world and is based on recently conducted surveys,
compared to other databases.
Access to electricity is defined as the percentage of the population (total, urban,
and rural) with access to electricity provided by national and sectoral surveys and
reputable international databases.44 Data on access to electricity are taken from the
World Bank’s World Development Indicators.45
Concerning the main control variables of our empirical analysis, to make the
analysis informative, our control variables can include: economic variables, demo-
graphic variables, and social variables. By focusing on the economic and non-
economic drivers of happiness, we are able to assess the unfettered effect of access
to electricity. According to R. Easterlin, B. Frey, and B. Frey and A. Stutzer, peo-
ple with higher incomes unambiguously consider themselves to be more satisfied
Table 1
MATRIX OF CORRELATIONSa
Variables (1) (2) (3) (4) (5) (6)
(1) Lifeladder (LL) 1.000
(2) Electricity(Elec) 0.610 1.000
(3) Lngdp (GDP/hbt) 0.652 0.811 1.000
(4) Inflation (Inf) 20.091 20.049 20.047 1.000
(5) Pop_grow (Pop) 20.324 20.610 20.505 20.007 1.000
(6) Life_expect (Exp) 0.573 0.841 0.727 20.070 20.554 1.000
Lifeladder (LL) 5 subjective well-being as measured by the scale-of-life index, Electricity (Elec) 5
a
access to electricity (urban and rural) as a percentage of the population, Lngdp(GDP) 5 natural log of per
capita gross domestic product, Pop growth (Pop) 5 population growth, and Life expect (Exp) 5 life
expectancy index.
Source: Authors.
with their lives than people with low incomes.46 R. Di Tella et al. and B. Frey and
A. Stutzer revealed that people seem to be happier when inflation and unemploy-
ment are low.47 J. Helliwell and L. Aknin found that countries with a higher
healthy life expectancy at birth have also been documented as being associated
with higher levels of happiness.48
The correlation matrix presented in table 1 suggests strong correlations between
per capita GDP, population growth, and life expectancy. The table of descriptive sta-
tistics (table 2) shows a low dispersion in our sample. This is visible because the stan-
dard deviation values are lower than the mean values. Concerning our two variables
of interest, the life expectancy index has a mean value of 4.9 in our sample and regis-
ters a low level for Afghanistan in 2019 (2.37%) and a high level with Costa Rica in
Table 2
DESCRIPTIVE STATISTICSa
Variables Obs. Mean Std. Dev. Min. Max.
Lifeladder(LL) 1139 4.949 .893 2.375 7.615
Electricity(Elec) 1133 73.411 31.306 1.279 100
Lngdp (GDP/hbt) 1132 7.809 .94 5.642 9.561
Inflation (Inf) 1131 7.588 22.839 230.2 558.56
Pop_grow (Pop) 1139 1.59 1.205 21.745 6.559
Life_expect (Exp) 1139 67.974 7.554 43.853 80.465
Lifeladder (LL) 5 subjective well-being as measured by the scale-of-life index, Electricity

a
(Elec) 5 access to electricity (urban and rural) as a percentage of the population, Lngdp(GDP) 5
natural log of per capita gross domestic product, Pop growth (Pop) 5 population growth, Life expect
(Exp) 5 life expectancy index, Obs. 5 number of observations, Std. Dev. 5 standard deviation,
Min. 5 minimum, and Max. 5 maximum.
Source: Authors.
2009 (7.61%). Furthermore, access to electricity is marked in the sample by an aver-

age of 73.41% and registers a minimum level in Liberia in 2008 (1.27%) and a maxi-
mum level of 100% for 39 of the 98 developing countries.49 This means that almost
half of the countries in our sample already have at least full access to electricity.
Discussion and Results
This section presents the basic results and the robustness analysis.
Basic Results: Overall, access to electricity has a positive and significant effect
on the SWB (table 3). The results show that an increase in access to electricity of
1% leads to an improvement in SWB of 0.0337 points on average. Plausible expla-
nations are that access to electricity reduces the risk of depression, facilitates the
use of cooking utensils/equipment, and creates economic opportunities for house-
holds.50 Column (1) presents the marginal effect of access to electricity on happi-
ness. Columns (2) to (6) present the full model, taking into account the time effect,
income level dummies, and sub-regional dummies. In addition, the results pre-
sented in table 3 have been corrected for heteroscedasticity.
Table 4 presents model (1), in its column (1) are the results of Pooled Ordinary
Least Squares (POLS) with time effect. Subsequently we turn to methods that take
into account the individual dimension. To do so, we perform the Hausman test
which suggests the existence of fixed effects. We then carry out post-estimation
tests to validate the model. The results show that there is the presence of autocorre-
lation errors and heteroscedasticity (see appendix table 3). We correct for these
errors using the Generalized Least Squares (GLS) method (column (5) of table 4).
The coefficients for access to electricity show that the coefficient tends to increase
when we change the estimation method and the signs of the coefficients remain the
same and significant.
The results with the control variables suggest a positive and significant relation-
ship between the level of income per capita and happiness as expected, which is
consistent with the results found by R. Easterlin and B. Frey.51 However, this result
somehow contradicts the famous Easterlin paradox according to which, beyond a
certain threshold, further increases in income or per capita GDP do not necessarily
translate into higher levels of individual happiness. Inflation is negatively and sig-
nificantly related to the scale-of-life index, as inflation could decrease subjective
well-being by eroding the purchasing power of households, which has a significant
impact on the consumption basket. From a temporal point of view, it could decrease
the profitability of financial investments in the sense of the Fisher relationship. Pop-
ulation growth is positively and significantly related to the scale-of-living index.
The results do not validate the famous Malthusian hypothesis explaining the imbal-
ance between the growth of resources necessary to determine well-being and popu-
lation growth. Life expectancy positively and significantly explains happiness in the
Table 3
BASIC MODELa WITH DEPENDENT VARIABLE: LIFELADDER
Method: POLS
Variables (1) (2) (3) (4) (5) (6)
Electricity_acc
0.0175*** 0.00521*** 0.00483*** 0.00589*** 0.00592*** 0.00551***
(0.000613) (0.00161) (0.00162) (0.00188) (0.00177) (0.00180)
GDP/Hbt
0.418*** 0.416*** 0.449*** 0.338*** 0.341***
(0.0421) (0.0417) (0.0537) (0.0405) (0.0406)
Inflation
20.00198** 20.00215*** 20.00148* 20.00193*** 20.00205***
(0.000800) (0.000736) (0.000804) (0.000655) (0.000682)
Pop_growth
0.0665*** 0.0678*** 0.0579** 0.103*** 0.104***
(0.0229) (0.0227) (0.0240) (0.0234) (0.0231)
Life_expect
0.0170*** 0.0195*** 0.0145*** 0.000136 20.00129
(0.00475) (0.00493) (0.00488) (0.00489) (0.00542)
Constant
3.662*** 0.0569 0.534 20.323 1.418*** 2.061***
(0.0438) (0.388) (0.461) (0.482) (0.391) (0.503)
Time effect
No No Yes No No Yes
Level income dummies
No No No Yes No No
Sub_regional dummies
No No No No Yes Yes
Comments
1,133 1,127 1,127 1,127 1,127 1,127
Countries
98 98 98 98 98 98
R-squared
0.376 0.458 0.466 0.460 0.570 0.578
R-squared adjusted
0.376 0.455 0.456 0.456 0.566 0.568
a
*; **, and *** significance at the 10%, 5%, and 1% thresholds, respectively. () robust standard
deviations. Electricity_acc 5 access to electricity (urban and rural) as a percentage of the population,
GDP/Hbt 5 per capita gross domestic product, Pop_growth 5 population growth, Life_expect 5 life
expectancy.
Source: Authors.
Table 4
BASIC MODEL: CORRECTION FOR HETEROSKEDASTICITY AND AUTOCORRELATIONa
WITH DEPENDENT VARIABLE: LIFELADDER
Variables POLS (1) FE (2) FE (3) GLS (4) GLS (5)
Electricity_acc 0.00483*** 20.00497 20.00650 0.00698*** 0.00726***
(0.00162) (0.00507) (0.00501) (0.00136) (0.00142)
GDP/Hbt 0.416*** 1.380*** 1.165*** 0.480*** 0.455***
(0.0417) (0.258) (0.302) (0.0365) (0.0394)
Inflation 20.00215*** 20.00176*** 20.00183*** 20.00151** 20.00162**
(0.000736) (0.000271) (0.000267) (0.000661) (0.000667)
Pop_growth 0.0678*** 0.0792** 0.109*** 0.0993*** 0.0970***
(0.0227) (0.0368) (0.0389) (0.0242) (0.0239)
Life_expect 0.0195*** 20.0377** 20.0544*** 0.00390 0.00559
(0.00493) (0.0144) (0.0171) (0.00524) (0.00555)
Constant 0.534 -3.006* 0.245 0.264 0.772*
(0.461) (1.563) (2.480) (0.343) (0.401)
Time effect Yes No Yes No Yes
Comments 1,127 1,127 1,127 1,123 1,123
R-squared 0.466 0.118 0.151
Number of countries 98 98 98 94 94
a
deviations. POLS 5 Pooled Ordinary Least Squares; FE 5 Fixed effects; GLS 5 Generalized Least
Squares, Electricity_acc 5 access to electricity (urban and rural) as a percentage of the population,
expectancy.
Source: Authors.
countries in our sample. This is consistent with the results found by J. Helliwell
and L. Aknin,52 which find that countries with a higher health expectancy at birth
are associated with a higher level of happiness. This means that the subjective
nature of happiness is also a matter of understanding. Far from financial worries,
being in good health ensures good physical condition, which allows people to per-
form vigorously in their social activities. Thus, health is understood as an essential
dimension of human capital that enables people to realize their ambitions and
achieve their goals.
Robustness Analysis: In this subsection we present the robustness check of our
model taking into account the role of institutional quality, disaggregated indices of
access to electricity, and by level of development.
Robustness by Taking into Account Governance Indicators: Governance is also
a relevant determinant of happiness in developing countries. In table 5 we consider
Table 5
CONSIDERATION OF THE QUALITY OF INSTITUTIONSa
Estimation Method: GLS
Variables (1) (2) (3) (4) (5) (6)
Electricity_acc
0.00645*** 0.00657*** 0.00696*** 0.00631*** 0.00615*** 0.00789***
(0.00155) (0.00149) (0.00144) (0.00149) (0.00154) (0.00127)
GDP/Hbt
0.466*** 0.443*** 0.452*** 0.491*** 0.482*** 0.439***
(0.0429) (0.0408) (0.0393) (0.0415) (0.0418) (0.0371)
Inflation
20.00157** 20.00156** 20.00161** 20.00162** 20.00158** 20.00177***
(0.000668) (0.000667) (0.000666) (0.000672) (0.000672) (0.000662)
Pop_growth
0.0986*** 0.0837*** 0.0945*** 0.101*** 0.0969*** 0.0996***
(0.0242) (0.0251) (0.0238) (0.0249) (0.0254) (0.0233)
Life_expect
0.00695 0.00472 0.00550 0.00928 0.00900 0.00442
(0.00558) (0.00559) (0.00556) (0.00564) (0.00555) (0.00559)
Corruption
0.0263
(0.0484)
Gov-effec
0.0693*
(0.0386)
Pol_stability
0.0289
(0.0263)
Reg_quality
20.0836**
(0.0378)
Rule_Law
20.0619
(0.0462)
Voice_accou
0.0621*
(0.0327)
Constant
0.672 1.019** 0.834** 0.281 0.379 0.938**
(0.434) (0.430) (0.404) (0.438) (0.442) (0.400)
Time Effects
Yes Yes Yes Yes Yes Yes
(continued)
Table 5 (continued)
CONSIDERATION OF THE QUALITY OF INSTITUTIONSa
Estimation Method: GLS
Variables (1) (2) (3) (4) (5) (6)
Comments
1,123 1,123 1,123 1,123 1,123 1,123
Countries
94 94 94 94 94 94
a
expectancy, Gov-effec 5 governance effectiveness, Pol_stability 5 political stability, Reg_quality 5
regulatory quality, Rule_Law 5 rule of law, and Voice_accou 5 voice and accountability.
Source: Authors.
the governance variables: governance effectiveness (Gov-effec), political stability

(Pol_stability), regulatory quality (Reg_quality), rule of law (Rule_Law), and voice
and accountability (Voice_accou). The coefficients and signs of the variables
remain unchanged. The results show that the variables Gov_effec, Pol_stability,
Reg_quality, and Voice_accou significantly improve happiness in DCs. Gover-
nance effectiveness and voice and accountability have a positive and significant
impact on happiness (columns 2 and 6), while the regulatory quality significantly
reduces the happiness index (column 4).
Robustness with Consideration of Disaggregated Electricity Access Indices: In
table 6 we present the results for the estimates of equation (2), where the variable
electo retains a positive and significant coefficient at 1% in columns (1) to (3).
Therefore, these results suggest that, holding all other factors constant, a higher
level of access to total electricity as a percentage of the population boosts people’s
happiness. In other words, the estimated coefficients in column 1, for example,
suggest that a 1% increase in access to total electricity in a given country corre-
sponds, on average, to a 0.00394-point increase in the scale-of-life index. The
sub-indices of total electricity access, that is, urban electricity access and rural elec-
tricity access, positively and significantly affect happiness. In column (2), results
suggest that a 1% increase in access to urban electricity in a given country corre-
sponds on average, to a 0.00346-point increase in the scale-of-life index. In column
(3), results suggest that a 1% increase in rural electricity access in a given country
corresponds, on average, to a 0.00288-point increase in the scale-of-life index.
Our results also suggest that the effect of urban access is greater than rural
access in our sample countries. The OLS estimate in table 3 is slightly biased as
expected. The coefficients show the lowest values in the S-GMM estimates
Table 6
CONSIDERATION OF DISAGGREGATED ELECTRICITY ACCESS INDICESa WITH
DEPENDENT VARIABLE: LIFELADDER
GMMs
Variables Electricity Urban Electricity Rural Electricity
Life_ladder (t-1) 0.232*** 0.223*** 0.229***
(0.0141) (0.0173) (0.0143)
Electricity_acc 0.00394***
(0.000987)
GDP/Hbt 0.297*** 0.339*** 0.346***
(0.0276) (0.0297) (0.0264)
Inflation 20.00179*** 20.00192*** 20.00187***
(8.82e205) (7.77e205) (6.28e205)
Pop_growth 0.0350*** 0.0251*** 0.0406***
(0.00853) (0.00653) (0.00697)
Life_expect 0.0150*** 0.0176*** 0.0130***
(0.00388) (0.00303) (0.00352)
Elect_urb 0.00346***
(0.000904)
Elec_ru 0.00288***
(0.000479)
Time effect No No No
Constant 0.145 20.305* 0.0358
(0.263) (0.160) (0.163)
Comments 962 954 915
Number of countries 93 93 90
ar1p 0.00 0.00 0.00
ar2p 0.278 0.198 0.312
Number of instruments 72 72 72
Hansen (prob) 0.138 0.178 0.243
a
expectancy, Electr_urban 5 urban access to electricity, and Elec_ru 5 rural access to electricity.
Source: Authors.
compared to the OLS and GLS. This justifies the presence of endogeneity and,
hence, the need to correct for it by using the instrumental variables method. Also,
the coefficients of the lagged dependent variable are relatively large and highly sig-
nificant at the 1% level. This suggests that happiness shows great persistence over
time and consequently, its past levels are strongly associated with the present.
Table 7
EFFECT OF ACCESS TO ELECTRICITY ON HAPPINESS BY INCOME LEVELa
GMMs
Upper-Middle Lower-Middle Lower
Variables Total Income Income Income
Life_ladder(t-1) 0.232*** 0.674*** 0.509*** 0.446***
(0.0141) (0.0576) (0.0696) (0.0349)
Electricity_acc 0.00394*** 0.00558* 0.00886*** 20.00232
(0.000987) (0.00286) (0.00154) (0.00158)
GDP/Hbt 0.297*** 0.231*** 0.0698 0.140
(0.0276) (0.0814) (0.0540) (0.246)
Inflation 20.00179*** 0.00396*** 20.00778*** 0.00249**
(8.82e205) (0.000936) (0.00253) (0.000984)
Pop_growth 0.0350*** 0.00478 0.0215 0.109**
(0.00853) (0.0142) (0.0147) (0.0502)
Life_expect 0.0150*** 0.0163*** 20.00577 20.00800
(0.00388) (0.00557) (0.00537) (0.00996)
Constant 0.145 21.973** 1.633*** 1.616
(0.263) (0.766) (0.453) (2.245)
Time effect No No No No
Comments 962 404 393 151
Number of countries 93 36 36 20
ar1p 0.00 0.00 0.00 0.00
ar2p 0.278 0.727 0.807 0.221
Number of instruments 72 24 24 24
Hansen (prob) 0.138 0.257 0.378 0.548
a
GDP/Hbt 5 per capita gross domestic product, Pop_growth 5 population growth, and Life_expect 5
life expectancy.
Source: Authors.
Specifically, countries where the population has a higher scale-of-life index will
tend to have higher levels of happiness in the future. This finding supports the idea
that happiness is a cumulative process. The positive effects of access to electricity
as a percentage of the population are consistent with previous findings that access
to electricity can explain within-country variation in the scale-of-life index. More
specifically, our results confirm those of S. Ahmad et al.,53 which show that access
to electricity is positively associated with well-being in rural but not in urban India.
But, different from their research conclusions, we show that access to electricity in
Table 8
TAKING INTO ACCOUNT THE INTERACTION BETWEEN INCOME LEVEL
AND ACCESS TO ELECTRICITYa
GMMs
Variables (1) (2) (3)
Life_ladder(t-1) 0.229*** 0.236*** 0.194***
(0.0141) (0.0145) (0.0149)
Electricity_acc 0.00535*** 0.00553*** 0.00473***
(0.00120) (0.00134) (0.00114)
GDP/Hbt 0.0278 0.250*** 0.166***
(0.0516) (0.0396) (0.0372)
Inflation 20.00122*** 20.00178*** 20.00222***
(6.75e205) (8.82e205) (0.000102)
Pop_growth 0.0858*** 0.0415*** 0.0660***
(0.0103) (0.00867) (0.0104)
Life_expect 0.0144*** 0.0150*** 0.0169***
(0.00411) (0.00392) (0.00413)
electo_umi 0.00693***
(0.00113)
electo_lmi 20.00144
(0.000968)
electo_li 20.0206***
(0.00362)
Constant 1.843*** 0.411 1.220***
(0.371) (0.306) (0.408)
Comments 962 962 962
Countries 93 93 93
ar1p 0.00 0.00 0.00
ar2p 0.278 0.287 0.225
Number of instruments 72 72 72
Hansen (prob) 0.103 0.117 0.169
a
expectancy, electo_umi5 access to electricity total in upper-middle income countries; electo_lmi5
access to electricity total in lower-middle income countries; electo_li5 access to electricity total in low-
income countries.
Source: Authors.
Table 9
ALTERNATIVE MEASURES OF ACCESS TO ELECTRICITYa
GMMs
Alternative Renewable Fossil Fuel Combustible
Access to and Nuclear Energy Energy Renewables
Variables Electricity Energy Consumption Consumption and Waste
Life_ladder(i,t-1)
0.232*** 0.353*** 0.182*** 0.381*** 0.391***
(0.0141) (0.0152) (0.0149) (0.0166) (0.0127)
Electricity_acc
0.00394***
(0.000987)
GDP/Hbt
0.297*** 0.302*** 0.333*** 0.0439* 0.187***
(0.0276) (0.0159) (0.0319) (0.0266) (0.0291)
Inflation
20.00179*** 0.00364*** 0.00383*** 0.00168*** 0.00394***
(8.82e205) (0.000459) (0.000576) (0.000617) (0.00103)
Pop_growth
0.0350*** 20.0489*** 0.00633 20.0354*** 0.00365
(0.00853) (0.00739) (0.0102) (0.00774) (0.00943)
Life_expect
0.0150*** 0.0262*** 0.0155*** 0.000168 0.0108***
(0.00388) (0.00378) (0.00327) (0.00463) (0.00238)
Altern_nuclear
20.0424***
(0.00192)
Renew_energy_cons
20.00498***
(0.00152)
Fossil_fuel_cons
0.0221***
(0.00254)
Comb_renew
20.00871***
(0.00231)
Constant
0.145 20.655** 0.548 1.382*** 1.045***
(0.263) (0.283) (0.358) (0.323) (0.308)
Comments
962 390 877 382 388
(continued)
Table 9 (continued)
ALTERNATIVE MEASURES OF ACCESS TO ELECTRICITYa
GMMs
Alternative Renewable Fossil Fuel Combustible
Access to and Nuclear Energy Energy Renewables
Variables Electricity Energy Consumption Consumption and Waste
Countries
93 61 91 62 61
Ar1p
3.93e209 5.79e205 6.74e208 4.87e205 5.39e205
Ar2p
0.278 0.166 0.126 0.234 0.156
Number of Instruments
72 59 72 60 60
Hansen (prob)
0.138 0.343 0.193 0.241 0.313
a
GDP/Hbt 5 per capita gross domestic product, Pop_growth 5 population growth, and Life_expect 5
life expectancy, Alter_nuclear 5 alternative and nuclear energy, Renew_energy_cons 5 renewable
energy consumption, Fossil_fuel_cons 5 fossil fuel energy consumption, Comb_renew 5 combustible
renewables and waste.
Source: Authors.
rural areas improves happiness. Overall, the control variables show the expected
signs and retain the signs of the baseline estimate.
To ensure that our results sufficiently address endogeneity issues, we provide a
number of diagnostic tests with the S-GMM results. These diagnostic tests include
the Sargan/Hansen test for instrument validity and non-over identification of the
model, the AR(1) and AR(2) tests for first and second order serial correlation,
respectively. As can be seen in all our different tables, we do not reject the null
hypothesis of instrument validity in the Hansen test. Indeed, the insignificance of
the Hansen statistics indicates that the instruments used are valid and that the
model does not suffer from over-identification. Since the p-value of the AR(1) sta-
tistic is significant in all tables, we can conclude that there is a first-order correla-
tion in the model, while the non-significance of the AR (2) statistic shows that
there is no second-order correlation.
Robustness with Consideration of the Level of Development: In table 7 we pre-
sent the effects in the different income groups. Overall, we notice that the lagged
values of the life-span index affect the present values more strongly than in the
overall model. In column (1) we present the total effect as found in the previous
table. In column (2) we present the results for the upper-middle income countries.
The effect of access to electricity is positive and significant at 10%. The coefficient
is higher than the overall coefficient. In column (3) we present the results for
lower-middle income countries. The effect of access to electricity is positive and
significant at 1%. The coefficient is higher than the overall coefficient and the coef-
ficient in the previous column. Column (4) presents the results for low-income
countries. Access to electricity does not significantly influence happiness.
Table 8 presents the differentiated effects by level of development. The results
suggest that total access to electricity retains a positive effect on the scale-of-life
index. Overall, the coefficients are higher than the general estimate. Column (1)
shows that belonging to upper-middle income countries significantly favors peo-
ple’s happiness. Column (2) shows that lower-middle income countries appear to
be detrimental to happiness, but this result is not significant. Column (3) leads us
to find that in low-income countries, the countries in the sample appear to have a
significant harm to happiness. These results are consistent with A. Zidansek54 who
found that the quality of life improves more as the level of development increases.
Use of Alternative Measures of Access to Electricity: In line with the literature,
the results in table 9 suggest that only fossil energy consumption has a positive and
significant effect on happiness, while alternative and nuclear energy, renewable
energy consumption, renewable energy fuels and waste negatively explain happi-
ness in our sample countries.
Conclusion
The objective of this paper was to study the effects of access to electricity on
subjective well-being. Using a sample of 98 developing countries over the period
2005-2020 and a dynamic approach, we found a positive relationship between
access to electricity and subjective well-being. Specifically, we found that access
to electricity tends to increase happiness, but this effect differs by area and level of
development, as well as by type of electricity access. Indeed, by studying the het-
erogeneity of results across countries, we found that the positive effect of access to
electricity on happiness tends to be amplified in middle-income countries. Further-
more, disaggregating electricity access shows that urban electricity access has a
higher positive and significant effect on SWB than rural electricity access. This
strong and positive average effect of access to electricity on happiness was con-
firmed by the two-stage GMM-S.
The results equally show that in rural areas the effect on happiness is lower
than in urban areas. This does not mean that access to electricity is less important
in rural areas, but rather that other factors such as the price per kilowatt and the
income of rural people need to be taken into account. This observation also high-
lights the awareness in development thinking that the means such as access to elec-
tricity are necessary but insufficient for advancing well-being.
This research has some limitations. First, the analysis is limited to 98 countries
due to data limitations and used only one measure of happiness. Second, the non-
parametric analysis may be better than an analysis by means as presented above.
Third, this study did not present the transmission channels through which this rela-
tionship might pass. In perspective, future work could assess whether the estab-
lished relationships stand up to further empirical scrutiny. Finally, complementing
such regression analysis with field research may help capture the dimensions of
happiness as well as a broader set of explanatory variables. Despite these short-
comings, the quantitative estimates are robust and the recommendations pragmatic.
APPENDIX
Appendix Table 1
DATA DESCRIPTION AND SOURCESa
Variables Definitions Sources
Happiness index Subjective well-being obtained by inviting WHR (2021)
respondents to think of their lives as a ladder, with
the worst possible life for them as 0, and the best
possible life as 10.
GDP per capita GDP per capita is gross domestic product divided by WDI (2020)
midyear population.
Health Life expectancy at birth. WDI (2020)
Population growth Exponential rate of growth of midyear population WDI (2020)
from year t-1 to t.
Inflation Inflation as measured by the consumer price index WDI (2020)
reflects the annual percentage change in the cost to
the average consumer of acquiring a basket of
goods and services that may be fixed or changed at
specified intervals such as yearly.
Access to electricity Access to electricity is the percentage of population WDI (2020)
with access to electricity. Electrification data are
collected from industry, national surveys, and
international sources.
Governance Control of Corruption: Estimate; Government WGI (2020)
Effectiveness: Estimate; Political Stability and
Absence of Violence/Terrorism: Estimate;
Regulatory Quality: Estimate; Rule of Law:
Estimate; Voice and Accountability: Estimate.
Alternative_nuclear Alternative and nuclear energy (% of total energy WDI (2020)
use)
(continued)
Appendix Table 1 (continued)

DATA DESCRIPTION AND SOURCESa
Variables Definitions Sources
Renewable energy Renewable energy consumption (% of total final WDI (2020)
energy consumption)
Fossil Fossil fuel energy consumption (% of total) WDI (2020)
Fuel Combustible renewables and waste (% of total WDI (2020)
energy)
WHD 5 World Happiness Database, WDI 5 World Development Indicators, PWT 5 Penn World
a
Table, ILOSTAT 5 Institute of Labor Statistics, WHO 5 World Health Organization, and 5 V-DEM
Varieties of Democracy.
Source: Authors’ construction.
Appendix Table 2
LIST OF COUNTRIES
Albania India Somalia
Algeria Indonesia South Africa
Angola Iraq South Sudan
Argentina Jamaica Sri Lanka
Armenia Jordan Sudan
Azerbaijan Kazakhstan Suriname
Bangladesh Kenya Tajikistan
Belarus Kosovo Tanzania
Belize Lebanon Thailand
Benin Lesotho Togo
Bhutan Liberia Tunisia
Bolivia Libya Turkmenistan
Bosnia and Herzegovina Madagascar Uganda
Botswana Malawi Ukraine
Brazil Malaysia Uzbekistan
Bulgaria Maldives Zambia
Burkina Faso Mali Zimbabwe
Burundi Mauritania
Cambodia Mauritius
Cameroon Mexico
Central African Republic Moldova
Chad Mongolia
China Montenegro
Colombia Morocco
Comoros Mozambique
Costa Rica Myanmar
Cuba Namibia
(continued)
Dominican Republic Nepal

Ecuador Nicaragua
El Salvador Niger
Eswatini Nigeria
Ethiopia North Macedonia
Gabon Pakistan
Georgia Paraguay
Ghana Peru
Guatemala Philippines
Guinea Rwanda
Guyana Senegal
Haiti Serbia
Honduras Sierra Leone
Appendix Table 3
HETEROSCEDASTICITY, AUTOCORRELATION, SPECIFICATION AND VIF TESTS
Breusch-Pagan/Cook-Weisberg Test for Heteroskedasticity
Assumption: Normal error terms
Variable: Fitted values of lifeladder
H0: Constant variance
chi2(1) 5 22.04
Prob . chi2 5 0.0000
Wooldridge Test for Autocorrelation in Panel Data
H0: no first-order autocorrelation
F (1, 86) 5 56.100 Prob . F 5 0.0000
Hausman (1978) Specification Test
Test Value Coefficients
Chi-square test value 54.951
P-value 0
Variance Inflation Factor
VIF 1/VIF
electo 5.169 .193
lifexpect 3.523 .284
lngdp2015 2.98 .336
popgrow 1.612 .62
inflation 1.008 .992
Mean VIF 2.859 .

NOTES
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The 39 countries are Albania, Argentina, Armenia, Azerbaijan, Bulgaria, Bosnia and Herze-
govina, Belarus, Brazil, China, Colombia, Costa Rica, Dominican Republic, Algeria, Georgia,
Iraq, Jamaica, Jordan, Kazakhstan, Lebanon, Sri Lanka, Morocco, Moldova, Maldives, Mexico,
North Macedonia, Montenegro, Mauritius, Malaysia, Paraguay, El Salvador, Serbia, Thailand,
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50
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54
A. Zidansek, “Sustainable Development and Happiness in Nations,” Energy, vol. 32, no. 6
(2007), pp. 891–97.
ENVIRONMENTAL LIFE CYCLE ASSESSMENT OF
USING ELECTRIC VEHICLES COMPARED TO
CONVENTIONAL INTERNAL COMBUSTION ENGINE
VEHICLES: A CASE STUDY IN JORDAN
Ghassan Tashtoush, Osama Saadeh, AND Ashraf Dawagreh*
Introduction
D ue to the depletion of fossil resources and climate change, electric vehicles

(EVs) have received increased global interest, and as a result, the promotion
*Ghassan Tashtoush is a Professor of Mechanical Engineering at Jordan University of Science and

Technology. Dr. Tashtoush earned his Ph.D. in Mechanical Engineering from the University of
Kentucky (Lexington, KY) and his M.S. and B.S. in the same field from Jordan University of Science
and Technology. The author’s fields of specialization include thermo-fluid and power engineering,
thermal power and renewable energy, energy efficiency and auditing, air pollution measurement and
control, internal combustion engines and emission analysis, refrigeration, combustion, quality control,
and manufacturing and industrial management and consultations. Some of Dr. Tashtoush’s publications
have appeared in the Journal of Engineering and Applied Science, International Journal of Ambient
Energy, and Energy Procedia, among other respected journals.
Osama Saadeh earned both his M.Sc. and Ph.D. in Electrical Engineering from the University of
Arkansas (USA) and B.Sc. in the same field from Jordan University of Science and Technology. He is
currently with the Energy Engineering Department at the German Jordan University and prior to
that was in the Department of Electrical Engineering at Jordan University of Science and Technology
(2011-2017). His areas of research include power electronics with an emphasis on modeling and
simulation, power semiconductor devices, renewable energy interfaces, and power system protection
and quality. Dr. Saadeh is a professional engineer and senior member of IEEE and Eta Kappa Nu.
Ashraf Dawagreh received his M.S. in Renewable Energy and Sustainable Development and B.S. in
Mechanical Engineering/Thermal Power at Jordan University of Science and Technology. The author’s
(continued)

51
and prioritization of EVs has been placed on the political agendas in various coun-
tries. Statistics show that the total number of electric cars in the world has reached
3 million in 2017, and is expected to reach 125 million by the end of 2030,1 as the
political aspirations continue to rise to meet climate goals and other sustainability
targets. However, since there is a difference between EVs and internal combustion
engine vehicles (ICEVs) in many regards including local emissions, driving range,
and electric energy demand, there is a need to assess the effects of the growing
fleet of EVs. Our study is focusing on this trend of growth in EV adoption for the
country of Jordan.
Jordan is a non-oil producer country that imports most of its energy needs, so
reducing energy consumption is one of the most important challenges facing the
nation. This is especially true for the transportation sector, which has been greatly
affected by the economic and technological changes that the country has witnessed
over the past three decades. For example, the number of road vehicles in Jordan
rose by almost 900% during the past 25 years.2 The enormous increase in the num-
ber of operating vehicles has contributed to a significant increase in the local
energy demand, and an increasing amount of damage to the natural environment
because of polluting emissions. As a result, there has been a continuous search for
alternatives to conventional vehicles. One such alternative, which has been increas-
ingly promoted by the government, is EVs.
The lifetime of the vehicle depends mainly on two factors: the periodic mainte-
nance of the vehicle and the drivers’ driving behaviors. Thus, there is no official
numbers for a specific EV lifetime. However, when looking at the manufacturer’s
warranty, it will range from 130,000 kilometers (km) to 200,000 km depending on
the manufacturer,3 since after this period the faults in the main parts of the car
increase. In Jordan, due to the high tax rates on cars that may reach 90% of the
import price, car owners typically invest in periodic maintenance rather than buy-
ing a new car, which increases the vehicles’ lifetime to over 350,000 km.
EVs are automobiles that are powered partially or entirely by electricity. There
are many types of EVs, which include: (1) Battery Electric Vehicles (BEVs) that
are powered entirely by electricity; (2) Plug-in Hybrid Electric Vehicles (PHEVs)
that have electric batteries that can be charged using an external charger and use
conventional fuel for a secondary motor; (3) Hybrid Electric Vehicles (HEVs) that
are powered by both petrol/diesel and electricity as they begin by using the electric
motor and then uses the ICE at higher speeds; and (4) Fuel Cell Electric Vehicles
research fields include thermal power and renewable energy (solar, biofuels, and wind), energy
efficiency auditing and management, and environmental management. The author’s master thesis
focused on the environmental life cycle of electric vehicles versus conventional vehicles. The author
was the editor of the Jordanian Ministry of Environment’s Dealing with Car Components at the End of
the Car’s Life in Jordan.
JORDAN: ELECTRIC VS. CONVENTIONAL VEHICLES 53
(FCEVs) that have a fuel cell stack which uses hydrogen to create the electricity
needed to power the vehicle (Appendix table 1 has the nomenclature).
On the one hand, the well-to-wheel (WTW) analysis for EVs, which focuses on
the life cycle of energy provided to propel the vehicle such as gasoline and electric-
ity, has been studied by many researchers. For instance, X. Liu et al. investigated
hydrogen fuel cell electric vehicles fueled by hydrogen from a fossil-based produc-
tion pathway and ICEVs in term of energy use and GHG emissions during the
WTW phase.4 Their results showed that hydrogen fuel cell electric vehicles have a
5% to 33% lower WTW energy use and a 15% to 45% lower WTW GHG emis-
sions. S. Ehrenberger et al. conducted a study to assess the influence of the increas-
ing number of EVs on a WTW basis in five countries (Germany, United States,
China, Japan, and Norway) in terms of GHG emissions using a number of para-
meters including activity, fleet composition, efficiency, and fuel production in each
country.5 The WTW result was that EVs emit lower GHG emissions in all countries
and the amount of emissions saved in absolute terms depends on both the number of
vehicles in a fleet and the number of kilometers driven. HVs, FCEVs, EVs, and
ICEVs were chosen by S. Kosai et al. to evaluate their respective energy efficiency
during the WTW phase from the perspective of both energy consumption during the
use phase and material structure at the manufacturing phase.6 Then, a predicted
change in vehicle weight and energy use due to a material structural shift caused by
the use of aluminum instead of steel was assessed. C. Onn et al. focused on the envi-
ronmental impact of ICEVs, HEVs, and EVs during their use phase by simulating
their energy consumption (fuel or electricity) and the energy supply chains (WTW)
using a life cycle analysis.7 The electricity mix and use profile on the life cycle
assessments (LCA) of EVs was investigated by R. Faria et al. focusing mainly on
the environmental and economic LCA for conventional and EV technologies.8 Their
research found that a mix with a large contribution from renewable energy sources
does not always translate directly into lower GHG emissions for EVs due to the
high variability of these sources. B. Singh and A. Stromman studied the benefit of
large-scale use of EVs in reducing the global warming potential (GWP) in the Nor-
wegian passenger vehicle transport sector.9 It was found that the benefit is only 3%
to 15% for the EVs scenarios, when the complete life cycle is considered.
On the other hand, the cradle-to-grave analysis for EVs, which is from raw mate-
rial processing to the disposal phase, was the subject of different studies. For exam-
ple, D. Korol et al. for Poland and the Czech Republic evaluated the environmental
impact of EVs compared to ICEVs.10 They focused on either renewable or fossil
fuel-based energy sources, which are used to recharge the EVs. Due to the use of
hard coal and lignite as the primary energy sources for the production of electricity,
the results showed that Poland had a greater environmental burden than the Czech
Republic, and that the use of renewable sources to charge the EV batteries contri-
butes significantly to the reduction of GHG emissions, fossil fuels depletion, particu-
late matter formation, and terrestrial acidification. F. Del Pero et al. investigated
EVs and ICEVs in Italy based on a wide range of impact categories on both health
and human ecosystems.11 They found that due to the EVs lack of exhaust gas emis-
sions while in operation, a significant impact reduction in terms of climate change is
feasible. However, the BEV manufacturing is more demanding than ICEV produc-
tion, particularly due to the high energy, metal, and chemical demands of some elec-
tric powertrain components, like the high-voltage battery. C. Tagliaferri et al. for
Europe reported that ICEVs have a higher global warming than BEVs, due to the
greater amount of GHG emissions generated during the use phase.12 Additionally,
they put forth a scenario to predict the environmental impact for a future energy mix
in Europe. Furthermore, two vehicle disposal scenarios were analyzed by these
researchers. The first scenario assumed the vehicle totally to be disposed of inside
Europe and the second was that part of the vehicle was disposed of outside Europe.
In China, the LCA on the power system of ICEVs and two types of EVs—one
powered by nickel cobalt manganese lithium battery and the other lithium-iron fer-
rous phosphate battery—was conducted by A. Yu et al. to evaluate their environ-
mental impacts.13 They found that EVs have a larger impact on the environment
than ICEVs. In addition, the sensitivity analysis was achieved by optimizing the
electric power structure and battery energy density to reduce CO, CO2, and other
contributors to global warming potential.
Another comparative study was undertaken by Y. Bicer and I. Dincer to investi-
gate the human health and environmental impact, including global warming,
human toxicity, and ozone layer depletion, of methanol, hydrogen, and electric
vehicles, with the lifetime of the vehicle assumed to be 150,000 km and the func-
tional unit was 1 km driving distance.14 The result showed that hydrogen driven
vehicles are a more environmentally-benign option with respect to global warming
and ozone layer depletion potentials.
The life cycle CO2 emissions of ICEVs powered by diesel and gasoline and EVs
were estimated by R. Kawamoto et al., who studied China, Japan, Australia, the
United States, and European Union as reference regions for vehicle use.15 Their
results found that EVs showed significantly lower CO2 emissions than ICEVs, except
in Australia where ICEV emissions were lower than BEVs until their end of life due
to coal accounting for 75% of Australia’s electricity generation. A. Nordelof et al.
determined the value of various types of electrified vehicle LCA studies undertaken
by 79 reviewed papers.16 They focused on the goal and scope formulation of all stud-
ies and then categorized them depending on technical and methodological scope.
Other studies discussed and focused on electrification and lightweight vehicle
design to reduce the amount of GHG emissions and to improve fuel economy.
A. Mayyas et al. found that using aluminum in vehicle design has the lowest GHG
emissions and lowest energy consumption compared with steel and magnesium-
based design.17 However, this advantage of being lightweight can also be magni-
fied if it is combined with a properly electrified powertrain. This can be achieved
by a pure battery EV that has a lightweight body design using an aluminum
body-in-white. Additionally, C. Koffler studied the environmental implications of

two light-weight automotive components (Ford Taurus front end bolster and Chev-
rolet Trailblazer/GMC Envoy assist step) using glass-fiber reinforced polymers
(GFRP) instead of steel alloys.18 It was found that the lightweight GFRP compo-
nents outperform their steel counterparts over the full life cycle, mainly due to the
reduced fuel consumption of the vehicle in the use phase.
Several researchers have conducted studies in vehicle-producing countries to
investigate the environmental impacts associated with the vehicle life cycle. In
spite of the fact that Jordan is a non-vehicle producing country, there are many
vehicles imported to Jordan and used on the roads, whether they are EVs or
ICEVs.19 At the end-of-life (EOL) cycle of the vehicles, all components are
recycled according to the regulations applied by the Ministry of Environment.
Therefore, a comprehensive study of different vehicle life cycles is important. In
addition, during the utilization phase of these vehicles, many faults and problems
required routine maintenance. In general, the use phase is the most important phase
of the EV life cycle, due to the approach adopted by the users to charge the battery,
which will reflect the amount of damage to the environment. Due to the lack of
available studies focusing on the environmental impacts of using EVs in Jordan, it
has become necessary to investigate the effect of greater demand for EVs which
has increased the energy demand on the grid by charging their batteries, leading to
increased energy consumption and GHG emissions.
Material and Method
The life cycle assessment (LCA) of EVs is used as a technique to assess the
environmental impacts associated with all stages during the lifetime of the vehicle,
from raw material to the end of the life. The ISO14040 guideline20 is used to
describe the framework of the study as shown in figure 1, including the goal and
scope, the life cycle inventory analysis (LCI), the life cycle impact assessment
(LCIA), and the life cycle interpretation.
The LCA methodology was used in this study and the system boundary was
defined to include all phases of the vehicle lifetime and fuel life cycle. Jordan was
selected as a region for our study considering the electricity generation mix and
vehicle driving conditions. Two different types of vehicle technologies were cho-
sen for assessment: the Nissan Leaf ZE0 with lithium-ion battery as a type of BEV
and the Mitsubishi Lancer EX as an ICEV powered by gasoline. These vehicles
were comparatively analyzed due to the fact that these two cars are more common
in the Jordanian car market and their relative equivalence to one another. Only pas-
senger vehicles with five seats were investigated in this study; all other vehicles
are excluded. Table 1 explains the specification for both vehicles and figure 2
shows the electricity generation mix in Jordan as of 2020.
Figure 1
THE LIFE CYCLE ASSESSMENT (LCA) FRAMEWORK
Source: G. Rebitzer et al., “Life Cycle Assessment Part 1: Framework, Goal and Scope Definition,
Inventory Analysis, and Applications,” Environment International, vol. 30, no. 5 (2004), pp. 701–20.
A one-kilometer driving distance is used in the analysis to calculate GHG

emissions (presented as gCO2eq km21) and energy consumption (presented as
MJ km21) with the assumption that the lifetime for both vehicles is 150,000 km to
facilitate comparison with other studies.21 In addition, the sensitivity analysis has
been utilized for cases where vehicle lifetimes are 250,000 km and 350,000 km.
The GHG emissions and energy consumption for inflow and outflow was consid-
ered at each stage of the life cycle.
Table 1
THE KEY PARAMETERS OF THE REPRESENTATIVE VEHICLES
Nissan Leaf ZE0 Mitsubishi Lancer EX
Fuel type electricity gasoline
Battery/engine capacity 24 kWh 1.6 L
Horsepower 107 hp/80 kW 115 hp/86 kW
Curb weight 1475 kg 1225 kg
Gross vehicle weight 1945 kg 1750 kg
Fuel efficiency - 0.073 L km-1
Electricity consumption 0.17 kWh km-1 -
Source: Compiled by authors from Nissan Leaf ZE0, car specifications & performance data review,
available at https://www.automobile-catalog.com/car/2015/2604815/nissan_leaf.html, and Mitsubishi
Lancer EX specifications available at https://www.mitsubishi-motors.com/en/showroom/lancer/
specifications/.
Figure 2
ELECTRICITY GENERATION MIX IN JORDAN, 2020
Source: National Electric Power Company (Nepco), 2020 Annual Report of National Electric Power
(Amman: Nepco, 2020).
System Boundary: The system boundary of our study was defined to include all
processes linked to the vehicle lifetime, from raw material extraction to the vehicle’s
end-of-life. The fuel life cycle was also considered, the detailed flow diagram for
LCA is shown in figure 3 and figure 4. The data of inventory analysis, which are
used for calculations, came from several sources including the GREET model,22
published articles,23 government websites,24 and communication with vehicle users.
(1) Vehicle life cycle as appears in figure 3 for ICEVs and figure 4 for EVs
includes: raw material production stage; manufacturing and assembly of vehicle
components including vehicle body, battery manufacturing, fluid production, etc.;
transportation of the vehicle from the production plant to the point of use; mainte-
nance stage; and end-of-life stage and recycling materials.
(2) Fuel life cycle (well-to-wheel) refers to the entire process of the fuel/electricity
pathway from the extraction of feedstock to the vehicle being driven including: well-
to-tank stage (WTT) that focuses on the production of gasoline/electricity to the stor-
age of the gasoline/electricity in the vehicle and tank-to-wheel stage (TTW) that
focuses on energy conversion which occurs in the vehicle motor.
The complete life cycle of the vehicle is divided into two main parts: the vehi-
cle life cycle and fuel life cycle. The stages that pass during the vehicle life cycle
are the same for both the EVs and the ICEVs, with the difference being in the pro-
duction stage of the EVs, as appears in figures 3 and 4 . On the other hand, the fuel
life cycle is completely different for both vehicles due to the fact that the processes
to produce the gasoline/electricity are different. The fuel cycle of ICEVs is shown
in figure 3 and includes extraction and transportation of the crude oil to the refining
58
Figure 3
SYSTEM BOUNDARIES FOR A COMPLETE LIFE CYCLE ASSESSMENT OF INTERNAL COMBUSTION ENGINE VEHICLES (ICEVS)
THE JOURNAL OF ENERGY AND DEVELOPMENT
Figure 4
SYSTEM BOUNDARIES FOR A COMPLETE LIFE CYCLE ASSESSMENT ANALYSIS OF BATTERY ELECTRIC VEHICLES (EVS)
JORDAN: ELECTRIC VS. CONVENTIONAL VEHICLES
59
site, crude oil refining, fuel distribution to the gas station, and the operation phase
of ICEVs (burning the gasoline in ICE).
As shown in figure 4, the fuel life cycle (well-to-wheel phase) of EVs depends
on the power technologies used to generate the electricity, which are either from
renewable sources or conventional sources. When conventional sources were used
for generation in the well-to-wheel phase of EVs, all information to describe
upstream activities involved in fuel production down to electricity generation was
required and this includes: extraction and transportation of fossil fuels, processing
of fossil fuels, transportation of fuels to the power plant station, power transmis-
sion and distribution, and operations phase of EVs.
The well-to-wheel phases when renewable sources are used for electricity gen-
eration include raw material production and construction of power plant, auxiliary
materials and maintenance during power plant operations, recycling materials at
the end of life, power transmission and distribution, and operations phase of EVs.
Life Cycle Inventory: The life cycle inventory includes all the data necessary
for the raw material, energy requirement, solid waste, atmospheric emissions, and
other releases into the environment depending on the system boundary of the pro-
ject. In this study, the GHG emissions and energy consumption were investigated
to evaluate the amount of damage to the environment during all stages of the life-
time for each type of vehicle that was chosen. The carbon dioxide equivalent
(CO2eq) was used to estimate the amount of GHG emissions based on their global
warming potential by converting these gases to the equivalent amount of carbon
dioxide with the same global warming potential.
Production Phase of EVs and ICEVs: Table 2 shows the amount of steel, cast
iron, aluminum, copper, glass, plastic, and rubber that are the main materials from
which the car components and attachments are made from (excluding batteries),
Table 2
THE MATERIAL COMPONENTS AND THE MASS PERCENTAGE OF EACH VEHICLE
TECHNOLOGY (KG) WITHOUT BATTERY
Nissan Leaf ZE0 Mitsubishi Lancer EX
Material Weight (kg) Material Weight (kg)
Steel 774 Steel 759.2
Cast Iron 23.6 Cast Iron 124.3
Wrought Aluminium 17.7 Wrought Aluminium 23
Cast-Aluminium 66.5 Cast-Aluminium 54.4
Copper/Brass 68.5 Copper/Brass 23
Glass 36.6 Glass 36.2
Plastic 140.5 Plastic 136.3
Rubber 20.2 Rubber 26.6
Others 33.4 Others 25.7
Total Weight 1,181 Total Weight 1,208.7
Table 3
THE MATERIAL COMPONENTS AND THE MASS PERCENTAGE OF EACH BATTERY
TECHNOLOGY USED IN VEHICLES (KG)
Lithium-Ion Battery Lead-Acid Battery
Material Weight (kg) Material Weight (kg)
Active Material 74 Lead 11.25
Graphite/Carbon 46.3 Sulfuric Acid 1.28
Binder 6.3 Water 2.3
Copper 34.5 Plastic 1
Wrought Aluminium 70.12 Fiberglass 0.34
Electrolyte 31.164 Others 0.13
Plastic 5
Steel 1.8
Thermal Insulation 1.42
Coolant: Glycol 12.64
Electronic Parts 10.7
Total Weight 294 Total Weight 16.3
whether EVs or ICEVs, but in different proportions. Table 3 shows the material
components and the mass percentage of each battery technology used in the vehi-
cle (kg). The energy consumption and GHG emissions from material production
and transformation used in the car production were considered, all the data in this
section related to GHG emissions and energy consumption during the production
phase were gathered from GREET 201825 and A. Burnham et al., G. Keoleian
et al., and H. L. Brown et al.26
The part manufacturing and vehicle assembly are included in this study. The
assembly stage is divided into six parts: painting and paint production, air condi-
tioning and lighting, heating, material handling, welding, and compressed air.
The lithium-ion batteries of EVs have received great attention from research-
ers27 in terms of their environmental impacts because the materials that they are
made up of produce large quantities of pollutants and consume significant amounts
of energy during their manufacturing phase due to the fact that lithium-ion batteries
require a complex series of manufacturing processes.
Transportation Phase of EVs and ICEVs: The transportation stage includes
transporting the vehicle from the production plant to the point of use. There are
three cities around the world where the Nissan Leaf is produced: Yokosuka, Kana-
gawa in Japan; Smyrna, Tennessee in the United States; and Sunderland in the
United Kingdom.28 In Jordan, the Nissan Leaf was imported from the United
States so the assumption was that the Nissan Leaf was assembled in the Smyrna
Vehicle Assembly Plant in the United States. On the other hand, the Mitsubishi
Lancer is produced at the Mizushima Plant in Kurashiki, Okayama, Japan, which
is 13,953 km from the Aqaba port. This path is assumed to be covered entirely by
marine freight transportation with a negligible amount of trucking due to the prox-
imity of the production plants to the ocean for both vehicles.
The energy consumption to transport the vehicles by shipping is approximately
0.8 MJ ton21 km21 based on the International Energy Agency’s 2019 data.29
Using the same dataset, the GHG emissions are 34 gCO2eq ton21 km21, which
was used for marine freight transportation.
Maintenance Phase of EVs and ICEVs: The batteries for the EVs are designed
for a long life, but the batteries will lose their capacity over time and eventually be
damaged. The Nissan Leaf manufacturer guarantees the lithium-ion battery used in
the vehicle up to 160,000 km under normal use.30 However, driving patterns, envi-
ronmental factors, and charging behavior significantly affect the lifetime of the bat-
tery. In this research, the assumption of the lithium-ion battery lifetime will be
150,000 km with a lifetime for lead-acid batteries of 50,000 km.
In general, the oil and fluid used in vehicles depends on many factors including
manufacturer, weather temperature, and driving condition. B. Bras and A. Cobert
studied the life cycle of tires and provide an estimate of 68,000 km for the United
States, but we assume that the lifetime of tires is 40,000 km in the case of Jordan
due to poor street conditions.31 As can be seen in table 4, it is assumed that the life-
time of engine oil and tires is 5,000 km and 40,000 km, respectively, with wind-
shield fluid, powertrain coolant, and brake oil being consumed every 12,000 km,
60,000 km, and 60,000 km, respectively. Moreover, it is assumed that the transmis-
sion fluid is replaced only once during the lifetime of the vehicle. All of the above-
mentioned assumptions were based on previous studies and the vehicle users in
Jordan. Finally, we assume that there will be no leakage or malfunction during the
lifetime.
End of the Life Phase of EVs and ICEVs: In Jordan, since 2015, interest has
increased in disposing of older cars over the age of ten years. The Jordanian gov-
ernment has encouraged its citizens to dispose of their older cars and replace them
with modern hybrid ones while reducing customs duties on them. The project
aimed to get rid of end-of-life vehicles, reduce the cost of maintenance for citizens
Table 4
WEIGHT (KG) AND LIFETIME (KM) OF FLUID PER VEHICLE
ICEVs (kg) EVs (kg) Lifetime (km)
Engine Oil 3 0 5,000
Brake Fluid 0.9 0.9 60,000
Transmission Fluid 6 0.8 75,000
Powertrain Coolant 5 0 60,000
Windshield Fluid 2 2 12,000
Source: Data collected by authors based upon Jordanian vehicle ownership.

by providing spare parts, reduce the environmental effects resulting from the older
cars, and reduce energy consumption. The vehicle and the driver license depart-
ment require the engine number and chassis number of the vehicle to be disposed
of, while the rest of the other vehicle parts including engine parts, gearbox, radia-
tor, interior, accessories, etc., are dismantled by the vehicle owner to be used as
spare parts or sold as scrap for recycling.
Based upon information provided by the Jordanian Ministry of Environment,32
the lithium-ion battery is exported outside Jordan at the vehicle’s end-of-life by
licensed companies as there are no factories inside of Jordan that deal with this
type of battery. The used tires are made into rubber pellets or to produce industrial
fuel. The oil used in ICEVs is recycled to the essential oil and allowed to be used
as an alternative fuel in cement factories.
The energy consumption and GHG emissions for recycling vehicle components
were considered in our study. Alternatively, the fluid and glass were assumed not
to be recycled due to their relatively inexpensive prices.
Data Collection for Fuel Cycle (Well-to-Wheel Phases)
(1) The GHG Emissions During the Fuel Life Cycle of ICEVs and EVs: There
are two sets of data to calculate the WTW of GHG emissions of the Nissan Leaf
ZE0. The first one is the GHG emissions of the WTW process of each power
source available in Jordan and the second one is the electricity generation mix data
for Jordan. Table 5 shows the GHG emissions in the WTW process of each power
source as presented by R. Turconi et al.33 They reviewed 167 studies about LCA
of electricity generation technologies and the worst case of GHG emissions was
Table 5
GHG EMISSIONS (GCO2EQ KWH-1) IN THE WTW PROCESS FOR EACH POWER SOURCE
USED TO GENERATE ELECTRICITY
The Number of Min. Max.
Data Sources (gCO2eq kWh21) (gCO2eq kWh21)
Coal 43 660 1,300
Oil 10 530 900
Natural Gas 23 380 1,000
Photovoltaic 22 13 190
Wind Energy 22 3 41
Hydropower 12 2 20
Biomass 25 8 130
Source: Data collected by authors based on R. Turconi, A. Boldrin, and T. Astrup, “Life Cycle
Assessment (LCA) of Electricity Generation Technologies: Overview, Comparability and Limitations,”
Renewable and Sustainable Energy Reviews, vol. 28 (2013), pp. 555–65.
used in our study. The electricity generation mix data for power sources in Jordan
are presented in figure 2, while the electricity efficiency of Nissan Leaf ZE0 is
0.17 kWh km21 as given in table 1.
The emissions factor and fuel efficiency are the data necessary to calculate
GHG emissions during WTW for ICEVs. The fuel efficiency of the Mitsubishi
Lancer EX, as shown in table 1, is 0.073 L km21. The Joint Research Center
of European Commission (JRC) data were used for the WTW emissions factor
data for gasoline used in ICEVs.34 According to the JRC, the GHG emissions
during WTT were 463.8 gCO2eq L21 and the TTW GHG emissions were
2,314.5 gCO2eq L21. The value of GHG emissions for the Mitsubishi Lancer EX
is almost the same value estimated by the manufacturer.35
(2) The Energy Consumption During Fuel Life Cycle of ICEVs and EVs: The
energy consumption during the fuel life cycle was calculated by summing the
energy required to produce 1.0 MJ of gasoline during the WTT phase for ICEVs
or to generate 1.0 MJ of electricity for EVs and the amount of energy consumption
during the tank-to-wheel (operation phase) for both vehicles as listed below.
The WTT energy efficiency for gasoline production, which includes feedstock
recovery, processing, storage, and transportation of fuel will be assumed to be 80%
(1.25 MJPE MJFuel21) as reported by Argonne National Lab. On the other hand,
to determine the energy consumption of ICEV (MJFuel km21) during the tank-to-
wheel phase, it is important to know the density (kg L21), heating value (MJ
kg21) of the fuel, and fuel efficiency of ICEVs (L km21). The gasoline properties
used in ICEVs in Jordan is based on the Jordanian Technical Regulation for Auto-
motive Gasoline as follows: (a) the density is 0.723 kg L21 and (b) the average
heating value of the gasoline is 45 MJ kg21.36 Figure 5 summarizes the amount of
WTW energy consumption for the Mitsubishi Lancer EX vehicles with a fuel effi-
ciency engine 0.073 L km21.
The amount of energy consumption (MJPE km21) during the WTW phase of
EVs is particularly dependent on the technology used for electrical generation,
which is either from renewable or conventional sources. Therefore, to calculate the
energy consumption (MJPE km21) of EVs, there is a need for three sets of data.
First is the primary energy factor (MJPE MJel21) for each power source used to
generate electricity in Jordan, taking into consideration after that the power plant-
to-tank losses due to transmission and distribution of electricity, and EVs’ charging
losses. The second data set is the electricity generation mix data for Jordan. The
third data set is the energy consumption of the Nissan Leaf vehicle during the
TTW phase. The results are summarized in figures 6 and 7.
Table 6 illustrates the primary energy factor for renewable (wind, solar, bio-
mass, and hydro) and fossil fuels (coal, oil, and natural gas) generation technolo-
gies as presented by A. Stoffregen and O. Schuller.37 The primary energy factor is
an indicator of how much the primary energy was used to generate a unit of
electricity.
Figure 5
WTW ENERGY CONSUMPTION FOR MITSUBISHI LANCER EX VEHICLES POWERED BY GASOLINE
65
66
Figure 6
WTW ENERGY CONSUMPTION FOR NISSAN LEAF VEHICLES IN THE CASE WHERE A RENEWABLE SOURCE IS USED TO
GENERATE ELECTRICITY
Figure 7
WTW ENERGY CONSUMPTION FOR NISSAN LEAF VEHICLES IN THE CASE WHERE A CONVENTIONAL SOURCE
(COAL, NATURAL GAS, OR OIL) IS USED TO GENERATE ELECTRICITY
67
Table 6
PRIMARY ENERGY FACTOR (MJPE MJEL-1) FROM RENEWABLE AND CONVENTIONAL
ELECTRICITY GENERATION TECHNOLOGIES
Power Generation Technologies MJPE MJel-1
Coal 3.5
Oil 3
Natural Gas 2.78
Solar Energy 0.15
Wind Energy 0.032
Hydropower 0.01
Biomass 0.18
Source: A. Stoffregen and O. Schuller, Primary Energy Demand of Renewable Energy Carriers
Part 1: Definitions, Accounting Methods and Their Applications with a Focus on Electricity and Heat
from Renewable Energies (Berlin: Thinkstep, 2014).
Electricity generation in Jordan depends largely on conventional energy sources

(especially natural gas) with other renewable energy sources as shown in figure 2.
Natural gas is mostly used in steam-electric power generation, simple cycle tur-
bines, and combined cycle turbines, which use waste heat recovery to increase
Figure 8
THE GHG EMISSIONS OF THE VEHICLE CYCLE WITH A 150,000 KM LIFETIMEa
EOL 5 end of life.

a
power plant efficiency. According to the National Electricity Company’s (NEPCO)

Annual Book 2020, the largest generating capacity of plants in Jordan was 4,242
MW.38 The average efficiency of the power plants is 32% for both simple cycle
gas turbines and simple cycle steam turbines, while the efficiency range of the
combined cycle is from 52% to 58%.39 In our case, the average energy efficiency
of power plants was assumed to be 40% to 45%. On the other hand, the distribu-
tion and transmission efficiency of carrying electricity over poles and wires from
power plants to a vehicle is about 88% to 92%. The charging efficiency for EVs
depends on the vehicles, but is typically between 80% and 90%, while the charging
efficiency of the Nissan Leaf is 85%. These numbers were based on the test data
published by H. Lohse-Busch et al.40
Finally, the energy consumption (MJ km21) during the TTW phase of EVs
depends on the electric motor efficiency of the vehicle. The TTW energy consump-
tion of the Nissan Leaf is 0.615 MJ km21, which is a function of the vehicle sys-
tem efficiency and includes vehicle-speed-dependent terms over the drive cycle.41
Figure 6 shows the energy consumption of EVs during the WTW phase when the
renewable sources were used to generate electricity, while the consumption of the
Figure 9
THE ENERGY CONSUMPTION OF THE VEHICLE CYCLE WITH A 150,000 KM LIFETIMEa
EOL 5 end of life.

a
Table 7
THE GHG EMISSIONS AND ENERGY CONSUMPTION OF GASOLINE PRODUCTION
AND ELECTRICITY PRODUCTION BASED ON THE ELECTRICITY GENERATION
SOURCES IN JORDAN, 2018
GHG Emissions (gCO2eq MJ-1) Energy Consumption (MJPE MJFF-1)
Gasoline 14.25 1.25
Electricity 251.4 2.5
Nissan Leaf is 0.615 MJ km21, which is a function of the vehicle system efficiency
and includes vehicle-speed-dependent terms over the drive cycle. While figure 7
shows the energy consumption of EVs during the WTW phase when conventional
sources were used to generate electricity.
Results and Discussion
Vehicle Cycle: Figures 8 and 9 summarize the amount of GHG emissions and
the amount of energy consumed during the vehicle cycle of both vehicles. It was
clear that the amount of GHG emissions and energy consumption of the EVs were
Figure 10
THE GHG EMISSIONS IN THE ENTIRE FUEL CYCLE (WTW) FOR ICEVS
(WHICH USED GASOLINE FUEL) COMPARED WITH EVS (WHICH USED THE
ELECTRICITY MIX IN JORDAN)
greater than ICEVs, 82 gCO2eq km21 and 53 gCO2eq km21, respectively, with
1.2 MJ km21 and 0.82 MJ km21 of energy consumption, respectively (GHG emis-
sions and energy consumption for EVs is greater by 1.5 times than ICEVs during
the vehicle cycle).
The reason for the high energy consumption and pollutant values of EVs was
related to the production and recycling of the lithium-ion battery because the
manufacturing process of a lithium-ion battery requires a large amount of energy
and results in a large amounts of pollutants.
In addition, the GHG emissions and energy consumption during the transporta-
tion phase of EVs were higher than ICEVs due to the energy intensity and emis-
sions factor of marine freight (sea) transportation, which was highly dependent
upon the vehicle weight. Additionally, the place from which the car was imported
was factored in as was previously mentioned. On the other hand, the GHG emis-
sions and energy consumption resulting from the production of fluid and mainte-
nance phase of ICEVs were greater than EVs due to the amount of fluid that was
required to be changed during the lifetime of the ICEV.
Fuel Cycle (Well-to-Wheel Phase) of EVs and ICEVs: The GHG emissions
and energy consumption for ICEVs in the fuel cycle were affected by emissions
factors, fuel efficiency, fuel density, and the fuel heating value. As mentioned in
Figure 11
THE AMOUNT OF ENERGY CONSUMPTION IN THE ENTIRE FUEL CYCLE (WTW)
FOR ICEVS (WHICH USED GASOLINE FUEL) COMPARED WITH EVS (WHICH USED
THE ELECTRICITY MIX IN JORDAN)
the previous section, the main parameters for EVs to determine the GHG emissions
and energy consumption were the electrical efficiency of these vehicles, emissions
factors for each power source used to generate electricity, and the proportion of
generation from each fuel source.
Well-to-Tank Phase: Electricity generation by conventional power sources (oil
and natural gas) in Jordan represents about 89.14% of the total electricity generated
as shown in figure 2, while the percentage of electricity generation from renewable
power sources (wind, solar, biomass, and hydropower) is 10.86%. The electricity
that is used to charge EVs in Jordan comes from the most energy-consuming and
higher emissions source relative to gasoline. Therefore, when looking at the results,
we find that during the WTT phase the GHG emissions produced to generate elec-
tricity is about 17.6 times more than gasoline production and consumes twice as
much energy as gasoline. Table 7 illustrates the amount of GHG emissions and
energy consumption per MJ due to the used electricity and gasoline of EVs and
ICEVs, respectively, during the WTT phase. If energy consumption and GHG
emissions are calculated based upon a per km distance traveling during this phase,
the results of the assessment of energy consumption and GHG emissions produced
Figure 12
THE GHG EMISSIONS FOR EVS COMPARED WITH ICEVS DURING
A COMPLETE VEHICLE LIFE CYCLE (VEHICLE CYCLE AND FUEL CYCLE)
WITH A 150,000 KM VEHICLE LIFETIMEa
EOL 5 end of life.

a
during the WTT phase for ICEVs is 0.62 MJ km21 and 33.8 gCO2eq km21,
respectively, and 1.4 MJ km21 and 153 gCO2eq km21, respectively, for EVs.
Tank-to-Wheel Phase: The energy consumption (MJFF km21) of ICEVs during
the tank-to-wheels phase depends on gasoline density (kg L21), the gasoline heat-
ing value (MJ kg21), and the fuel efficiency of ICEVs (L km21). Based on the
density of gasoline, fuel efficiency, and heating value, the energy consumption of
the Mitsubishi Lancer EX is 2.38 MJ km21 while the energy consumption of the
Nissan Leaf is 0.61 MJ km21, which is about five times less than the energy
required for the Mitsubishi Lancer EX. On the other hand, the GHG emissions of
the Mitsubishi Lancer EX are 2,314.5 gCO2eq L21 due to the gasoline used in the
TTW phase, while no GHGs are emitted in this phase for the Nissan Leaf.
The Entire Fuel Cycle (Well-to-Wheels): When considering the overall fuel life
cycle, the energy consumption and GHG emissions of ICEVs were higher than
those of EVs as shown in figures 10 and 11. The total GHG emissions in the fuel
cycle of ICEVs was 200 gCO2eq km21 with 3.0 MJ km21 energy consumption,
while the total GHG emissions in the fuel cycle of EVs was 153 gCO2eq km21
with 2.18 MJ km21 of energy consumption. It can be observed that the energy
Figure 13
THE ENERGY CONSUMPTION FOR EVS COMPARED WITH ICEVS DURING
WITH A 150,000 KM LIFETIMEA
EOL 5 end of life.

a
consumption reduction benefit was 27% and about 23% GHG emissions benefit of
EVs in the fuel cycle.
The Complete Life Cycle of ICEVs and EVs: The total amount of GHG
emissions produced during the complete life cycle (assuming that the vehicle life-
time is 150,000 km) of the Nissan Leaf was 35.3 tons CO2eq (235 gCO2eq km21)
and for the Mitsubishi Lancer EX it was 38 tons CO2eq (249 gCO2eq km21). This
means that the Mitsubishi Lancer EX vehicle produced slightly more GHG emis-
sions than the Nissan Leaf during the life cycle as shown in figure 12. The GHG
emissions during the usage phase represented 80% of the total life cycle for the
Mitsubishi Lancer EX vehicle and 65% for the Nissan Leaf, the results of the use
phase (WTW) were previously explained.
It is clear that the GHG emissions during the production phase and end-of-life
(EOL) phase of the Nissan Leaf vehicle were higher than the Mitsubishi Lancer
EX vehicle by 1.6 and 1.9, respectively, due to the large amount of emissions asso-
ciated with the production and recycling of the lithium-ion battery. Regarding the
maintenance phase, it is evident that the contribution to the emissions was low dur-
ing the vehicle life cycle, while the results showed that the emissions from the
Figure 14
THE GHG EMISSIONS FOR EVS COMPARED WITH ICEVS DURING A COMPLETE
VEHICLE LIFE CYCLE (VEHICLE CYCLE AND FUEL CYCLE) WITH A
250,000 KM LIFETIMEa
EOL 5 end of life.

a
maintenance phase of the Mitsubishi Lancer EX vehicle were 1.5 times more than
the same phase for the Nissan Leaf.
Figure 13 illustrates the total values of energy consumption for the Nissan Leaf
and Mitsubishi Lancer EX vehicles during the life cycle of the vehicle; the results
show that the total energy consumption for the Mitsubishi Lancer EX was 573 GJ
(3.82 MJ km21), 1.2 times more than the Nissan Leaf, which was 477 GJ
(3.18 MJ km21). The use phase of both vehicles accounts for the largest share of
energy consumption. The energy consumption of the Mitsubishi Lancer EX during
the use phase was 1.5 times more than the Nissan Leaf. On the other hand, the
energy consumption during the WTW phase of the Nissan Leaf was 62% during
its life cycle, while it was 79% for the Mitsubishi Lancer.
Sensitivity Analysis: In this section, the calculation of energy consumption and
GHG emissions were repeated using a vehicle life of 250,000 km and 350,000 km
driving distance to illustrate how it affects the complete life cycle of ICEVs and
EVs vehicles. Moreover, the GHG emissions and energy consumptions were calcu-
lated for EVs during the WTW phase in case any of the power source technologies
were used to generate electricity and compared with ICEVs.
Figure 15
WITH A 250,000 KM LIFETIMEa
EOL 5 end of life.

a
250,000 Km Vehicle Lifetime: Figure 14 shows the total amount of GHG emis-
sions with a 250,000 km vehicle lifetime for both the Nissan Leaf and Mitsubishi
Lancer EX vehicles. The lifetime GHG emissions for the Nissan Leaf and Mitsu-
bishi Lancer were 214.8 gCO2eq km21 and 233.5 gCO2eq km21, respectively.
This means the GHG emissions are lowered by 9% and 8%, respectively, com-
pared with an analysis using a 150,000 km vehicle lifetime.
As shown in figure 14, the results of the use phase were unchanged compared
to the previous analysis because the emissions during the use phase did not depend
on the vehicle’s lifetime but mainly depended on the vehicle efficiency. The other
phases including production, transportation, and vehicle end of the life had a
lower amount of emissions per km because the GHG emissions of these phases
had a fixed amount that changed over the vehicle’s lifetime. The results of
the maintenance phase had higher GHG emissions than the previous section
analysis (150,000 km vehicle lifetime) due to the vehicle’s need for continuous
maintenance during its lifetime such as changing tires, battery, fluid, and mechani-
cal parts.
Figure 16
THE GHG EMISSIONS FOR EVS COMPARED WITH ICEVS DURING
EOL 5 end of life.

a
The same results were calculated as shown in figure 15 for the energy consump-
tion assuming a 250,000 km vehicle life. For the Nissan Leaf, energy consumption
was 2.9 MJ km21 and was 3.5 MJ km21 for the Mitsubishi Lancer EX, which was
lower by 9% and 8%, respectively, compared to the150,000 km vehicle lifetime.
The energy consumption during the use phase did not change, while the produc-
tion, transportation, and EOL had lower amounts, as the maintenance phase had a
higher amount.
350,000 Km Vehicle Lifetime: Figures 16 and 17 show the energy consumption
and GHG emissions for EVs compared with ICEVs with 350,000 km vehicle life-
time. The GHG emissions for the Nissan Leaf and Mitsubishi Lancer EX vehicles
were 206 gCO2eq km21 and 225 gCO2eq km21, respectively, coupled with
energy consumptions of 2.8 MJ km21 and 3.4 MJ km21, respectively. This means
that the GHG emissions for the Nissan Leaf and Mitsubishi Lancer EX vehicles
were lower by 12% and 10%, respectively, and the energy consumptions were
lower by 12% and 11%, respectively, compared to the150,000 km vehicle lifetime.
Figure 17
EOL 5 end of life.

a
As can be seen from figures 16 and 17, results for the assessment of EVs with a
350,000 km lifetime showed there was a clear increase of GHG emissions and
energy consumption during the maintenance phase because of the need to replace
the lithium-ion battery for EVs twice within the 350,000 km vehicle lifetime.
As previously discussed, the vehicle lifetime in Jordan may reach 350,000 km
or more, so the GHG emissions and energy consumption results calculated in this
section were close to the use of both EVs and ICEVs in Jordan.
Conclusion
In the presented work, the life cycle assessment methodology was conducted to
compare EVs with ICEVs in terms of GHG emissions and energy consumption
during a complete life cycle analysis of vehicles (fuel cycle and vehicle cycle) in
Jordan. To summarize our results, from the LCA analysis we found that there were
two important parameters in determining the GHG emissions and energy consump-
tion of EVs during a complete vehicle life cycle. The first parameter was the elec-
trical generation source used for charging the EVs and the second one was the
vehicle driving distance during the lifetime measured in km. The electrical genera-
tion mix used in charging the EV was the main parameter in identifying the
amount of GHG emissions and energy consumption during the life cycle of the
EV. There was a significant impact for using EVs in Jordan on GHG emissions
and energy consumption because the electricity generation by conventional power
sources (oil and natural gas) represented around 89.14% of the total electricity gen-
erated. EVs driven consumed approximately 3.18 MJ km21 of energy coupled
with GHG emissions of 235 gCO2eq km21 while ICEVs consumed 3.82 MJ km21
of energy coupled with GHG emissions of 249 gCO2eq km21 in the assessment
with the vehicle lifetime of 150,000 km in Jordan. The vehicle lifetime was the
second most important parameter, the longer lifetime of the vehicle shifts the
energy consumption (MJ km21) and GHG emissions (gCO2eq km21) to be less
for both vehicles.
The fuel cycle (WTW) had the greatest impact on GHG emissions and energy
consumption compared to the vehicle cycle for both EVs and ICEVs during the
lifetime of the vehicles. The amount of GHG emissions and energy consumption
was greater for ICEVs with 200 gCO2eq km21 and 3 MJ km21, respectively, com-
pared with 153 gCO2eq km21 and 1.98 MJ km21, respectively, for EVs during the
fuel cycle. On the other hand, EVs had greater numbers relative to ICEVs during
the vehicle cycle with GHG emissions of 82 gCO2eq km21 and energy consump-
tion of 1.2 MJ km21 compared with the ICEVs, which had GHG emissions of
52.9 gCO2eq km21 and energy consumption of 0.82 MJ km21. In the fuel cycle
(WTW), the majority of energy consumption and all the GHG emissions of EVs
were during the WTT phase, specifically caused by the electricity production
(1.57 MJ km21 of energy consumed and 153 gCO2eq km21 of GHG emissions).
On the other hand, the majority of energy consumption and the GHG emissions
for ICEVs were on the road during the TTW phase with 2.38 MJ km21 and
167 gCO2eq km21, respectively.
In our assessment, the EVs with the 350,000 km lifetime produced a large
amount of GHG emissions (18.7 gCO2eq km21) and energy consumption
(0.293 MJ km21) during the maintenance phase compared with ICEVs, which had
GHG emissions of 3.58 gCO2eq km21 and energy consumption of 0.089 MJ km21.
The reason for this is the need to replace the lithium-ion battery twice for EVs
within the 350,000 km lifetime as the production and recycling of the lithium-ion
battery has a high environmental impact to be added on to the maintenance phase
for the vehicle.
Our research findings are important for policy makers both inside and outside
of Jordan as they show the importance of evaluating multiple factors when com-
paring the life cycle and impacts of EVs relative to ICEVs. This is critical as coun-
tries are making important decisions regarding how best to implement their energy
transition plans and agendas. Much of the research on EVs versus ICEVs comes
from countries in which the electricity power generation mix has larger amounts of
renewable energy sources relative to Jordan’s and where the vehicle lifetimes are
shorter leading to fewer EV lithium-ion battery replacements. However, for coun-
tries that have an electricity generation mix that is similar to Jordan’s and with
similar relatively long vehicle lifetimes, our research findings have significant
implications. The results suggest that a better understanding of energy consumption
and GHG emissions on a country basis, including determining the average vehicle
lifetime and sources of electricity generation for EVs, are key to making prudent
decisions to reduce energy consumption, improve the environment, and meet GHG
emission targets.
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APPENDIX
Table 1
NOMENCLATURE
GHG Greenhouse gas TTW Tank to wheel
EV Electric vehicle LCA Life cycle assessment
GREET Greenhouse gases, regulated ICEV Internal combustion engine
emissions, and energy use in vehicle
transportation
PHEV Plug-in hybrid electric vehicle HEV Hybrid electric vehicle
WTW Well to wheel FCEV Fuel cell electric vehicle
WTT Well to tank BEV Battery electric vehicle
ICE Internal combustion engine GWP Global warming potential
EOL End of life PE Primary energy
gCO2eq gCO2 equivalent
ON THE EFFECTS OF ACCESS TO ELECTRICITY
ON HEALTH CAPITAL ACCUMULATION IN
SUB-SAHARAN AFRICA
Idrissa Ouedraogo, Alex Nester Jiya, AND Issa Dianda*
Introduction
A ccess to energy is recognized as a key engine for economic growth, the pro-
vision of social services, including health, poverty reduction, structural
change, and, in general, economic and human development.1 The importance of
*Idrissa Ouedraogo obtained his Ph.D. in Governance and Regional Integration at the Pan African
University-Yaounde and the Universite of Yaounde II (Cameroon). He is currently an Assistant
Professor of Development Economics at the Department of Economics at the Thomas Sankara
University at Saaba in Burkina Faso. He is also a permanent researcher at the Thomas Sankara
University’s Centre for Economic and Social Studies, Documentation and Research (CEDRES). Dr.
Ouedraogo is a Researcher affiliated with Universite Norbert Zongo in Koudougou (Burkina Faso) and
Dublin City University (Ireland) as part of the Irish Research Council funded project on Corruption,
Gender, and Sustainable Development (COGS). He was the lead consultant in a project on the
distributional effects of fiscal policies in Sub-Saharan Africa with the United Nations University
(UNU)-World Institute for Development Research (WIDER). His research interests include
governance and institutional economics, human development, economics of inequality, and regional
integration in Africa. His articles have been published in African Development Review, Economics
Bulletin, Economic Systems, Governance, Natural Resource Forum, Journal of Productivity Analysis,
Social Sciences, and Humanities Open.
Alex Nester Jiya is a governance specialist working with the African Institute for Development
Policy (AFIDEP) as a Research and Policy Analyst. He obtained his Ph.D. in Governance and Regional
Integration from the Pan African University-Yaounde and the Universite of Yaounde II (Cameroon).
Dr. Jiya has authored and co-authored various articles on governance and development economics. He
leads the Africa Integrity Project, which collects data on governance across 54 African countries.
(continued)

83
energy is emphasized in the United Nations’ Sustainable Development Goals

(SDGs)2 and in the African Union’s 2063 Agenda. Indeed, SDG7 aims to ensure
access to affordable, reliable, sustainable, and modern energy for all by 2030. Like-
wise, the 2063 agenda aims to ensure modern, efficient, reliable, cost-effective,
renewable and environmentally friendly energy to all African households, busi-
nesses, industries, and institutions.3
More specifically, expanding access to electricity matters for improved health
outcomes. It affects health outcomes through reduced respiratory illnesses.4 It also
contributes to the improvement of health services supply, access, and quality.5
Likewise, it favors access to health information.6 Beyond these direct effects, elec-
tricity acts on health outcomes by reducing fertility,7 increasing income,8 and
improving education.9
However, according to the International Energy Agency,10 more than two-
thirds of the world’s population without electricity live in Sub-Saharan Africa
(SSA). The electrification rate in the region is low (45%) compared to the average
of Asian developing countries (94%) and the world average (88.7%). In SSA,
600 million people, representing 55% of the population, were lacking electricity
in 2018. As well, nearly 60% of healthcare facilities in Sub-Saharan Africa have
no access to electricity.11 Only 28% of health facilities and 34% of hospitals had
reliable access to electricity.12 The African WHO region had seven of the nine
countries with less than 50% of hospitals providing surgical care in low- and
middle-income countries with reliable electricity.13
At the same time, the incidence of malaria, under-five mortality rates, and crude
death rates have been dramatically high in the region. For example, in 2018, an
estimated 228 million cases of malaria occurred worldwide and the World Health
Organization (WHO) African Region recorded 93% of the cases (213 million).
Nineteen countries in SSA and India carried almost 85% of the global malaria bur-
den. Six countries in SSA accounted for more than half of all malaria cases world-
wide: Nigeria (25%), the Democratic Republic of the Congo (12%), Uganda (5%),
and C^ ote d’Ivoire, Mozambique, and Niger (4%). The WHO African Region
accounted for 94% of all malaria deaths in the same year.14
Over the period 1990 to 2018, the World Bank’s15 World Development Indicators
(WDI) data indicate that the average under-five mortality rate is 111. This reveals
Issa Dianda holds a Ph.D. in Applied Economics from Thomas Sankara University. He is an
Assistant Professor in Development Economics at the Department of Law and Economics of the Nazi
Boni University at Bobo Dioulasso in Burkina Faso. Dr. Dianda is also a Researcher at the Thomas
Sankara University’s Centre for Economic and Social Studies, Documentation and Research
(CEDRES). Previously, he was an advisor in studies and analysis at the Ministry in charge of the
environment. His research interests include human development, institutions, and gender and income
inequalities. His articles have been published in Economics Bulletin and Journal of Economics and
Sustainable Development.
SUB-SAHARAN AFRICA: ELECTRICITY & HEALTH 85
that 101 children die in SSA before the age of five per 1,000 live births in a given
year. In 49% of SSA countries, this statistic exceeds 111 child deaths. The same
trends are observed with crude mortality rates.16
Despite these situations, empirical evaluations of the effect of access to electric-
ity on health outcomes in SSA are limited. Most of the studies are case studies at
the household level.17 The exception is O. Shobande18 who analyzes the effects
of energy use on health in a sample of 23 African countries over the period
1999-2014. However, the author focuses only on child health. This study differs by
investigating the effects of electricity access on different health outcomes, includ-
ing the incidence of malaria, under-five mortality rates, and crude death rates from
a macroeconomic perspective.
The rest of the paper is structured as follows: we give a related literature review
followed by the data and methodology, then we present and discuss the findings.
We end with a section on our conclusions and highlight some policy implications.
Literature Review
In this section, we present both the theoretical and the empirical literature
reviews.
Theoretical Review: Theoretically, it is accepted that expanding access to elec-
tricity promotes improved health through several direct and indirect channels.19
Directly, electrification affects health outcomes through reduced respiratory ill-
ness,20 improving quality, supply, and access to services,21 and access to health
information.22 The indirect channels include a fall in fertility,23 increased income24
and education,25 and reduced human drudgery for women and children who are
involved in collecting firewood.26
Electrification, by decreasing dependence on wood, charcoal, and kerosene and
increasing access to clean cooking, reduces indoor air pollution and respiratory ill-
ness and, hence, improves health.27 In developing countries, diseases such as tuber-
culosis, lung cancer, and respiratory infections are caused by indoor biofuel
burning.28 However, with electrification, cooking with wood falls while lighting
and cooking increase with electricity.29 Thereby, an increase in access to electricity
leads to an improvement in indoor air quality and in a reduction in the prevalence
of acute respiratory infections, especially among children and women and, hence,
induces health benefits.30
The access to electricity favors the functionate of a modern hospital and the use
of modern equipment and new technologies in health facilities thereby improving
healthcare service delivery.31 By allowing standard treatments in the absence of
daylight, access to electricity increases survival chances.32 Likewise, with access
to electricity in health facilities, women can more safely give birth at night and
during emergencies.33 Electrification increases healthcare quality by facilitating the
sterilization of medical equipment, the preservation of life-saving vaccines for

newborns, children, and adults, and the refrigeration of medicines.34 Moreover,
health facilities that are electrified, especially in rural areas, can attract and retain
more qualified personnel thanks to the improved quality of living afforded by elec-
tricity, and it allows for the practice of telemedicine, thus offering improved ser-
vices.35 Additionally, the utilization of child immunization and maternal health
services are boosted with access to electricity.36 Furthermore, access to electricity
can reduce the costs of health services.
Electrification improves access to television and other modern media.37 These
media are channels for public health education by disseminating health information
to encourage behavioral changes needed to improve health outcomes.38 For exam-
ple, important information about childcare, nutrition, the importance of vaccina-
tions, micronutrients, or preventive measures can be spread through mass media.39
The media favors awareness campaigns on the dangers associated with tobacco
consumption, sexually transmitted infections, in particular the Human Immunodefi-
ciency Virus / Acquired Immune Deficiency Syndrome (HIV-AIDS), family plan-
ning, and road safety. Likewise, access to electricity can increase coverage of
malaria education campaigns using mass media. Thereby, electrification by increas-
ing media consumption (through televisions, radios, and the internet) facilitates
updated attitudes and behaviors regarding health issues, which can support improved
health outcomes.40
Electrification contributes to a decline in fertility rates.41 In fact, media expo-
sure, made possible by electrification, affects fertility preferences. The media
expose viewers to new information about the outside world and other lifestyles,
which allows individuals to assess the trade-offs between the number of children
they would like to have and quality of life issues.42 The media, by conveying fertil-
ity preferences depicted by modern households, decrease the desired number of
children. Likewise, by providing information about family planning services the
media help to reduce “unwanted births.”43 In addition, time spent watching TV
reduces the time available for physical intimacy and the availability of TVs further
lowers fertility rates.44 The decline in fertility reduces the mortality risk and allows
parents to take better care of their children’s health.
Electrification is expected to lead to higher incomes.45 Access to electricity also
increases the productivity of businesses.46 Electrification may also open up new
businesses and opportunities especially for micro, small, and medium-sized enter-
prises in areas such as hairdressing, eating establishments, tailoring, and in non-
farm activities.47 The lack of access to electricity forces women to rely on fossil
fuels and devote less time to income-generating activities. Access to electricity
reduces the time spent on household chores, allowing women to spend more time
on productive activities and enhances women’s participation in the labor market.48
As a result, households have access to better and greater quantities of food and
medication, which, in turn, leads to improved nutritional status. Likewise, greater
access to electricity affects the reallocation of inputs to more productive economic

activities.49 Increased incomes allow people better access to valuable health inputs
such as nutritious food, better hygiene, accessible drinking water, medical care,
and suitable living conditions, which improve the overall health capital.50
Access to electricity enhances the quality of educational learning through the
use of information and communication technologies for teaching including compu-
ters.51 Electricity access also improves the ability of children to study at night and
so increases children’s study time at home.52 In doing so, it reduces the repetition
rate53 and increases the children’s schooling attainment.54 Education favors health
capital accumulation.55
Empirical Literature Review: Empirically, one strand of the literature
assesses the effect of access to electricity on malaria risks and has yielded conflict-
ing results. The determinants of malaria risk on 187 children from the ages of 6 to
59 months (cases) and 286 control cases in urban and peri-urban areas of Blantyre,
Malawi were evaluated by D. Mathanga et al.56 The results of the authors’ condi-
tional logistic regression show that electricity in the home is associated with pro-
tection from malaria illness both in the urban and peri-urban zones. Along the
same vein, M. Sultana et al. examined the determinants of malaria parasites by
using a multivariable logistic regression on data from 7,040 children, aged 6 months
to 14 years, extracted from the 2015 Kenya Malaria Indicator Survey.57 The results
show that the children from households with no electricity are more likely to have
malaria compared to those in households with access to electricity.
The effects of electricity network development on malaria transmission during
its elimination phase have also been investigated.58 S. Izadi studied a sample of
122 villages in the rural areas of three districts in Iran’s Sistan-va-Baluchestan
Province over the period 2005-2009. The regression models with fixed and random
effects reveal that the improvement in electricity access does not significantly
affect the number of annual malaria cases.
Contrary to the previously mentioned studies, other authors find that households
with access to electricity are more affected by malaria compared to those without
it. The link between using electricity for either lighting or cooking purposes and
the occurrence of malaria cases has been explored by using country-representative
household level data for Malawi by L. Tasciotti.59 By applying a probit regression
the author found that those household members living in “electrified” households
are more likely to experience malaria. The effect of housing and household charac-
teristics on malaria risk among 98 cases and 185 control children in the semi-urban
area of Nouna, Burkina Faso has been investigated by S. Yamamoto et al.60 Using
a multiple logistic regression, the authors reveal that electrification of the home is
associated with an increased risk of malaria. Evaluations of the effects of access to
electricity are case studies on cross-sectional data and, therefore, of a microeco-
nomic nature. Assessments of the effects of access to electricity on malaria from
African panel data from a macroeconomic perspective, to our knowledge, are rare.
A second strand of the empirical literature examines the effect of access to elec-
tricity on access to health services. It reveals that expanding access to electrification
leads to a greater use of pregnancy care services and an improvement in maternal
health care in India.61 Similarly, the research by A. Mbonye et al. has shown that
electricity access improves the supply of emergency obstetric care in Uganda.62
Studies have also shown the link between electricity and improved immunization
and uptake of prenatal care in rural areas.63 Likewise, a case study of Maharashtra
State, India by M. Koroglu et al. demonstrates that an inadequate supply of electric-
ity is associated with lower odds of successful childbirths in a healthcare facility
and reduced odds of childbirth attendance by a skilled professional.64 Thus, electri-
fication plays a critical role in children’s health by improving access to health ser-
vices along with the quality and supply of child and maternal care.
A third strand in the empirical literature looked into the infant and child health
benefits of access to electricity. In this context, S. Rutstein studied the factors asso-
ciated with trends in infant and child mortality in developing countries during the
1990s and found that increases in the percentage of women living in households
with electricity was associated with declines in mortality.65 L. Wang evaluated
Demographic and Health Survey (DHS) data from over 60 low-income countries
to investigate the determinants of child mortality.66 The author finds that access to
electricity significantly reduces child mortality and this effect is most important in
urban areas. In the same vein, A. Burlando finds, in the case of Tanzania, that the
birth weight of children conceived in areas with a poor supply of electricity is sig-
nificantly lower than those with adequate access, meaning that better electricity
access supports fetus growth thereby improving the chances of survival at birth.67
The factors associated with under-five mortality in Bhutan have been analyzed
by T. Dendup et al.68 By using a sample of 6,398 single births from November
2002 to October 2007 taken from the Bhutan National Health Survey 2012 and
employing multiple logistic regression, they find that children born in households
without electricity had a significantly higher risk of death by 81%. In the case of
the United States, in a historical perspective, J. Lewis studies infant mortality in
2,093 rural counties between 1930 and 1960.69 Lewis’ results reveal that increases
in electricity access accounted for a 15% to 19% decline in the infant mortality
rate in the sample of rural counties. T. Fujii et al. explore the relationship between
electrification and children’s nutritional status in rural Bangladesh using five
rounds of Bangladesh DHS from 2000 to 2014.70 Their research estimates by Ordi-
nary Least Squares (OLS), Fixed-effects model (FE), and Generalized method of
moments (GMM) reveal that access to electricity has a positive effect on the nutri-
tional status of children under five.
The effect of access to electricity on health was highlighted through other health
outcomes. Along these lines, S. Ahmad et al. evaluated the effect of electricity access
and availability on human well-being, including reductions in short-term morbidity in
India.71 Using OLS regression, the authors find that electricity access and availability
are inversely related to short-term morbidity in rural households. The link between
development and health in India has been analyzed by K. Roychowdhury and
S. Jones.72 The authors find that crude birth rates and maternal mortality rates are
both strongly and negatively correlated with the percentage of households with access
to electricity.
In SSA, the determinants of the rural-urban gap in infant mortality rates was
examined by E. Poel et al. in a cross-sectional study using DHS data for six Fran-
cophone countries in Central and Western Africa.73 The results from the decompo-
sition method they employed show that urban-rural differences in access to
electricity at home are partly responsible for urban-rural gaps in child mortality,
which account for about 9% of the gap. In a recent study, O. Shobande examines
the effects of energy use on the infant mortality rate in a sample of 23 African
countries over the period 1999-2014.74 In this work, empirical evidence based on
the pooled OLS and system GMM estimators suggests that infant and under-5 mor-
tality rates are negatively and significantly related with energy consumption.
The effects of Rwanda’s Electricity Access Roll-Out Program on all beneficiary
groups including households were evaluated by L. Lenz et al.75 Using qualitative
data, they report that even if around 40% of beneficiary households indicated that
the air quality had improved due to reduced kerosene usage, this perceived air
quality improvement does not lead to a reduction of respiratory diseases, eye dis-
eases, or headaches. In the same vein, B. Bridge et al. examined the effects of elec-
tricity on income, education, health, and labor productivity in Nepal.76 Using data
from the Nepal Living Standards Survey-III (5,988 households) between 2010 and
2011, the authors employed a three-stage least squares (3SLS) method and found
that a household being connected to electricity has a very large and significant
effect on income, educational attainment, and agricultural productivity. Con-
versely, they find a positive but non-significant association between household
electricity connections and respiratory health expenditures.
Data and Methodology
In this section, we present the data, the empirical model, and the estimation
techniques.
Data: The data used in this study are from the World Bank’s World Develop-
ment Indicators.77 They cover 24 SSA countries over the period 1990-2018. The
period of study and the sample size are justified by the availability of data.
The dependent variables, the main independent variable, and control variables
are chosen following the relevant literature. Dependent variables are health capital
variables. Health is widely regarded as one of the most important forms of human
capital investment.78 For our study, health capital is measured by the incidence of
malaria, under-five mortality rates, and crude death rates. Incidence of malaria is
the number of new cases of malaria in a year per 1,000 people at risk. This variable
measures the epidemiological profile of the region under study. Under-five mortal-
ity rate is the probability per 1,000 that a newborn baby will die before reaching
age five, if subject to age-specific mortality rates of the specified year. Under-five
mortality appears to be a more reliable indicator than infant mortality in terms of
the overall level of child well-being than under-one mortality. For example,
according to J. Caldwell children in developing countries die between the ages of
1 and 5, and using the mortality rate for children under one year of age would
underestimate the difficulties faced by children in these countries.79 Crude death
rate indicates the number of deaths per 1,000 midyear population. We use crude
death rates to extent the mortality to all the population regardless of age.
The main independent variable of interest is access to electricity. Access to
electricity is measured by the percentage of the population with access to electric-
ity collected from national and industry surveys and renowned international
databases.
The control variables are GDP per capita (constant 2010 US$), current health
expenditure as a percentage of GDP, primary net school enrollment rate, and
urbanization rate. GDP per capita is gross domestic product divided by mid-year
population. Current health expenditure is the level of current health expenditure
expressed as a percentage of GDP. Primary net school enrollment rate (%) is the
ratio of children of official school age who are enrolled in school to the population
of the corresponding official school age children. Primary education provides chil-
dren with basic reading, writing, and mathematics skills along with an elementary
understanding of such subjects as history, geography, natural science, social sci-
ence, art, and music. Urbanization rate indicates people living in urban areas as a
decimal fraction of the total population.
We also control for the availability of health personnel in the region using
nurses and midwives per 1,000 people and the number of physicians per 1,000
people. Nurses and midwives include professional nurses, professional midwives,
auxiliary nurses, auxiliary midwives, enrolled nurses, enrolled midwives, and other
associated personnel, such as dental nurses and primary care nurses. Physicians
include generalist and specialist medical practitioners. Descriptive statistics and
sources of all variables are presented in table 1.
There are substantial variations on both the access to electricity measure and
health capital variables (table 1). Specifically, on a 0 to 100 scale, access to elec-
tricity ranges from 0.01% in Rwanda to 100% in the Seychelles and Mauritius
while the average of people having access to electricity in the region is limited to
35.19%.
The incidence of malaria per 1,000 inhabitants at risk ranges from less than 1
person in Cabo Verde to up to 589 people in Burkina Faso. In SSA, over the period
1990-2018, the number of new cases of malaria in a year per 1,000 inhabitants at
risk is, on average, 231.
Table 1
DESCRIPTIVE STATISTICS AND DATA SOURCES
Mean Std. Dev. Min. Max. Source
Incidence of malaria 231.2 167.981 0.008 589.326 World Bank
(per 1,000 (2020)
population at risk)
Under-5 mortality rate, 111.288 55.009 13.700 328.600 World Bank
(per 1,000 live (2020)
births)
Crude death rate 12.1704 4.386 4.828 41.359 World Bank
(per 1,000 people) (2020)
Access to electricity 35.191 25.282 0.01 100 World Bank
(% of population) (2020)
GDP per capita 1857.565 2512.613 164.337 19581.67 World Bank
(constant 2010 US$) (2020)
Current health 5.525 2.384 1.264 20.413 World Bank
expenditure (2020)
(% of GDP)
Urbanization rate 30.698 18.462 2.600 81.083 World Bank
(% of total (2020)
population)
Primary net school 65.329 23.911 10.609 99.908 World Bank
enrollment rate (%) (2020)
Nurses and midwives 1.1758 1.181 0.048 8.077 World Bank
(per 1,000 people) (2020)
Physicians (per 1,000 0.222 0.342 0.008 2.533 World Bank
people) (2020)
Source: Authors.
The under-5 mortality rate per 1,000 live births ranges from almost 14 children
in the Seychelles to 329 children in Niger with an average of 111 children in SSA.
This shows that every year, at least 1 in 10 children in SSA do not reach their fifth
birthday. The death of these children is not only a tragedy for the region, it is also
the loss of human capital that will never be realized.
The crude death rate per 1,000 people varies from 5 people in Sao Tome and
Principe to 41 people in Rwanda while the average number of deaths per 1,000
midyear population is estimated at 12 people in the region.
Figures 1-3 use SSA countries averages over the period 1990-2018 and show a
negative relationship between access to electricity and health capital measured by
the incidence of malaria (figure 1), under-five mortality rates (figure 2), and crude
death rates (figure 3). Over the sample period, SSA countries that enjoy more
Figure 1
ACCESS TO ELECTRICITY AND INCIDENCE OF MALARIA IN
SUB-SAHARAN AFRICA, 1990-2018
Source: Authors.
access to electricity have a lesser incidence of malaria (figure 1), lesser under-five
mortality rates (figure 2) as well as lesser crude death rates (figure 3).
This stylized fact is also reflected in table 2 where coefficients of correlation
between access to electricity and incidence of malaria, under-five mortality rates,
and crude death rates are all statistically and negatively significant at the 1% level.
They are (-0.41), (-0.66), and (-0.51) for the incidence of malaria, under-five mor-
tality rates, and crude death rates, respectively.
Empirical Model and Estimation Techniques: To investigate the effects of
access to electricity on health capital in SSA over the period 1998-2018, we esti-
mate the following empirical model in equation (1):
HCit 5 b0 1 b1 AEit 1 b2 GDPpcit 1 b3 CHEit 1 b4 Eit 1 b5 NMit

(1)
1 b6 Phit 1 b7 URBit 1 ai 1 lt 1 «it
Figure 2
ACCESS TO ELECTRICITY AND UNDER- FIVE MORTALITY RATE IN
Source: Authors.
Where i is an SSA country; t is the year; HC is health capital measured by inci-

dence of malaria per 1,000 people, under-five mortality rates per 1,000 live births,
and crude death rates per 1,000 people; AE is access to electricity in the percentage
of the population; GDPpc is GDP per capita in constant 2010 US$; CHE is current
health expenditure in the percentage of GDP; E is primary net school enrollment
rates; NM is the number of nurses and midwives per 1,000 people; Ph is the num-
ber of physicians per 1,000 people; URB is the urbanization rate in percentage of
the total population; ai and lt are country and period fixed effects, respectively;
and «it is the error term. Country fixed effects are included to control for the effects
of unobserved country-specific characteristics. They are also useful in removing
omitted factors that influence both health capital and access to electricity in the
long run. Period fixed effects are included to control for the effects of shocks that
are common across SSA countries. Additionally, they ensure that our estimates
do not reflect over-time trends in health capital or access to electricity at the
Sub-Saharan African level over the sample period.
Figure 3
ACCESS TO ELECTRICITY AND CRUDE DEATH RATE IN
Source: Authors.
We start by using fixed effects (FE) and random effects (RE) to evaluate the
effects of access to electricity on health capital in SSA. We run a Hausman test to
see whether FE or RE is more suitable to the model. The Hausman test shows that
FE regressions are likely to provide more convincing and relevant conditional cor-
relations as they focus on whether health capital changed following changes in
access to electricity (Hausman test p-value is reported in table 4). The FE specifica-
tions help to mitigate any omitted variable bias. They are crucial as they provide a
way to control for unchanging or slow-changing factors such as physical geogra-
phy, culture, and colonial history that may be simultaneously determining access
to electricity and human health.
Although the Hausman test revealed that FE models are more suitable than RE
ones, the former could yield large standard errors given the moderately long-time
series and the slow-moving nature of access to electricity and health capital in the
region under investigation. FE results could also be downward biased, due to the
Nickell effect.80 In this case, RE models are used to test the robustness of the find-
ings (table 4).
Table 2
CORRELATION BETWEEN MAIN VARIABLES, 1990-2018a
IM U5MR CDR AE GDPpc CHE URB E NM Ph
IM 1.00
U5MR 0.65*** 1.00
CDR 0.46**** 0.83*** 1.00
AE 20.41** 20.66*** 20.51*** 1.00
GDPpc 20.28*** 20.13*** 0.02 0.55*** 1.00
CHE 20.12*** 0.01 0.11*** 20.22*** 20.08 1.00
URB 20.18*** 20.23*** 20.14*** 0.54*** 0.63*** 20.31*** 1.00
E 20.26*** 20.21*** 0.00 0.29*** 0.51*** 0.11* 0.35*** 1.00
NM 20.40*** 20.50*** 20.13*** 0.59*** 0.56*** 0.00 0.300*** 0.47*** 1.00
Ph 20.44*** 20.52*** 20.32*** 0.73*** 0.35*** 20.04 0.31*** 0.41*** 0.69*** 1.00
a
***, **, * denotes significance at 1%, 5%, and 10%., respectively. IM 5 incidence of malaria per 1,000 people, U5MR 5 under five mortality rates
per 1,000 live births, CDR 5 crude death rates per 1,000 people; AE 5 access to electricity in percentage of population, GDPpc 5 GDP per capita in 2010
constant US $, CHE 5 current health expenditure in percentage of GDP, URB 5 urbanization rate in percentage of total population, E 5 primary net
school enrollment rate in percentage, NM 5 number of nurses and midwives per 1,000 people, and Ph 5 number of physicians per 1,000 people.
Source: Authors.
SUB-SAHARAN AFRICA: ELECTRICITY & HEALTH
95
Potential endogeneity in variables like education and health expenditure in the

relationship between access to electricity and health capital accumulation cannot
be ruled out. Random measurement errors are inherent in macroeconomic variables
such as education and health expenditure. We also suspect reverse causality
between education and health, on one hand, and between health expenditure and
health capital, on the other hand. Education can improve the health status of a
country’s population. For example, education is inversely related to several
unhealthy behaviors, including smoking, excessive alcohol consumption, and phys-
ical inactivity. Educated people are also better able to adopt medical technologies,
which can save lives and improve health capital. This reasoning is akin to the work
of M. Grossman, who believes that educated people are more efficient producers
of health capital.81 There is considerable empirical support for Grossman’s hypoth-
esis.82 Concerning health expenditure, the research of H. Issa and O. Ouattara, A.
Wagstaff and M. Claeson, and U. Yogo and D. Mallaye highlight its endogene-
ity.83 This endogeneity is justified by the fact that indicators of health system
inputs, such as expenditure, are influenced to some extent by past levels of health
outcomes. In this sense, A. Wagstaff and M. Claeson argue that under the Millen-
nium Development Goals (MDGs) and the SDGs, governments can choose the
level of expenditure in a given sector such as health based on its indicators.84
To handle the endogeneity problem in the literature two instrumental variables
methods are widely used: the generalized method of moments (GMM) and the two
stage least squares (2SLS). GMM is designed for panels with a small period (T)
and large sample size (N).85 Our period of study runs from 1990 to 2018 (29 years)
and the sample size covers 24 SSA countries. This restrains the use of GMM. We,
therefore, use 2SLS to account for endogeneity problems in education and health
expenditure and also to test the robustness of the results of the regressions. These
estimators are two-stage least-squares generalizations of simple panel-data estima-
tors for exogenous variables. Table 3 presents the endogenous variables list and
instruments.
The lagged variables in table 5 provide good instruments because the error term
in equation (1) turns out to display little serial correlation.86 The statistician L. P.
Hansen shows us that these instruments are not correlated with the error term and,
thus, that the instruments are valid.87 The Kleibergen-Paap rk LM Statistic rejects
the null hypothesis that the first stage is under-identified, so our instruments are
correct (table 6).
Results and Discussions
The regression analysis was conducted using fixed effects and random effects
methods. The Hausman test shows that the fixed effects method is the most appro-
priate when compared with the random effects method. Nevertheless, we also
Table 3
ENDOGENOUS VARIABLES LIST AND INSTRUMENTS
Exogenous Endogenous Justification for
Dependent Independent Independent Endogenous
Variable Variables Variables Variables Instrument
Incidence of Access to Current health Double causality Lag variable
malaria electricity, GDP expenditure, and error of
per capita, Primary net measure
Urbanization rate, school
Nurses and enrollment rate
midwives,
Physicians
Under-five Access to Current health Double causality Lag variable
mortality rate electricity, GDP expenditure, and error of
midwives,
Physicians
Crude death rate Access to Current health Double causality Lag variable
electricity, GDP expenditure, and error of
midwives,
Physicians
show the results from the random effects model for comparison purposes. We fur-
ther use the 2SLS estimation technique for robustness checks in the presence of
endogeneity. In all our regression results, we find that access to electricity has sta-
tistically significant and negative coefficients in all the models (table 4, 5, and 6).
The results are robust even when we control for endogeneity. The results mean
that an increase in the number of people with access to electricity in SSA leads to
better health capital.
More specifically, access to electricity reduces the incidence of malaria in the
region: a 1% increase in the population with access to electricity decreases the inci-
dence of malaria by 0.05%. Our results are in line with the research of D. P.
Mathanga et al. and M. Sultana et al. who found that access to electricity is likely to
reduce the incidence of malaria.88 For example, D. P. Mathanga et al., using condi-
tional logistic regression, found that electricity in the house is linked with protection
from malaria illness, both in the urban and peri-urban zones in Malawi.89
In Kenya, using multivariable logistic regression, M. Sultana et al. show that
children of households having no electricity are more likely to have malaria
Table 4
FIXED EFFECTS ESTIMATE OF ACCESS TO ELECTRICITY ON HEALTH
OUTCOMES,1990-2018a
Incidence Under-Five Crude Death
Variables of Malaria Mortality Rates Rates
Access to electricity 20.0543* 20.0125*** 20.00644**
(0.0298) (0.00431) (0.00294)
Log (GDP per capita) 0.364 0.0593 0.115
(1.530) (0.224) (0.153)
Current health expenditure 20.0706 0.00692 20.00789
(0.120) (0.0176) (0.0120)
Urbanization rate 20.0377 20.0232* 20.0422***
(0.0880) (0.0124) (0.00844)
Primary net school enrollment rates 0.00822 20.00682*** 20.00202*
(0.0116) (0.00166) (0.00114)
Number of nurses and midwives 0.200 0.0680*** 20.00741
(0.160) (0.0246) (0.0168)
Number of physicians 1.151 0.00409 0.0956
(2.339) (0.0891) (0.0608)
Constant 3.975 5.382*** 3.366***
(9.178) (1.354) (0.925)
Number of observations 82 95 95
Hausman test p-value 0.056 0.004 0.000
R-squared within 0.231 0.706 0.804
Prob . chi2 0.0000 0.0000 0.0000
a
Robust standard errors are reported in parentheses. ***, **, * denotes significance at the 1%, 5%
and the 10% level, respectively.
Source: Authors.
compared to those in households with access to electricity.90 As explained in the

literature review, access to electricity can increase coverage of malaria education
campaigns using mass media through televisions, radios, and the internet. How-
ever, contrary to this, L. Tasciotti finds that people in electrified households are
more likely to experience malaria in Malawi.91
For under-five mortality rates, we find that access to electricity has a negative
sign and is statistically significant, implying that an increase in the population with
access to electricity significantly decreases under-five mortality rates in SSA (tables
4, 5, and 6). In addition, a 1% increase in the population with access to electricity
decreases under-five mortality rates by 0.02%. Our results corroborate those of
M. Alam et al., U. Al-Mulali, A. Mazur, S. Rutstein, L. Wang, A. Burlando,
Table 5
RANDOM EFFECTS ESTIMATE OF ACCESS TO ELECTRICITY ON HEALTH
CAPITAL,1990-2018a
Variables of Malaria Mortality Rates Rates
Access to electricity 20.0391** 20.0214*** 20.0140***
(0.0172) (0.00272) (0.00236)
Log (GDP per capita) 21.364** 0.0609 0.372***
(0.619) (0.115) (0.102)
Current health expenditure 20.0833 0.00367 20.0226*
(0.110) (0.0172) (0.0136)
Urbanization rate 0.0512 0.00624 20.0184***
(0.0408) (0.00728) (0.00645)
Primary net school enrollment rates 20.00408 20.00806*** 20.00372***
(0.00968) (0.00157) (0.00125)
Number of nurses and midwives 0.116 0.0640** 20.00737
(0.160) (0.0255) (0.0199)
Number of physicians 22.470 20.0117 0.126*
(1.939) (0.0874) (0.0691)
Constant 14.33*** 4.952*** 1.235**
(3.358) (0.637) (0.579)
Number of observations 82 95 95
R-squared between 0.5669 0.6491 0.2758
Prob . chi2 0.000 0.000 0.000
a
Source: Authors.
T. Dendup et al., J. Lewis, T. Fujii et al., E. Poel et al., and O. Shobande.92 For
example, E. Poel et al., using a decomposition method in a cross-sectional study of
six Francophone countries in SSA, show that urban-rural differences in access to
electricity at home are partly responsible for urban-rural gaps in child mortality.93
Also, O. Shobande, using pooled OLS and system GMM estimators in a panel of
23 SSA countries finds that under-5 mortality is negatively and significantly related
with energy consumption.94
Furthermore, an increase in access to electricity leads to improvements in
indoor air quality and in a reduction in acute respiratory infection prevalence
among children and, hence, reduces their mortality. By allowing standard treat-
ments in the absence of daylight, access to electricity increases infant survival
chances. The utilization of child immunization and maternal health services are
Table 6
IV-2SLS ESTIMATES OF ACCESS TO ELECTRICITY ON HEALTH
OUTCOMES, 1990–2018a
Variables of Malaria Mortality Rate Rate
Access to electricity 20.0530** 20.0194*** 20.00935***
(0.0247) (0.00398) (0.00322)
Log (GDP per capita) 20.000936** 20.000270*** 24.62e-05
(0.000402) (7.44e-05) (7.58e-05)
Current health expenditure 0.341* 0.109** 0.0445
(0.175) (0.0487) (0.0428)
Urbanization rate 0.126*** 0.0351*** 0.0103
(0.0460) (0.0100) (0.0108)
Primary net school enrollment rates 20.0454** 20.0132*** 20.00568**
(0.0170) (0.00294) (0.00280)
Number of nurses and midwives 0.149 0.182*** 0.119**
(0.441) (0.0469) (0.0486)
Number of physicians 27.041* 20.329** 0.0934
(3.532) (0.137) (0.0955)
Constant 5.378*** 4.447*** 2.358***
(1.099) (0.302) (0.299)
Observations 50 63 63
R-squared 0.823 0.884 0.470
Kleibergen-paap rk LM Statistic F p-value 0.0161 0.007 0.007
F-Statistic 26.593 36.370 36.370
Hansen J Statistic p-value 0.3813 0.9580 0.7983
a
Source: Authors.
boosted with access to electricity. Through the improvement of access to mass

media, access to electricity can provide important information about childcare,
nutrition, the importance of vaccinations, micronutrients, or preventive measures.
Besides, providing information about family planning services helps to reduce
“unwanted births” and fertility: the decline in fertility reduces the mortality risk
and allows parents to take better care of their children’s health. This implies that
access to electricity can help African countries to make faster progress to reach an
under-five mortality rate of 25 per 1000 live births by 2030 (SDGs 3.2).
For the crude death rate, tables 4, 5, and 6 show that access to electricity statis-
tically and significantly reduces crude death in SSA. A 1% increase in the
population with access to electricity decreases crude death rates between 0.006%
to 0.014%. This result is consistent with the research by K. Roychowdhury and
S. Jones who find that in India crude birth rates and maternal mortality rates are
both strongly and negatively correlated with the percentage of households with
access to electricity.95 As shown in the literature review section, the expansion
of access to electricity can reduce respiratory illness, improve the quality, supply,
and access to health services, and facilitate access to health information. Further-
more, access to electricity can reduce fertility rates, increase income, and foster
education—all things that can contribute to crude death reduction in the region.
These findings suggest that access to electricity services is particularly important in
meeting the SDGs of reducing the incidence of malaria, under-five mortality rates,
and crude death rates in SSA.
Finally, for the control variables, interestingly, we find that few of them are sta-
tistically significant. One of the most robust results among the controls in the inci-
dence of malaria is that, during the sample period, GDP per capita is negatively
and statistically significant at conventional levels at least in tables 4 and 6. This
means that an increase in income per capita in SSA is linked to a reduction in the
incidence of malaria. Indeed, studies show that a country’s level of development
may influence the control of malaria.96 At the micro-level, this could be attributed
to the availability of income, which allows the households to spend more on the
treatment of the disease and preventive measures such as insecticide-treated nets
(ITNs), indoor residual sprays, better housing, schooling, and nutrition,97 while at
the macro level it could be attributed to the increase in governments expenditure
on public health facilities for the treatment of malaria.98
In the under-five mortality rates, increases in primary net school enrollment
rates reduce under-five mortality rates in SSA. This could be the case as education
may help in changing parents’ attitudes towards the use of modern health services
and also the adoption of measures to control children’s illness through preventive
care.99 The change in attitudes can be very important in cases where parents have
negative attitudes towards the use of modern medicine and positive attitudes
towards the use of traditional medicine. The finding supports Grossman’s hypothe-
sis that educated people are more efficient producers of health capital.
Paradoxically, increases in the number of nurses and midwives are accompa-
nied by increases in under-five mortality rates. This may be due to the poor qualifi-
cation of these health personnel in the region. In other words, it is the quality of
health personnel that matters more for under-five mortality and not merely their
quantity. The weakness of the regulation of the health sector, in particular the pri-
vate sector in Africa, does not guarantee the exercise of the medical professions by
the agents who have the highest competence. Therefore, the quality of health per-
sonnel is extremely important. For example, the World Bank’s Service Delivery
Indicators surveys conducted in SSA find that in Nigeria, less than 50% of
Nigerian health personnel, including doctors, could correctly diagnose a basic con-
dition such as neonatal asphyxia.100
In terms of crude death rates, one of the most robust results among the controls
is that urbanization reduces crude death rates (at least in tables 4 and 5). City
dwellers are generally closer to health care centers than those living in rural areas.
In urban areas, access to health information is generally easier.101 In addition, the
use of charcoal and domestic firewood, a major source of pollution in domestic
households in SSA, is less common in urban areas. Access to quality primary edu-
cation is also one of the most robust results in terms of reducing crude death rates.
As already stated, this supports the fact that education is good for health.
Conclusion
This study analyzed the effects of access to electricity on health capital in a

panel of 24 Sub-Saharan African countries. For this purpose, fixed effects and
instrumental variable-two stage least squares methods were applied to effectuate
the econometrical estimations using the World Development Indicators 2020 for
the selected variables during the period 1990- 2018. The empirical results reveal
that there is a negative and statistically significant correlation between access to
electricity and the incidence of malaria, under-five mortality rates, and crude death
rates. They further reveal that access to electricity reduces the incidence of malaria,
under-five mortality rates, and crude deaths in the region. Overall, the findings
imply that access to electricity improves health capital and contributes to human
capital accumulation in SSA. Therefore, access to electricity is still very crucial
when it comes to fostering human capital accumulation in Sub-Saharan African
countries. In fact, the results suggest that access to electricity should be at the cen-
ter of human capital policies in the region. Moreover, access to electricity is a key
factor that should always be considered in the preparation and implementation of
strategies or measures aimed at improving the human capital of the countries of
the region.
Acknowledgments
The authors would like to thank Ajibola Oladejo, Damien De Walque, Ismaila
Amadu, Nochi Dief Reagan, Waldja Thiombiano and the participants at the 2021
International Development Economics Conference organised by DIAL, GREThA
and LAREFI for helpful comments and suggestions.
NOTES
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ESTIMATION OF THE X-FACTOR IN THE
COLOMBIAN ELECTRIC POWER DISTRIBUTION
SECTOR: A COMPETITION WITH JUST
THREE WINNERS
Andres Ramırez-Hassan, Estefanıa R

ua-Ledesma, AND John Garcıa-Rendon*
Introduction
T he Colombian electricity market is an interesting case to study as it has faced

rapid changes in terms of its regulatory framework in recent years. In particu-
lar, the implementation of new international trends, such as the distributed of
*Andres Ramırez-Hassan is a Distinguished Professor of the School of Finance, Economics and

Government at Universidad EAFIT (Medellın, Colombia) and the Director of the research group
OMEGA (Observatory of Markets and Enterprises: Guidelines and Applications). The author is a
trained econometrician who received his Ph.D. in Statistical Science, two M.Sc. degrees (one in
Finance and another in Economics), and a B.A. degree in Economics. The author was a Research
Fellow at the Department of Econometrics and Business Statistics at Monash University (Melbourne,
Australia) and a Visiting Professor in the Department of Economics at Melbourne University. Since
completing his Ph.D. degree, much of the author’s research has been in the area of Bayesian
Econometrics with applications in finance, utilities, health, crime, and sports.
Estefanıa Rua-Ledesma is an Economist from the Universidad de Antioquia and received her
Ms. C. in Economics from Universidad EAFIT. The author is experienced in process architecture and
organizational structures and currently works as an Organizational Design Analyst in the retail industry.
She has worked in project management for the financial sector and in the implementation of
Management Systems in the electricity sector. Her areas of research interest are energy markets and
health economics.
John Garcıa-Rendon is a Research Professor in the research group OMEGA (Observatory of
Markets and Enterprises: Guidelines and Applications) of the School of Finance, Economics and
Government at Universidad EAFIT. Dr. Garcıa-Rendon is an economist who earned a Ph.D. (continued)

109
energy resources,1 which should be based on remuneration mechanisms that pro-

mote efficiency; otherwise, the system will face the “missing money” problem.2
The need to have a system that allows continuous interactions between agents has
increased significantly in the Colombian electricity market, which has turned into a
reference system in Latin America. In this context, the aim of such interactions are
reflected in lower tariffs for users, greater coverage for difficult access areas, and a
service with high demand-side reliability. On the other hand, the supply side
should be based on a system with greater incentives for participation, use of all
energy sources, and processes that are more efficient.
Our focus is on the charge associated with the distribution sector, which is the
second most relevant component of the retail price, around 30% of the market
price.3 The electric power distribution sector in Colombia is one of the links in the
energy chain that presents quite particular characteristics according to its structure,
operation, and remuneration, which remarkably differentiates it from the other
electric power sectors. The natural monopoly conditions4 and the possibility of
exercising greater control over its technical and operational performance make effi-
ciency analyses interesting to establish advances in the performance of the electric
power distribution sector.5 The changes in the productivity functions of the differ-
ent companies can be driven by several determinants, which are also linked to the
theoretical methodologies of efficiency analysis.6
Therefore, the main objective of this paper is to estimate the total factor produc-
tivity (TFP) change of the electric power distribution sector in the Colombian mar-
ket during the period 2010-2019 based on available public information. This
objective is particularly relevant as the Colombian energy regulatory council,
which set via Resolution CREG 70 of 1998, the rules for the network operators
(NOs). These firms are responsible for the functions of transportation and delivery
of energy at their corresponding voltage levels, performing maintenance, planning,
operations, expansion design and investment, and offering a good quality service.7
We can see in Figure 1 an overview of the electricity market in Colombia. This
is based on the interaction of marketers and large users for the acquisition of
energy, through the free operation of the forces of demand and supply.8 The indus-
try allows the entry of many participants in all the links of the energy chain, com-
posed of generation, transmission, distribution, and commercialization. We see in
in Economics, two M.Sc. degrees in Economics, and a B.A. degree in Economics. An expert in industrial
organization in electricity markets and smart grids, the author was a Researcher at the Department of
Economics at the Autonomous University of Barcelona, a Professor at Pompeu Fabra University, and
received the European Excellence award, Best EEM12 paper prize in European Energy Market (2012), for
his research in Regulatory Reform and Corporate Control in European Energy Industries. He was a visiting
Ph.D. student at City University London and has been a consultant for the IDB and the World Bank. His
research has been published in Energy Economics, Renewable and Sustainable Energy Reviews, Regional
Studies, Renewable Energy, The Electricity Journal, and Review of Income and Wealth.
COLOMBIAN ELECTRIC POWER DISTRIBUTION 111
Figure 1
ELECTRIC POWER MARKET STRUCTURE IN COLOMBIA
Generation
Wholesale Market
Buying or
Energy
$ Selling on
Flow
Spot Market
Contract Market $
Market Operator Transmission
Buying or
$ Selling on Spot
Market
$
Commercialization Distribution
Retail Market
$ Monetary
Payments
Tariff: End Users
Source: A. Perez & J. Garcıa-Rendon, “Integration of Non-Conventional Renewable Energy and Spot
Price of Electricity: A Counterfactual Analysis for Colombia,” Renewable Energy, vol. 167 (2021).
Figure 1 that the first players in the wholesale market are the electric generation
firms that set bilateral contracts and/or deals in the spot market with the commer-
cialization firms, these two players trade in an oligopolistic market structure with a
high level of concentration according to the Herfindahl-Hirschman index (HHI).
These two sectors can be vertically integrated according to Law 143, 1994. The
firms in the generation and commercialization sectors pay fees to the firms in the
transmission and distribution sectors, respectively. The latter sectors are in monop-
olistic markets at the national and local level, respectively.
Over the past several years, institutions in Colombia have undertaken great
efforts to implement technical, operational, and regulatory changes to make the
operation of the entire electricity system more efficient, ensuring higher levels of
coverage and quality of supply in all regions of the country. For this reason, the
Colombian government recently created the commission called “Mission of Energy
Transformation” with the objective of creating a roadmap for “the energy of the
future.” This commission is in charge of designing a better market structure and
regulatory framework to improve the level of competition in the sector as well as
better coverage and quality of electric power and gas services.9
Improvements in efficiency can occur in all links of the energy chain. However,
the electric power distribution sector has become a hot topic in terms of productiv-
ity, due to its economic characteristic as a natural monopoly, which necessitates
special attention be paid to its behavior and, in particular, facilitating anti-trust
practices and the behaviors that result in loss of efficiency. The monopoly market
structure that NOs operate in undermines the incentives to translate productivity
gains (X-factor) into gains that are passed on to the consumers. Thus, regulatory
councils should generate yardsticks and benchmarks for competition to guarantee
that the electricity end users realize some part of these potential gains.
In this study, we use stochastic frontier analysis (SFA) to estimate the X-factor.
In particular, we decompose the total factor productivity (TFP) change in terms of
efficiency, scale of economies, and technical changes. We found that the TFP
change was 21.6%, on average per year, where the largest contribution to this neg-
ative figure is from the efficiency change, 22.6%. On the other hand, the average
technical change was 2.1%, whereas the scale of economies change was 21.1%.
We found that just 3 out of 23 NOs had a positive TFP change. Additionally, the
result in terms of average efficiency for all periods is 32.8% using a truncated nor-
mal frontier function. However, there is a remarkable level of heterogeneity regard-
ing average efficiency, ranging between 9.9% and 94.8%.
Currently, most of the energy delivered by NOs belongs to residential users.
The arrival of new technologies of generation, distribution, and commercialization
systems have made market agents pay greater attention to their processes and
greater care to higher costs, especially due to the large boom in small-scale self-
generation, distributed generation, and prosumers. The first two, defined by the
Energy and Gas Regulatory Commission (CREG is its Spanish acronym), refer to
“electric energy users who can produce energy and market it in the national inter-
connected system,”10 while a prosumer refers to the unit acting as both a producer
and consumer. Therefore, the NOs face greater pressure to improve their efficiency
and translate productivity gains to their consumers.
After this introduction, we briefly review the functioning of the electric power
distribution sector in Colombia, then present the literature review and describe our
methodology, which is a stochastic frontier analysis to estimate the TFP change. In
the subsequent section, we describe our dataset and the results of the efficiency
analysis, showing the parameter estimates and TFP change components. Finally,
we present some concluding remarks and outline the main policy implications.
Theoretical Framework
Regulatory Framework: The Colombian Case: The Colombian electric power

network system is composed of regional transmission networks (RTS) and local dis-
tribution systems (LDS). According to Resolution CREG 015 of 2018, the RTS is
the network at a national level attending voltage level IV, that is, between 57.5 kV
and 220 kV. While LDS is comprised of district and municipal distribution networks
attending voltage levels I, II, and III, that is, voltage levels below 57.5 kV.11
Resolution 015 of 2018 establishes a revenue cap mechanism, by means of a
rate of return, to remunerate the electric power distribution activity. This mecha-
nism remunerates the replacement of assets by NOs, providing incentives to
improve the quality of service and the remuneration of efficient costs and expenses
consistent with recognized investments. Therefore, the income for the NO that pro-
vides the distribution service may be reduced, if it does not make sufficient invest-
ments that the regulation council considers in the investment plan.
Income from investment in assets of the NO by period of time includes:
(i) The regulatory base of assets, considering the investment approved in the
investment plan and in projects to expand the coverage. This investment
considers electric and non-electric assets, the latter according to Resolution
CREG 097 of 2008. The investment plan must include the assets necessary
for the implementation and certification of an asset management system in
accordance with ISO55001 standards for a 5-year term.
(ii) The rate of return recognized to each NO, defined in Resolution CREG
095 of 2015.
(iii) The capital recovery recognized for the remunerated assets in the regula-
tory asset base of the NO.
(iv) The regulatory land base of the NO.
Productivity measures are integrated in the Colombian electric regulatory
framework, Resolution 015 of 2018, through the administration, operation, and
maintenance costs and expenses (AOM). The NOs report the values of the AOM
and these values are contrasted with the results of the application of the stochastic
frontier efficiency models. The main objective is to improve the quality in the pro-
vision of the service through the remuneration of the efficient AOM using yard-
stick competition.
The actual regulatory system makes updates to the base cost using an efficiency
factor known as the X-factor. As explained by the CREG, the tariff level for a spe-
cific year depends on the behavior of the average income and, this in turn, is inde-
pendent of costs, thus introducing the concept of efficiency. Thus, if some NOs
manage to increase their productivity above the X-factor, they can obtain greater
benefits, otherwise, they are penalized. Therefore, the total factor productivity
change of NOs not only shows the evolution that the sector has had in operational
matters, but also shows the possible incentives that are created in these companies
to obtain higher than expected profits. On the other hand, there should be mecha-
nisms to ensure that the users will not have to bear high charges.12
Literature Review: Productivity Analysis in the Electricity Sector: In the
electricity sector, the analysis of efficiency has become a highly relevant assess-
ment throughout the energy chain. Researchers have accepted the use of parametric
and non-parametric frontier approaches for such analysis.13
Data envelopment analysis (DEA) does not assume any functional form for the
production function; this gives it an advantage over other efficiency methodolo-
gies.14 In particular, it uses the linear programming method to construct a nonpara-
metric frontier.15 A comparative analysis is performed between units to estimate
the efficiency, that is, their performance is estimated with respect to the most effi-
cient agent.16 On the other hand, stochastic frontier analysis (SFA) performs an
estimation of the efficient frontier and then calculates the relative distances as a
measure of efficiency.17
Efficiency analysis has been used at different points in the energy chain, from
power generation, transmission, and distribution, and has even been directly related
to the end user in the efficiency analysis of electric power demand. Some authors
have shown how the use of parametric models has significant advantages over the
use of non-parametric models. However, other authors18 have used both methodol-
ogies in their analyses. A. Otsuka19 suggests that the use of SFA can yield better
results since, unlike DEA, the model considers statistical errors and, therefore, con-
siders efficiency errors coming from all the explanatory variables that the model
may have. This author uses this model to analyze the demand-side determinants of
efficiency by first analyzing efficiency levels and then estimating the impact of
end-user housing types on efficiency.
Electric power generation is the activity in the chain where analyses directly
related to production, cost, and factor productivity functions have been performed
the most. K. See and T. Coelli20 examined the change of the total factor productiv-
ity of electricity generation in Malaysia. They show how sample size considera-
tions, model specifications, and noise in the data make the use of SFA the best
method to estimate the total factor productivity change (TFPC). L. Hiebert21 esti-
mated a stochastic frontier cost function, using as a complement to the SFA, a
model of inefficiencies that allows determining factors associated with changes in
efficiency.
For the case of electric power distribution, R. Lavado22 used SFA and DEA to
estimate a cost function with variable returns to scale. T. Hattori23 carried out a
SFA to analyze the relative performance of the productive efficiency of vertically
integrated companies in the United States and Japan. K. Anaya and M. Pollitt24
estimated a translog production function to estimate the impact of weather condi-
tions on the efficiency of electric power distribution, extending their analysis to the
impact of this on economic development. L. Orea et al.25 combined spatial econo-
metrics with stochastic frontier analysis to determine the effects of environmental
factors on cost functions in electric power distribution. There have also been works
introducing Bayesian inference and spatial effects in SFA to determine indirect
effects on efficiency.26
Table 1 shows a synthesis of efficiency studies in the electricity sector focusing
on the functional form, dependent variable and explanatory variables. We see in
this table that there are not many good quality publicly available applications of
efficiency analysis in the electric sector. Most of these estimate a SFA using a cost
function, which is the recommendation when taking into account multiple pro-
ducts, but requires information about input prices. We also included in this table
the number of cross-sectional units and the measure of delivered energy, the
Table 1
LITERATURE REVIEW: EFFICIENCY ANALYSIS IN ELECTRICITY SECTOR
Delivered Energy
Min Max Mean Application Function Dependent Variable Explanatory variables
Authors: L. Karim, M. Anaya, & G. Pollitt (Study Period: 1998–2008 Cross-Sectional Unit: 82)
82 GWh 41,898 GWh 5,982 GWh Distribution Input Distance (1) Operating cost OPEX; Model (1) and (2): Number
Function Cost (2) Operating cost OPEX, of customers, energy
Models Capital cost CAPEX delivered, length of
network
Input Distance (3) Operating cost OPEX, Model (3), (4) and (5):
Function Cost power losses; (4) Number of customers,
Quality Models Operating cost OPEX, energy delivered, and
power losses, customer length of network.
hour lost; (5) Operating Model (3), (4), (5): Total
cost OPEX, Capital cost rainfall, maximum
CAPEX, power losses; (6) absolute temperature,
Operating cost OPEX, minimum absolute
Capital cost CAPEX, temperature
power losses, customer
hour lost.
Author: A. Carvalho (Study Period: 1996–2010 Cross-Sectional Units: 28)
N/A N/A N/A Distribution Cost Frontier Variable Cost: Operational Energy delivered, Number of
Model expenditure of the firm customers, Load factor,
System average
interruption duration
index, Customer density,

Proxy measure of capital
of the network
(continued)
115
Table 1 (continued)
Delivered Energy
116

Author: L. D. Hiebert ((Study Period: 1988–1997 Cross-Sectional Units: 201 Gas Plants and 432 Coal Plants )
2,014 21.88 MM 3.97 MM Gas plants: Net generation,
KWh Price of fuel, Nameplate
(Gas) capacity of the plant
Generation Cost Frontier Variable Cost: Total (MW), Vintage of the
136 KWh 10.65 MM 1.42 MM Model operating and maintenance plant, Age of the plant,
(Coal) expenses Number of units
comprising the plant. Coal
plants: Scrubber dummy
Author: R. Lavado (Study Period: 1990–2002 Cross-Sectional Units: 119)
92 KWh 369,215 42,931 Electric Cost Function Total operating and Total sales, Factor prices,
KWh KWh Cooperatives maintenance cost Distribution network,
Transformer capacity,
Environmental variables,
Service area, Actual billed
customers, Demand
structure, System loss,
Maximum demand
Author: A. Otsuka (Study Period: 1990–2010 Cross-Sectional Units: 47)
895 KWh 32,871 KWh 5,315 KWh Residential Energy Demand Residential electricity Residential sector’s real
Electricity Frontier Model demand per household electricity price, Real
Demand household income,
Household size,
Household floor area,

Population aging rate,
Cooling degree day
(element of temperature),
Heating degree day
(element of temperature)
(continued)
Table 1 (continued)
Delivered Energy
Authors: K. F. See and T. Coelli (Study Period: 1998–2005 Cross-Sectional Units: 14)
744 GWh 10,914 GWh 4,553 GWh Generation Stochastic Total electricity sent-out in Fixed assets used in the
production gigawatt hours (GWh) for power plant, Fuel used,
frontier the power plants Total quantity of labor
employed, Total cost of
other inputs used, Year,
Dummy variable equal to
one if privately-owned
power plant and zero
otherwise, Dummy
variable equal to one if
peaking power plant and
zero otherwise, Weighted
average age of the power
plant operation
117
former to highlight a limitation of this kind of analysis, the reduced sample size in
some applications, and the latter to show that there is a high level of heterogeneity
between firms. We faced both issues in our application.
Efficiency Analysis: The Total Factor Productivity Change in Stochastic
Frontier Analysis: Efficiency analyses in the electricity sector have been carried
out by means of parametric and non-parametric approaches. The most popular
parametric approach is the stochastic frontier analysis (SFA), which focuses on the
use of econometric models. On the other hand, the most popular non-parametric
approach is data envelopment analysis (DEA), where the function that is estab-
lished as a frontier is estimated as a decision function of several variables.27
Despite the fact that DEA is a non-parametric technique, which implies flexibil-
ity, it has several limitations. A relative efficiency calculation is obtained, which
implies that at least one firm will have efficiency equal to 100%, that is, there is
bias in the calculation of efficiency. In addition, there is not a measure of uncer-
tainty in the estimates or statistical inference that gives a way to establish which
variables are statistically significant to determine efficiency. Moreover, 100% of
the inefficiency is attributed to the firms because of the non-inclusion of stochastic
disturbances in the specification; this feature also makes DEA very sensitive to out-
liers and measurement errors.
The above disadvantages are largely remedied by the use of SFA, although this
approach has its own limitations. First, calculation of individual efficiency is incon-
sistent due to its variance not converging to zero asymptotically. Second, the analy-
sis is parametric, although based on economic theory. Third, the most common
estimator is maximum likelihood; thus, the desirable statistical properties are
asymptotic. Fourth, the treatment of multiple products is complex since it must be
performed with simultaneous equations.
We made the decision to use stochastic frontier analysis based on a balance
between advantages and disadvantages of the two most implemented techniques
for efficiency analysis and, additionally, this seems to be the most popular
approach according to our literature review. In particular, we estimate a production
frontier because calculation of prices of productive inputs are not possible due to
limitations of publicly available information.
We estimate a production frontier using a Cobb-Douglas specification due to
sample size limitations; we had computational issues due to the singularity of the
design matrix when estimating a translog function. The model in log-log form is
given in equation (1):
PN
yit 5 b0 1 n 5 1 bn xnit 1 at 1 vit 2 uit (1)
where i 5 1; 2, :::, I; t 5 1; 2, :::, T, yit is log ouput of i-th unit in the t-period, xnit is
log of the n-th input, vit is the independently and identically distributed stochastic
error having N 0, s2v distribution, and uit is the technical inefficiency effect with
a skewed distribution in the positive orthant, j uit j Nðm, s2u Þ. Observe that the lat-
ter stochastic component implies reduction of the observed production compared
to its total potential.
We specify uit 5 ui Exp 2 hðt 2 TÞ , where uit decreases, remains constant, or in-
creases as t increases, if h . 0, h 5 0 or h , 0, respectively.28 Observe that uit is
the error component that takes into account inefficiency, then h . 0, h 5 0 or
h , 0 imply that the evolution of technical efficiency increases, remain constant, or
decreases as t increases.
The total factor productivity change (TFPC) of each network operator (NO)
between two given time periods is given by the following equation:
ln ðTFPit =TFPis Þ 5 ln ðTEit =TEis Þ 1 yit =t

P
1 0:5 Nn5 1 ðSFis enis 1 SFit enit Þ 3 ðxnit 2 xnis Þ :
Thus, the TFPC is composed of the efficiency change (EC), the technical
change (TC), and the scale of economies change (SC), that is, TFPC 5 EC 1
TC 1 SC. In particular, the technical efficiency of each agent will be estimated by
means of the expected value of e 2 uit with respect to «it 5 vit 2 uit , this implies
results between 0 and 1, where 1 will be considered as a technically efficient unit.
The technical efficiency of the i-th firm in the t-th period, denoted by TEit is given
by the following equation:
TEit 5 E½e 2 uit j «it :
Following T. Coelli et al.,29 the efficiency change (EC) index is defined as:
Efficiency Change ðECÞ 5 TEit =TEis :
In addition, the technical change is calculated by the partial derivative with

respect to the trend in the case of a Cobb-Douglas production function:
Technical Change ðTCÞ 5 yit =t,
where Equation (1) implies that yit =t 5 a.

The scale change (SC) is given by:
PN
Scale Change ðSCÞ 5 0:5 n51 ðSFis enis 1 SFit enit Þ 3 ðxnit 2 xnis Þ ,
P
where SF 5 ½ðeit 2 1Þ=eit is the scale factor, eit 5 Nn5 1 enit is the returns to scale
elasticity, and enit 5 yit =xnit 5 bn are production elasticities for each input.
Table 2
DESCRIPTIVE STATISTICS OF VARIABLES PER YEAR
(Stand. Dev. 5 Standard Deviation, Min. 5 Minimum, Max. 5 Maximum)
Variable Mean Stand. Dev. Min. Max.
Output variable Electricity sent-out 2,521.5 4,002.7 35.9 17,522.7
(Demand GWh)
Direct employees 590.2 923.0 3.0 7,561.0
Input variable Distribution transformers 22,843.0 30,404.0 333.0 140,601.0
Distribution networks (Kms) 20,527.9 22,140.0 50.9 96,609.0
Empirical Analysis: Efficiency Analysis and Total Factor Productivity

Change Decomposition Data: We estimate the TFPC in the electricity distribu-
tion sector in Colombia between 2010 and 2019 using information of 23 network
operators due to data availability. We specify a production function due to network
operators exerting more control over their inputs rather than their final product as
demand is already established.30
We estimate a Cobb-Douglas production function where the output is the total
energy delivered by each network operator (y), and inputs are the number of direct
employees (x1 ), the amount of distribution transformers (x2 ), and the distribution
network length (x3 ). The former is a proxy of labor, and the two latter are proxies
of capital.
The list of network operators was obtained from the general list provided by the
energy market operator in Colombia. We have the total energy demand in GWh
(Gigawatt hours) per network operator as output. This variable is obtained directly
from the historical data source of the business intelligent portal of the energy mar-
ket operator.
The information of the inputs was obtained by merging four sources: the reports
made by the NOs to the SUI public repository, the management reports of each
NO, the Superintendence of Public Utilities of Colombia, and the Colombian Asso-
ciation of Electric Power Distributors (ASOCODIS is its Spanish acronym). Table
2 provides the descriptive statistics. We observe a high degree of variability regard-
ing NOs size; there is a network operator whose demand is just 35.9 GWh a year,
whereas the highest has a demand equal to 17,522.7 GWh. This degree of variabil-
ity is also present in the input variables, for instance, there is a NO with just three
direct employees, whereas there is another with 7,561 employees.
Results
We estimate our production function using the maximum likelihood estimator

put forth by G. Battese and T. Coelli in their 1992 work31 and their subsequent 1995
article.32 This estimation is carried out using the R statistical software assuming a
Table 3
SFA RESULTS: PARAMETER ESTIMATES OF THE PRODUCTION FUNCTION
Location Coefficient Std. Error z value p-value
Intercept 1.44 0.40 3.57 3.51E-04
Direct employees 0.16 0.03 5.01 5.49E-07
Transformer 0.47 0.08 6.09 1.15E-09
Network 0.14 0.06 2.29 2.21E-02
Trend 0.02 8.7E-03 2.39 1.72E-02
Variance Coefficient Std. Error z value p-value
s2 0.34 0.05 6.05 1.48E-09
g 0.92 0.01 68.22 , 2.20E-16
m 1.12 0.17 6.70 2.10E-11
h 20.02 7.0E-03 22.64 8.17E-03
truncated normal distribution for the inefficient stochastic term. We also estimate a
model assuming a half-normal distribution, but there were technical issues.
We can see the parameter estimates in Table 3; all coefficients are statistically
significant at 5%. We observe in the top panel of Table 3 that the elasticities of the
production with respect to direct employees, amount of transformers, and network
length are 0.16, 0.47, and 0.14, respectively. This means that the most relevant
input is the amount of transformers, where a 1% increase in this input increases
by 0.47% the output. In the bottom panel of Table 3 we observe that g^ 5 s2u =s2 5
0:92, where s2 5 s2u 1 s2v , this indicates that approximately 92% of the total vari-
ability is due to inefficiency. This suggests that an SFA is pertinent. In addition,
the truncation parameter of the skew error is also statistically significant; this sup-
ports the use of this distribution for the inefficiency component. Finally, we
observe that the coefficient associated with the evolution of the efficiency through
time is equal to 20.02; this suggests that the average level of efficiency of the 23
network operators is decreasing on average at 2% per year.
Figure 2 shows the results of the average efficiency estimates per year, we see a
decreasing pattern with a 32.8% average over the period. However, there is a high
level of heterogeneity behind this average. Figure 3 shows that there are network
operators with levels of efficiency as high as 95% on average between 2010 and
2019, whereas there are NOs with average levels of efficiency as low as 10% in
this period. These results suggest that the average level of efficiency is very low;
consequently, there is a huge gap to improve in the sector. Nevertheless, the regu-
latory council should focus on particular network operators that present very low
levels of efficiency.
We calculate the total factor productivity change in the sector in this period.
We observe in Table 3 that the technical change is 2.1%, and this is statistically
significant at 5%. This means that the production possibility frontier moved
upwards on average 2.1% per year (see black line in Figure 4). We also see in
Figure 2
AVERAGE TECHNICAL EFFICIENCY PER YEAR: COLOMBIAN NETWORK
OPERATORS, 2010-2019
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Figure 3 other components of the TFPC. In Figure 4 we see that the efficiency
change had an arithmetic mean equal to 22.6% (gray line with circle markers),33
the scale economies change was on average 21.1% (gray line with black triangle
markers), which may be due to high fixed costs.34 Therefore, the average TFPC
was 21.6% in this period (gray line with X markers in Figure 4).
Figure 5 shows that there is also a high level of heterogeneity level regarding
the TFP change between 2011 and 2019. In particular, there are just three winners
in this period facing a positive TFPC, that is, if the X-factor proposed by the
Colombian council is equal to 0.5% per year, the average productivity gains of
these three NOs are 1.3%, 0.79%, and 0.55% per year. Other NOs are losers in
terms of the X-factor incentive contest.
Conclusions and Main Policy Implications
The Colombian electric power distribution sector is the sector with the second
largest share in the Colombian energy tariff, above 30% of the total, a situation
Figure 3
AVERAGE TECHNICAL EFFICIENCY PER NETWORK OPERATOR, 2010-2019
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
7 15 12 22 17 8 2 23 11 3 21 5 9 14 6 19 16 4 10 1 13 18 20
that makes this sector an important focus for determining the efficiency improve-
ments that the entire energy chain may have. In addition, the inherent characteris-
tics of the distribution sector make finding the determinants of efficiency quite
interesting due to the high fixed costs, economies of scale, and the characteristics
of natural monopoly. In addition, the granularity that these markets have presented
with the energy transition through distributed energy resources makes the technical
improvements more relevant.
When performing the stochastic frontier analysis, the average efficiency is equal
to 32.8% over all NOs between 2010 and 2019, and there is a negative TFP change
equal to 21.6%; these results are worrisome. The combination of low productivity
levels and a negative pattern of the TFP change implies that the regulatory council
seems not to be performing the most effectively. Therefore, our results suggests
that consumers are paying a higher charge due to inefficiency. However, there is a
high level of heterogeneity in this X-factor incentive competition. Econometric
results suggests that there are NOs with high levels of efficiency, higher than 90%,
and positive TFP changes, as high as 1.74% on average. There are just the three
winners in this contest.
Figure 4
TOTAL FACTOR PRODUCTIVITY CHANGE DECOMPOSITION: NETWORK OPERATOR,
2011-2019
3.0%
2.0%
Average change of NOs
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019
Efficiency change -2.4% -2.4% -2.4% -2.5% -2.5% -2.6% -2.6% -2.7% -2.9%
Technical change 2.1% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1% 2.1%
Scale economies change -0.8% -1.2% -1.6% -0.6% -1.2% -1.3% -1.1% -1.1% -1.0%
TFP change -1.0% -1.5% -1.9% -1.0% -1.7% -1.8% -1.7% -1.7% -1.8%
It seems that there is no easy future for the Colombian network operators given
our econometric results. This is also exacerbated with the new paradigm of the
international markets of network operators where better infrastructure based on
innovative technologies and smart networks are the core. In fact, the increasing
trend of distributed energy resources (DERs) is that they allow consumers to have
more control over electric power consumption.35 In addition, new removable
energy sources have created what is called the death spiral in countries like Austra-
lia, Germany, and the United States. These new trends imply new challenges for
the remuneration of the electric power network system and other new remuneration
mechanisms have emerged, such as the annual net-volumetric distribution tariff
(NET), the hourly bidirectional volumetric distribution tariff (BI), and time-of-use
tariffs,36 to compensate traditional remuneration frameworks due to decreasing
income because of prosumers.
In fact, the Colombian regulatory council has set forth new resolutions to align
with these new and emerging international trends. For instance, Resolution 174 of
2021 defines the regulation of the DER and large-scale self-generation activities in
Figure 5
AVERAGE TOTAL FACTOR PRODUCTIVITY CHANGE: NETWORK OPERATOR, 2011-2019
2.00%
1.00%
0.00%
15 12 7 9 17 22 23 6 11 21 2 3 14 5 8 10 1 19 16 13 4 18 20
-1.00%
-2.00%
-3.00%
-4.00%
-5.00%
-6.00%
the National Interconnected System (NIS), regulating operational and commercial

aspects, and establishing the conditions for integration and connection to the NIS,
in addition to the measurement systems for DERs.37 Also, Resolution 060 of 2019
sets the structural requirements for equipment and systems for the implementation
of the DERs for small facilities.38 Moreover, the Ministry of Mines and Energy
developed the study on the Mission for Energy Transition in which it established
the complementarity between a centralized and a distributed system is necessary in
order to deepen the energy transition and, therefore, the regulation for it must be
established.39 Although the main way to remunerate capital investment in the elec-
tric power distribution sector in Colombia is based on the time-of-use tariffs, where
the income of NOs can decrease if they do not satisfy regulatory requirements in
terms of investment, quality, and efficiency, it is important to examine other mech-
anisms such as Net Energy Metering or Net Billing, which encourage the imple-
mentation of distributed energy resources (DERs).
To sum up, our econometric results suggest that the remuneration based on rev-
enue cap and X-factor have not been generating the best incentives for efficiency
and productivity gains in Colombia. In addition, the new international trends
indicate that DERs are becoming increasingly used. Therefore, it should be exam-
ined to see what is happening with the current regulation mechanism or evaluate if
other mechanisms such as Net Energy Metering or Net Billing are appropriate.
This will allow for the entry of distributed grid operators and, as a consequence,
there will be more competition; thus, a more efficient system with better productiv-
ity results can be achieved.
Declaration of competing interest
The authors declare that they have no known competing financial interests or
personal relationships that could have appeared to influence the work reported in
this paper.
Acknowledgements
The authors would like to thank Universidad EAFIT for their support of this
research through the Research Assistantship grant from project 952- 000003. This
research has also been developed in the framework of the “ENERGETICA 2030”
Research Program with code 58864 in the “Colombia Cientıfica” initiative funded
by The World Bank through the call “778-2017 Scientific Ecosystems” managed
by the Ministry of Science, Technology and Innovation (Minciencias).
NOTES
1
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2
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del Sector de Distribucion de Electricidad en Colombia: una aplicaci on del Analisis de Frontera
Estocastica,” Ensayos sobre Polıtica Economica, Banco de la Republica de Colombia (2010), pp.
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4
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5
Y. A. Pati~no Moya et al., op. cit.
6
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7
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cional, Universidad Nacional de Colombia (2013).
8
XM, “Mercado de Energıa,” XM.com.co website, 2021.
9
MME, “Informes segunda fase Mision de Transformaci on Energetica. Hoja de ruta para la
energıa del futuro,” minenergia.gov.co website, 2021.
10
Comision de Regulacion de Energıa y Gas (CREG), “Autogeneraci on a peque~ na escala y
generacion distribuida,” creg.gov.co website, 2020.
11
12
Comision de Regulacion de Energıa y Gas (CREG), “Autogeneraci on a peque~ na escala y
generacion distribuida.”
13
C. Von Hirschhausen, A. Cullmann, and A. Kappeler, “Efficiency Analysis of German Elec-
tricity Distribution Utilities-Non-Parametric and Parametric Tests,” Applied Economics, vol. 38,
no. 21 (2006), pp. 2553–566.
14
T. Erkoc, “Estimation Methodology of Economic Efficiency: Stochastic Frontier Analysis vs
Data Envelopment Analysis,” International Journal of Academic Research in Economics and
Management Sciences, vol. 1, no. 1 (2012).
15
T. Coelli, D. Rao, C. O’Donnell, and G. Battese, An Introduction to Efficiency and Produc-
tivity Analysis (New York: Springer Science & Business Media, 2005).
16
T. Erkoc, op. cit.
17
A. Otsuka, “Determinants of Efficiency in Residential Electricity Demand: Stochastic Fron-
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18
R. Lavado, Benchmarking the Efficiency of Philippines Electric Cooperatives Using Stochas-
tic Frontier Analysis and Data Envelopment Analysis (Honolulu: East-West Center, 2004).
19
A. Otsuka, op. cit.
20
See, K. F. See and T. Coelli, op. cit.
21
L. Hiebert, “The Determinants of the Cost Efficiency of Electric Generating Plants: A Sto-
chastic Frontier Approach,” Southern Economic Journal, vol. 68, no. 4 (2002), pp. 935–46.
22
R. Lavado, op. cit.
23
T. Hattori, “Relative Performance of US and Japanese Electricity Distribution: An Application
of Stochastic Frontier Analysis,” Journal of Productivity Analysis, vol. 18, no. 3 (2002), pp. 269–84.
24
K. Anaya and M. Pollitt, “Using Stochastic Frontier Analysis to Measure the Impact of
Weather on the Efficiency of Electricity Distribution Businesses in Developing Economies,” Euro-
pean Journal of Operational Research, vol. 263, no. 3 (2017), pp.1078–094.
25
L. Orea, I. Alvarez, and T. Jamasb, “A Spatial Stochastic Frontier Model with Omitted Vari-
ables: Electricity Distribution in Norway,” The Energy Journal, vol. 39, no. 3 (2018), pp. 93–116.
26
A. Carvalho, “Efficiency Spillovers in Bayesian Stochastic Frontier Models: Application to Elec-
tricity Distribution in New Zealand,” Spatial Economic Analysis, vol. 13, no. 2 (2018), pp. 171–90.
27
A. Otsuka, op. cit.
28
G. E. Battese and T. J. Coelli, “Frontier Production Functions, Technical Efficiency and
Panel Data: With Application to Paddy Farmers in India,” Journal of Productivity Analysis, vol. 3,
no. 1 (1992), pp. 153–69.
29
T. Coelli et al., A Primer on Efficiency Measurement for Utilities and Transport Regulators.
30
31
G. E. Battese and T. J. Coelli, “Frontier Production Functions, Technical Efficiency and
Panel Data: With Application to Paddy Farmers in India.”
32
G. E. Battese and T. J. Coelli, “A Model for Technical Inefficiency Effects in a Stochastic
Frontier Production Function for Panel Data,” Empirical Economics, vol. 20, no. 2 (1995),
pp. 325–32.
33
Observe that this is an arithmetic average, whereas h 5 22% is a geometric average.
Remember that the arithmetic mean is always higher than the geometric mean.
34
E. C. Arias and J. V. Cadavid, “La regulacion econ omica de la distribucion de la energıa
electrica,” Revista Ecos de Economia, vol. 8, no. 18 (2004), pp. 99–139.
35
F. Meng, op. cit.
36
International Renewable Energy Agency (IRENA), Time-of-Use Tariffs Innovation Land-
scape Brief (Abu Dhabi: IRENA, 2019); J. Moncada, Z. Tao, P. Valkering, F. Meinke-Hubeny,
and E. Delarue, “Influence of Distribution Tariff Structures and Peer Effects on the Adoption of
Distributed Energy Resources,” Applied Energy, vol. 298, article no. 117086 (2021); and D. L opez
and J. Garcia, op. cit.
37
Comision de Regulacion de Energıa y Gas (CREG), “Resoluci on 174 de 2021, Por la cual se
regulan las actividades de autogeneracion a peque~na escala y de generaci on distribuida en el Sis-
tema Interconectado Nacional,” available at http://apolo.creg.gov.co/Publicac.nsf/1c09d18d2d5
ffb5b05256eee00709c02/c99b2f316a59fffb052587950077d9d1/$FILE/Creg174-2021.pdf.
38
Comision de Regulacion de Energıa y Gas (CREG), “Resoluci on 060 de 2019. Por la cual se
hacen modificaciones y adiciones transitorias al reglamento de operaci on para permitir la conexion
y operacion de plantas solares fotovoltaicas y eolicas en el SIN y se dictan otras disposiciones,”
available at http://apolo.creg.gov.co/Publicac.nsf/1c09d18d2d5ffb5b05256eee00709c02/ca640ed
be4b7b5100525842d0053745d/$FILE/Creg060-2019.pdf; A. Gutierrez and J. Garcia, “Fuentes de
energıa renovable, recursos energeticos distribuidos y almacenamiento en Colombia: Una revisi on
de la normatividad,” Working Paper CIEF, vol. 21, no. 1 (2021).
39
C. Batlle, P. Rodilla, and L. A. Barroso, “Foco 3. Hoja de ruta regulatoria para un desarrollo
mas eficiente de los recursos distribuidos,” Mision para la Transformacion Energetica, Ministerio
de Minas y Energıa (2019), pp. 1–65, and MME, “Informes segunda fase Misi on de Trans-
formacion Energetica. Hoja de ruta para la energıa del futuro,” (2021), available at https://www.
minenergia.gov.co/documents/10192/24265561/Informes+segunda+fase+MTE.pdf/e3811f3c-c4f3-
40d3-85e6-664d171c298a.
RENEWABLE ENERGY CONSUMPTION, POVERTY,
AND INEQUALITY IN FRENCH-SPEAKING AFRICAN
COUNTRIES: AN ARDL PANEL DATA ANALYSIS
Jean Aristide Biloa Essimi, Laurent-Fabrice Ambassa, Faustine Kede Ndouna,

AND Jean Marie Gankou*
Introduction
M any initiatives have been implemented around the world in recent years to
promote the consumption of clean energy or less polluting energy alterna-
tives. Toward this objective, the United Nations has named the decade 2014-2024
*Jean Aristide Biloa Essimi is a Senior Lecturer and Researcher in the Department of Economics
and Applied Management at the University of Douala (Cameroon), Associate Editor and Researcher at
the Laboratory of Analysis and Research in Mathematical Economics (LAREM) at Yaounde II
University-Soa (Cameroon), and Member of the International Association of French Economist
Language (AIEL) at the University of Pantheon-Assas (Paris II, France). He obtained a Ph.D. in
Mathematical Economics and Econometrics from the University of Dschang (Cameroon) and
graduated from Perdue University (U.S.A.), University of Haute-Alsace (France), University of Cadi
Ayyad (Morocco), and National School of Statistics and Economic Analysis (Dakar, Senegal). His
research focuses on income and gender inequality, poverty, social choice and well-being, informal
economics, labor economics, microeconomics, and macro development. Dr. Essimi has authored and
co-authored several scientific articles in academic and peer-reviewed journals.
Laurent-Fabrice Ambassa is a Ph.D. in Development Economics at the University of Douala with a
Master’s degree in Mathematical Economics and Econometrics from the University of Yaounde II
(Cameroon) and a Master’s degree in Banking, Finance and Insurance from the University of Rennes 1
(France). His research interests include development economics, gender issues, and labor economics.
He is a member of the Young Economists Network of the United Nations Economic Commission for
Africa. In parallel with his Ph.D. research, the author works as a Research Assistant in the Economics
and Management Research Group. (continued)

129
as that of clean energy.1 Additionally, the United Nations Sustainable Develop-

ment Goal number seven—ensuring access to affordable, reliable, sustainable, and
modern energy for all—encourages the consumption of cleaner and more modern
forms of energy in Africa, particularly in the south of the continent, to fight against
extreme poverty. According to a 2017 Oxfam report, two-thirds of the population
in Sub-Saharan Africa (SSA) does not have access to electricity. This document
also reports that nearly 34% of hospitals in the area are attached to an unreliable
energy source and that about 28 days of work are necessary for an individual living
in SSA to pay for their annual consumption, which is a relatively high amount
especially compared to developed countries.
An African Development Bank’s report2 shows the very promising potential for
energy resource development both in terms of fossil fuels and renewables in
Africa. Indeed, according to the International Energy Agency, as of 2019, Africa
supplied about 10% of the world’s crude oil, 7.9% of natural gas, and 4% of coal.3
However, despite the continent’s fossil fuel reserves and contribution to global
supply, the rate of energy consumption relative to this potential remains very low
with Africa’s consumption of the world’s fossil fuels at 3.7%.4 This situation is
similarly mirrored in terms of renewable energy, with Africa having a significant
potential, yet accounting for a mere 3.2% of global renewable energy consumption
despite having 17% of the world’s population.5 In addition, there is poor distribu-
tion of renewable energy consumption between the North and the South of the
African continent with SSA, in particular, lacking renewable energy development.6
As the world grapples with addressing global climate change and the energy
transition, the issue of how Africa equitably and sustainably can increase its renew-
Faustine Kede Ndouna is a Researcher at the Laboratory of Applied Microeconomics. She

defended her Ph.D. in Public Economics at the University of Dschang on the theme of “Essay on
Informality and Economic Development in Cameroon.” She is also a graduate of the National School
of Administration and Magistracy of Cameroon, Administrative Division and works at the Ministry of
Commerce in Cameroon. Her field of research is labor economics, business management,
entrepreneurship, innovation, development microeconomics, financial inclusion, and gender studies.
She has authored several scientific articles in academic and peer-reviewed journals and is a member of
the Center for Research in Economics and Management, the Association of Young African
Economists, the Young Scholars Initiative, Institute for New Economic Thinking, the Council for the
Development of Social Science Research in Africa, Africalics, and Globelics. She has received
distinctions including the Globelics Academy on Innovation and the Institute for Economic Research
on Innovation, from the Newton the Third University Program, Visiting Scholar, University of
Abomey-Calavi, Cotonou (Benin).
Jean Marie Gankou is a Full Professor at University of Yaounde II and Director of the Laboratory of
Analysis and Research in Mathematical Economics at the University Yaounde II. Professor Gankou has
been Director of Monetary African Center (Dakar), Delegate Minister in the Government (Ministry of
Economics and Finances), World Bank, and PNUD Consultant. His research includes analyses of debt,
investment, international trade and economic growth, and other macroeconomic development issues.
Professor Gankou’s publications have appeared in many academic and peer-reviewed journals.
ENERGY CONSUMPTION, POVERTY, & INEQUALITY 131
able energy supply and simultaneously meet its sustainable development goals
must be addressed. For decades, many developed nations have used the production
of inexpensive fossil fuels to grow their economies and, in the case of net energy
exporters, to gain export revenues. While some African nations have also benefited
as fossil fuel exporters, the majority of African countries have not. Additionally,
Africa accounts for only 3% of the cumulative global CO2 emissions, but is still
subject to the same pressures of the global community to reduce greenhouse gas
emissions, in general, and more specifically to move away from dependence on
energy generated from hydrocarbons to be replaced with renewable sources. As of
2020, renewable energy provided around 9% of Africa’s energy needs and that
was mainly generated by electricity produced from hydropower.7
Africa has an incredible untapped renewable energy potential. It is considered
to have the highest amount of untapped hydropower potential in the world with an
estimate that only 11% of its hydro capacity is being utilized today with approxi-
mately 37 GM of installed capacity.8 In addition to hydropower, Africa has under-
utilized wind energy (potential for more than 59 TW with only 0.01% of potential
being utilized), solar power (i.e., sunshine between 1,500 and 1,900 kWh/m2), bio-
mass or agrofuels (first and second-generation), and geothermal (a potential of
9,000 MW of which only 13% is being utilized in the Rift Valley), all of which
could help supply national grids and address the continent’s energy deficits.9 This
low renewable energy utilization is due to the relatively limited level of investment
despite the fact that we have witnessed some improvement in this trend over the
past decade.
At the crux of the matter is that energy demand in Africa has been increasing at
an annual rate of around 3%, the highest of any continent, but the energy supply
has not been growing fast enough to meet this demand. Africa’s 2020 energy gen-
eration mix from greatest to smallest source was as follows: oil (38.7%), natural
gas (29.7%), coal (22.1%), hydro (6.8%), wind (1.0%), nuclear (0.7%), solar
(0.6%), and bioenergy (0.4%).10 However, despite the existing dominance of fossil
fuels for energy generation, renewables are the region’s future and have increas-
ingly become the source of new electricity access, especially in SSA. According to
the Environment and Energy Management Agency, 70% of people in 2012 had
new access to electricity in SSA via renewable energy sources (hydroelectricity,
geothermal, and solar photovoltaic), in particular, thanks to the extension of exist-
ing networks, and that number is expected to increase to 80% by 2030.11 Hence,
the interest given to renewables in the UN Sustainable Development Goals along
with the hopes that Africa can leap-frog the use of fossil fuels for its energy transi-
tion while meeting its growing energy demand and the attainment of its other sus-
tainable development objectives.12
Furthering access to energy has been shown to have a major impact on well-
being (level of education, health, food security, etc.), economic growth, and envi-
ronmental protection. In terms of access, Africa’s regions have significant
disparities. In North Africa, the electrification rate is approaching 100%, while

SSA countries barely reach 15% in rural areas.13 This low energy consumption
may be the cause or consequence of low economic development in SSA. Indeed,
some individuals in these regions still live on less than USD $1.5 a day despite
growth domestic product (GDP) growth averaging 5% per year since 2000.14 This
is why lifting SSA out of energy poverty is seen as a key objective by 2050.15
To date, many investments have been made or are in progress on the continent
in the field of hydropower, wind, solar, and bioenergy with the support of develop-
ment partners such as the French Development Agency (AFD) and the Rockefeller
Brothers Fund, which encourage the discontinuation and movement away from fos-
sil fuels. However, these achievements are localized in Central Africa with hydro-
power and in West Africa with other types of renewable energy sources. As such,
facilities, exemption schemes, or exemptions have been granted to foreign and
domestic direct investors with major budgetary, economic, and social implications.
In the literature, several researchers have focused on the link between energy
consumption and economic growth around the world. Unfortunately, the majority
of this work is carried out in developed countries. Indeed, on the theoretical level,
these works can be grouped according to two main currents of thought in econom-
ics, namely, the classic and the neoclassic approaches, such as those of Adam
Smith and David Ricardo, that marginally evoke the notion of energy in their work
by addressing the concept of the machine. According to these scholars, the use of
machines increases the productivity of economic agents. The neoclassic approach
was the first to introduce energy as a factor of production into the production func-
tion in the 19th century. This function is called KLEM (Capital, Labor, Energy,
and Non-Energy Materials).
However, there are other types of production functions such as “putty-putty,”
“clay-clay,” and “putty-clay,” which are different ways of modeling the flexibility
of capital and labor in the production process. According to the literature, the putty-
putty function, which is the most flexible case where capital can be transformed
from one form to another at any time and can be combined with labor in any pro-
portion, can be unrealistic because it does not take into account the uniqueness of
the equipment and the non-flexibility of the technology. The clay-clay function is
the most rigid as capital is fixed in both form and proportion to labor once it is
installed. While the last function type is the SMAC production putty-clay function,
named after its founding fathers Solow, Minhas, Arrow, and Chenery, which incor-
porates the idea of putty-clay technology. Putty-clay technology means that capital
is flexible (putty) before it is installed, but becomes fixed (clay) once it is combined
with labor. This means that the capital-labor ratio and the marginal product of capi-
tal are determined at the time of investment and cannot be changed afterwards.
As a result of this work, other researchers such as Pacerbois (1978), Hamilton
(1983), Darmstadter et al. (1997), Ferguson et al. (2000), and Babusiaux (2001),
have highlighted the importance of energy in the production process, establishing a
link between energy consumption and wealth creation.16 This link was further
explored in the early 21st century with the research of Lee and Chang (2008).17
Empirically, much work has been done on the relationship between energy con-
sumption and economic growth at a global level. However, this research differs in
terms of method, data, and results. At the methodological level, the majority of the
research uses time series or panel data econometrics. Some of these analyses
employ widely used traditional econometric techniques such as panel data econo-
metrics, ordinary least squares method, and ordinary double least squares
method.18 Others, use fairly recent methods such as Structural VAR, panel VEC
model, dynamic panel, or Auto-Regressive Distributed Lag (ARDL) model in
panel data.19
The literature can be grouped into two main categories according to the results
obtained. The first group consists of work that establishes a unidirectional relation-
ship between energy consumption and economic growth. It has been carried out by
researchers such as Kraft and Kraft (1978), Abosedra and Baghestani (1991),
Jumbe (2004), Narayan and Smyth (2005), and Esseghir and Haouaoui (2014).20
The second group is composed of works using bivariate or multivariate methods to
highlight a bidirectional relationship between energy consumption and economic
growth or wealth creation. Here we find authors such as Ebohon (1996), Glauser
and Lia (1997), Yang (2000), Shiu and Lam (2004), Moritomo and Hope (2004),
Wolde-Rufael (2004 and 2006), Yoo (2005), Kane (2009), and Apergis and Payne
(2009).21 They advance four hypotheses on the link between energy consumption
and economic growth: growth, conservation, neutrality, and feedback. This work
assumes, in a comprehensive way, that low energy consumption is a symptom of
poverty and an obstacle to economic development.22
The main limitation to these studies is that they deal with energy without indi-
cating the source of production. Indeed, no distinction is made between renewable
energy and non-renewable energy, particularly concerning studies carried out on
the African continent. Among the existing works, however, very few pay particular
attention to the African continent, particularly SSA. The study by Ozturk and Bil-
gili (2015) carried out on 51 African countries, is one of the first studies that shows
that the consumption of bioenergy has a positive effect on GDP.23 The main limi-
tation of this study is the lack of consideration of the weight of this type of energy
in all the countries covered, knowing that the main source of electricity in Central
Africa is hydroelectric power, a limit to which recent empirical work will try to
respond.
In addition to these studies, we find contemporary research that give preference
to renewable energies compared to non-renewable energies. Renewable energy is
considered a more important growth factor than conventional fossil fuels (oil, coal,
and gas). Some of these analyses, which focus on Central America, Africa, India,
China, or other emerging countries, indicate that renewable energy consumption
positively influences economic growth and that it is a one-way (unidirectional)
relationship. This line of research is supported by authors such as Pereira et al.

(2019), Appiah (2018), Wang et al. (2018), Adams et al. (2018), Belaïd and Yous-
sef (2017), Teixeira et al. (2017), Cherni et al. (2017), and Wesseh and Lin
(2016).24
Specifically, this work leads to the conclusion that investments in renewable
energy and environmental protection have a positive impact on long-term eco-
nomic growth. However, in the short term, non-renewable energy has a more stim-
ulating effect on economic growth than renewable energy in African countries in
particular. In this sense, Adams et al. (2018) finds that “a 10% increase in renew-
able energy consumption is associated with a 0.27% increase in economic growth
while a 10% increase in non-renewable energy consumption leads to a 2.11%
increase in growth ceteris paribus.”25
On the other hand, other researchers speculate on the existence of a bidirec-
tional relationship such as Zafar et al. (2019), Menegaki et al. (2017), Kahia et al.
(2017), Shahbaz et al. (2017), Bhattacharya et al. (2016), and Shahbaz (2015).26
To this end, Bhattacharya et al. (2016), believe that there is a long-term dynamic
between economic growth and traditional energy-related inputs (measured by the
attractiveness index developed by Ernst & Young Global Limited).27 The authors
find the consumption of renewable energy has a positive and significant impact on
the economic growth of at least 57%. Kahia et al. (2017) confirm the existence of
a bidirectional causality between the use of renewable energy and short- and long-
term economic growth.28 For the latter, renewable and non-renewable energies are
substitutable but also are interdependent.
While it is true that the consumption of non-renewable energies can stimulate
economic growth through the improvement of the overall production of the econ-
omy, it must be admitted that this will have collateral damage to the environment
in the long term, in particular, the emission of CO2; hence, the paradox of renew-
able energies.29 Wesseh and Lin (2016) show that the main drivers of renewable
energy (wind, hydropower, and solar) in oil-producing African countries, for exam-
ple, are real per capita income, per capita energy resource depletion, carbon emis-
sions, and electricity prices.30
Some works, such as by Wang et al. (2018) and Tiba and Omri (2017), find a
consensus that shows that this is a relationship that varies according to the context
and the integration of activities related to environmental protection such as nature
conservation.31 For Wang et al. (2018), “the role of climate change and energy
security in the use of renewable energy needs to be strengthened” to achieve more
sustainable growth in developing countries.32
Other works, including by authors Lin and Ankrah (2019), Pereira et al. (2019),
Wang et al. (2018), and Bhide and Monroy (2011), find that the development of
renewable energies has a social dimension that can affect poverty and household
well-being among other factors.33 One challenge pointed out in the literature is that
the energy transition, despite having positive environmental consequences, can
have negative effects for disadvantaged households. According to Pereira et al.

(2019) the transition to renewable energy in Western countries has had negative
consequences for households in poverty leading to short-term income loss and
increasing their long-term poverty risks.34
The table in the appendix presents some important results of recent empirical
work discussed on renewable energy, non-renewable energy, and their relationship
to economic growth and well-being.
Given the above, the objective of this paper is to analyze the implications of
renewable energy consumption on the well-being of populations measured by the
gross domestic product (GDP) per capita in French-speaking Black Africa.
Apart from the introduction, the paper includes a section on methodology and
data sources, a section on the presentation and interpretation of results, and, finally,
a section on conclusion and recommendations.
Methodology and Data Sources
Presentation of the Methodology: Our empirical analysis is based on the use

of the methodology of non-stationary and co-integrated panels. However, before
estimating a dynamic model, we proceed to the study or determination of the statis-
tical properties of all the series convened for the realization of the study, as well as
their potential long-term or short-term relationship. Similar to the methodology
used in Bhattacharya et al. (2016)35 and Damette et al. (2018),36 our study uses the
following model to be estimated in the form of equation (1):
Yit 5 Abit Kita Lgit (1)
This is a Cobb-Douglas type of production function Yit that includes physical

capital denoted by Kita , labor represented by Lgit and the total productivity factor
(TPF) is represented by Abit , respectively, for country i at one-year t.
In our study, physical capital is represented by the physical capital stock, labor
is represented by total labor, and productivity depends on an energy component
and trade openness (Trade). By transforming equation (1) to bring all the variables
back to the same level, we obtain equation (2):
lnY it 5 bit lnAit 1 ait lnK it 1 git lnLit (2)
With
8
< lnAit 5 lnRECit 1 ln INF it 1 lnTradeit 1 vt 1 «it
lnK it 5 lnS kit 1 lnDeltait (3)
:
lnLit 5 lnLF it
Where Yit takes three (03) different values according to each estimate, namely,
the gross domestic product reduced to the number of inhabitants or the population
that makes it possible to assess the well-being of the population; the depth of pov-
erty captured by the poverty line, which represents the portion of the population
that lives below USD $1.90 dollars/day; and the income inequalities captured by
the Gini indices of each country i at date t. The TPF depends on the renewable
energies consumption RECit, the rate of inflation INFit, and the rate of trade open-
ness lnTradeit; the physical capital depends on the capital stock Skit, which makes
it possible to observe or appreciate the investments made in this field; the rate of
depreciation of physical capital Deltait; and the labor factor is represented by the
labor force LFit that provides information on the workforce mobilized.
To consider the short- and long-term relationship between renewable energy
consumption and GDP per capita and to avoid a misleading regression in the panel,
we use the estimation of a autoregressive distributed lag model (ARDL) introduced
by Pesaran and Shin (1999)37 and then developed by Pesaran et al. (2001).38 Error-
corrected models assume, in fact, the existence of a co-integration or long-term
relationship between the variables and a force of recall towards an equilibrium that
corrects the short-term deviations of the endogenous variable from its equilibrium
path. The final dynamic specification of the error-corrected model can be obtained
from the unconstrained model, given in equation (3), by simple linear transforma-
tion, thus allowing to have simultaneously the long-term and short-term coeffi-
cients as well as the adjustment coefficient or force of recall to equilibrium or
component of error corrections, which must be negative and significant. The model
to be estimated is specified as follows in equation (4):
Xp
DYit 5 u1 Yit 1 1 u2 Xit 1 1 w DYit j 1 :::
j51 i
(4)
Xq 1
1 r DXit j 1 dit 1 1 vt 1 «it
j50 j
With Xit2j a vector of explanatory variables from country i to year t; dit21 is the
error correction term, adjustment coefficient, or equilibrium recall force; wi repre-
sents the vector of coefficients of the short-run effect; rj is the coefficient vector of
the model’s long-term dynamic effect; vt is the temporal component; and «it is the
error term.
However, before making the estimates, we first analyze the correlation or depen-
dence between the variables (Pesaran and Smith (1995) tests),39 subsequently, we per-
form econometric tests such as unit root tests, cointegration tests, and causality tests.
For unit root or stationarity tests, we first perform the first-generation tests,
namely, the tests of Levin, Lin, and Chu (2002) and Im, Pesaran, and Shin
(2003).40 These provide information on whether the variables are stationary or not.
As far as cointegration tests are concerned, they will be carried out following the
stationarity tests and will make it possible to decide whether or not the variables are
dependent. Additionally we will examine whether there is a long-term relationship

between the variables. As such, we utilize the Pedroni (1999)41 and Westerlund
tests (2007).42
Finally, causality tests will make it possible to distinguish the type of relation-
ship that exists between the variables of interest—is it a unidirectional or bidirec-
tional relationship? For this purpose, the Granger causality test proposed by Lopez
and Weber (2017)43 is performed. This is a fairly robust test.
Data Sources: The data used in our model come from the World Bank’s World
Development Indicators (2017) for the period 1990-2017.44 Our sample consists of
20 Black African countries that are French-speaking and are members of the Fran-
cophonie; the map in figure 1 displays the countries in our study. Table 1 gives an
overview of the key variables, definitions, and their sources.
Figure 1
MAP OF FRENCH-SPEAKING COUNTRIES IN THE STUDYa
Cape
Verde
Mali Niger
Senegal Chad
Guinea-Bissau
Guinea
Burkina Faso CAR
Côte d'Ivoire Togo Benin
Cameroon
D.R.
Equatorial Guinea
São Tomé and Príncipe Congo
Rwanda
Gabon
Congo Rep.
Madagascar
Source: Authors.
a
CAR 5 Central African Republic. Djibouti and Burundi were not included in this study.
Table 1
PRESENTATION OF VARIABLES AND DEFINITIONS
Variables Symbols Definitions Sources
Gross Domestic PIB This variable corresponds to the World Development
Product per capita value of the GDP of a State Indicators (2020)
divided by the estimated mid-
year population of the same
State (in PPP)
Consumption of REC This variable represents the share World Development
renewable energies of renewable energy in gross Indicators (2020)
final energy consumption (in
percentage)
Total labor force LF This variable captures the World Development
percentage of people who are Indicators (2020)
employed plus the unemployed
who are looking for work. It,
therefore, represents the total
potential workforce of a country.
Physical capital stock S This variable represents the share Penn World Table
of investment in physical capital (PWT version 10)
in total GDP.
Rate of depreciation Delta This variable measures the Penn World Table
of physical capital proportion to which physical (PWT version 10)
capital is depreciated in a year
Trade openness Trade This variable is the sum of exports World Development
and imports of goods and Indicators (2020)
services measured as a
percentage of gross domestic
product
Inflation rate Inf This variable represents the World Development
percentage of increase/decrease Indicators (2020)
in the prices of goods and
services over a given period.
Depth of poverty Pov Also known as the poverty line, World Development
this variable represents the share Indicators (2020)
of the population that lives
below $1.9 per day.
Gini index Gini Also called the Gini coefficient, it Standardized World
is a synthetic indicator to Income Inequality
account for the level of Database (SWIID
inequality for a variable and a version 9.2)
given population. It varies
between 0 (perfect equality) and
1 (extreme inequality).
(continued)
Table 1 (continued)
PRESENTATION OF VARIABLES AND DEFINITIONS
Variables Symbols Definitions Sources
Political stability Geff This indicator measures the quality World Governance
of public services, the quality of Indicators (2020)
the public service and its
independence from political
pressures, the quality of policy
formulation and implementation,
and the credibility of the
government's commitment to its
stated policies.
Source: Authors.
Presentation and Interpretation of Results
Descriptive Statistics: Table 2 presents the descriptive statistics across the

panel of our study. Depending on the availability of data, the number of observa-
tions varies between 462 and 532.
Table 3 clearly shows that the majority of French-speaking Black African coun-
tries in the sample are economically similar if we consider only the variables used
for the study. Generally speaking, the values of the variables are quite similar for
different individual countries. This can be justified by the structure of their econo-
mies. These are economies that are not very diversified with a strong dominance of
the informal sector. Moreover, Table 3 shows that there is heterogeneity among
the countries of French-speaking Africa, particularly in terms of annual GDP per
capita, the depth of poverty, and the level of income inequality. The highest rate of
GDP per capita is that of Gabon (9.21%) followed by Equatorial Guinea (8.61%)
then Cape Verde (7.66%) followed by Cameroon (7.13%); most countries are at
more than 6% and only the Democratic Republic of Congo (DRC) is below this
average at 5.90%. On the other hand, the consumption of renewable energy (REC)
for the sampling period for most of these countries is around 4%, which justifies
that these countries are fairly uniform overall and the investment in renewable
energy (S) does not exceed 22% for the countries that invest the most in this
energy source (Ivory Coast and Cameroon).
The results are in line with estimates by the African Development Bank, which
estimates that renewable energy accounts for about 3% of final energy consump-
tion in Africa excluding fuelwood. Unfortunately, most of the renewable energy is
electricity produced from hydropower and access to these resources requires
increasing the level of capital investment.
The countries least committed to investing in renewable energy are Togo, Cen-
tral Africa Republic (CAR), and Guinea Bissau (19.73%, 19.25%, and 18.01%,
Table 2
CHARACTERISTICS OF VARIABLES ACROSS THE PANELa
Variables Mean Std. Dev. Min Max Observations
PIB overall 6.707 0.836 5.322 9.386 N 5 532
between 0.837 5.855 9.212 n 5 19
within 0.180 5.847 7.358 T 5 28
REC overall 4.291 0.292 3.074 4.588 N 5 532
between 0.284 3.412 4.569 n 5 19
within 0.095 3.952 4.637 T 5 28
LF overall 14.611 1.451 10.407 17.270 N 5 532
between 1.468 10.755 16.847 n 5 19
within 0.241 14.125 15.236 T 5 28
S overall 10.267 1.348 5.844 12.554 N 5 532
between 1.267 6.720 12.355 n 5 19
within 0.541 9.084 12.272 T 5 28
Delta overall 23.202 0.331 24.075 22.491 N 5 532
between 0.309 23.927 22.724 n 5 19
within 0.136 23.564 22.803 T 5 28
Trade overall 4.050 0.392 2.980 5.055 N 5 472
between 0.341 3.534 4.750 n 5 17
within 0.207 3.268 4.780 T-bar 5 27.76
Inf overall 1.428 1.487 23.305 10.076 N 5 462
between 0.868 0.522 3.987 n 5 19
within 1.198 22.854 7.518 T-bar 5 24.31
Pov overall 49.777 21.228 3.4 94.3 N 5 532
between 21.451 5.7 85.75 n 5 19
within 3.726 26.057 81.757 T 5 28
Gini overall 3.791 0.109 3.547 4.181 N 5 532
between 0.102 3.573 3.990 n 5 19
within 0.045 3.662 4.112 T 5 28
Geff overall 4.942 0.843 0 5.881 N 5 532
between 0.565 3.810 5.773 n 5 19
within 0.639 0.064 6.979 T 5 28
a
Data are logarithmic.
Sources: Authors.
Table 3
CHARACTERISTICS OF VARIABLES IN EACH SAMPLE COUNTRYa
Country
PIB REC LF S Delta Trade Inf Pov Gini Geff
Equatorial Guinea
8.668 3.078 12.451 9.123 22.563 4.751 1.408 4.0043 5.688
(1.326) (1.135) (0.363) (2.113) 0.261 0.132 0.954 0.0497 0.104
Benin
6.571 4.208 14.919 10.655 23.121 3.942 0.947 51.4 3.8164 3.921
(0.106) (0.238) (0.252) (0.430) 0.043 0.154 1.193 0.490 0.0118 0.405
Burkina Faso
6.179 4.443 15.456 10.452 23.151 3.699 0.990 64.28 3.7947 4.434
(0.225) (0.073) (0.174) (0.473) 0.122 0.254 1.050 6.677 0.0356 0.289
Cameroon
7.132 4.412 15.779 11.665 23.034 3.842 0.679 33.75 3.7935 4.878
(0.103) (0.038) (0.233) (0.400) 0.081 0.186 1.212 3.983 0.0051 0.966
Cape Verde
7.698 3.412 12.014 9.107 23.102 4.517 1.053 9.467 3.9095 5.003
(0.454) (0.188) (0.216) (0.475) 0.092 0.148 1.063 1.814 0.0091 1.611
Democratic Republic of Congo (DRC)
5.903 4.569 16.847 12.355 23.852 4.002 3.987 85.75 3.8591 5.773
(0.231) (0.016) (0.249) (0.174) 0.204 0.369 2.771 2.327 0.0191 0.035
Congo Republic
7.848 4.190 14.171 10.516 23.062 4.750 1.087 39.6 3.7702 5.489
(0.072) (0.097) (0.254) (0.899) 0.127 0.252 1.275 0.000 0.0004 0.063
C^
ote d'Ivoire (Ivory Coast)
7.183 4.282 15.652 11.345 23.179 4.301 0.878 26.15 3.9340 5.099
(0.085) (0.063) (0.153) (0.559) 0.083 0.207 0.917 1.514 0.0668 0.604
Gabon
9.212 4.362 12.903 11.083 23.040 4.455 0.640 5.7 3.7057 4.674
(0.100) (0.076) (0.297) (0.683) 0.033 0.101 1.378 0.626 0.0012 0.566
Guinea
6.432 4.417 15.040 10.220 22.983 3.907 1.962 59.82 3.7289 5.346
(0.113) (0.053) (0.203) (0.256) 0.110 0.143 1.446 7.930 0.0341 0.177
Guinea-Bissau
6.343 4.483 13.212 8.689 23.927 53.35 3.8595 5.535
(0.098) (0.012) (0.201) (0.072) 0.143 3.871 0.1751 0.149
Madagascar
6.044 4.385 15.949 10.925 23.104 3.872 2.352 71.043 3.7788 4.740
(0.049) (0.052) (0.270) (0.538) 0.092 0.257 0.551 2.672 0.0044 0.669
Mali
6.421 4.380 15.128 9.918 22.724 4.020 1.149 61.625 3.7014 5.004
(0.148) (0.121) (0.370) (0.683) 0.166 0.097 0.972 5.401 0.0106 0.304
(continued)
Table 3 (continued)
CHARACTERISTICS OF VARIABLES IN EACH SAMPLE COUNTRYa
Country
Niger
5.855 4.423 15.464 11.054 23.519 3.612 0.627 67.3 3.6632 4.836
(0.065) (0.045) (0.290) (0.334) 0.214 0.174 1.711 6.607 0.0172 0.252
Central African Republic (CAR)
6.005 4.447 14.285 9.458 23.414 3.731 75 3.9897 5.489
(0.128) (0.068) (0.141) (0.466) 0.152 0.180 2.477 0.0015 0.063
Rwanda
6.077 4.470 15.261 9.447 23.060 3.534 1.933 64.94 3.9029 4.278
(0.333) (0.042) (0.250) (0.786) 0.099 0.270 0.605 3.398 0.0277 1.386
S~ao Tome and Prıncipe
6.983 3.902 10.755 6.720 22.763 2.614 33.867 3.5726 4.585
(0.108) (0.107) (0.224) (0.932) 0.094 0.533 0.597 0.0190 0.344
Senegal
6.827 3.864 14.993 11.471 23.227 4.101 0.522 50.42 3.7351 3.810
(0.102) (0.102) (0.271) (0.363) 0.071 0.099 1.181 4.951 0.0106 0.826
Chad
6.490 4.546 15.073 9.949 23.179 4.170 1.679 38.1 3.7393 5.468
(0.280) (0.038) (0.281) (0.616) 0.307 0.323 1.082 0.000 0.0032 0.376
Togo
6.224 4.337 14.716 10.040 23.389 4.385 0.856 54.2 3.7680 5.535
(0.073) (0.076) (0.230) (0.429) 0.103 0.164 1.205 0.759 0.0061 0.202
TOTAL
6.805 4.231 14.503 10.210 23.170 4.069 1.460 49.777 3.8013 4.979
(0.965) (0.462) (1.493) (1.416) 0.356 0.403 1.547 21.228 0.1165 0.838
a
Standard deviations are in parentheses.
Sources: Authors.
respectively). Overall, the energy sector accounted for just over 7% of official
development assistance (ODA) from Foreign Direct Investment in Africa.45
The level of investment determines the level of the workforce mobilized, i.e.,
no more than 15% for countries with a larger workforce such as CAR followed by
Burkina Faso, Ivory Coast, Guinea, Madagascar, Mali, Niger, and the Democratic
Republic of Congo (DRC), with an average around 15%. These figures indicate
that the low level of investment in RE and the low level of labor engaged in
French-speaking African countries leads to low consumption of renewable energy
and labor quality, which may have implications for the population’s well-being
and standard of living. These results are in line with those of the World Bank and
Favennec (2015), which shows that access to renewable energy is growing at a
Table 4
CORRELATION MATRIXa
PIB 1
REC 20.4115 1
LF 20.6054 0.5752 1
S 0.1326 0.1376 0.581 1
Delta 0.398 20.2016 20.2466 20.21 1
Trade 0.6241 20.4117 20.398 0.1091 0.1678 1
Inf 20.2817 0.2511 0.1811 20.0326 20.2799 20.1751 1
Pov 20.8634 0.5157 0.6403 0.0347 20.3974 20.5707 0.3176 1
Gini 20.143 20.104 20.0682 20.2291 20.2273 20.0952 0.1057 0.0599 1
Geff 20.0845 0.168 0.0335 20.0401 20.2122 0.1633 0.2039 0.085 0.1036 1
a
The variables are logs.
Sources: Authors.
slower pace than population growth in Africa.46 This low use of labor can be
explained by the predominance of jobs in the informal sector.
Table 4 tells us that there is a link between the different variables selected in the
study. However, to confirm this result we carried out the dependency tests (CD-test)
Table 5
CROSS-SECTIONAL DEPENDENCY TESTINGa
Variables CD-test Average Joint Mean r Mean Abs(r)
PIB 16.171*** 28 0.22 0.5
REC 23.393*** 28 0.32 0.5
LF 72.001*** 28 0.99 0.99
S 52.715*** 28 0.72 0.79
Delta 7.765*** 28 0.11 0.54
Trade 12.358*** 25.92 0.15 0.29
Inf 23.363*** 21.07 0.34 0.34
Pov 0.358 28 0 0.1
Gini 2.045** 28 0.03 0.36
Geff 5.514*** 28 0.08 0.3
a
*** denotes a rejection of the independence hypothesis at the 1% significance level, ** denotes a
rejection of the independence hypothesis at the 5% significance level, and * denotes a rejection of the
independence hypothesis at the 10% significance level.
Sources: Authors.
Table 6
STATIONARITY TEST RESULTSa
Variables Test Stationarity Coefficient Integration Order
PIB LLC Level 20.965 I(0)
Indifference 26.480
REC LLC Level 22.127 I(0)
Indifference –
LF LLC Level 0.5652 I(0)
Indifference 12.09***
S LLC Level 2.002** I(0)
Indifference –
Delta LLC Level 3.904*** I(0)
Indifference –
Trade IPS Level 22.0255** I(0)
Indifference –
Inf IPS Level 26.469*** I(0)
Indifference –
Pov LLC Level 28.34*** I(0)
Indifference
Gini LLC Level 22.041** I(0)
Indifference
Geff LLC Level 219.59*** I(0)
Indifference
a
This is an estimate without trend and with a delay. The level of significance *** at 1% denotes a
rejection of the null hypothesis of the absence of stationarity of the variables.
Sources: Authors.
including the Pesaran test (2004) and Pesaran (2015).47 According to the results of
this test, we have found that there is a dependency relationship between the depen-
dent variable and the independent variables. The cross-sectional dependency test
results are given in Table 5.
The test by Levin, Lin, and, Chu (LLC)48 shows that most variables are station-
ary at the level and have the same integration order; they are I(0). This suggests
the existence of a long-term equilibrium relationship. However, there are countries
with no data on inflation and trade openness for which the LLC test is inadequate;
therefore, we preform the Im, Pesaran, and Shin (IPS) test,49 which is adapted to
non-cylinder panels, for these variables. Table 6 provides our stationarity test
results.
We preformed panel cointegration tests using the Pedroni (1999) and Wester-
lund (2007) tests. The results are given in Table 7 and the analysis shows that there
could be a cointegration relationship between the variables.
Table 7
PANEL COINTEGRATION TESTSa
Test
Dependent
Variable Pedroni Westerlund
Statistic
PIB Modified Phillips-Perron t 2.3427*** Variance ratio 22.5476***
Phillips-Perron t 20.3453
ADF t 1.7986**
Pov Modified Phillips-Perron t 22.783*** Variance ratio 23.0444***
Phillips-Perron t 217.3878***
ADF t 217.6666***
Gini Modified Phillips-Perron t 0.8994 Variance ratio 0.9958
Phillips-Perron t 21.4091*
ADF t 20.8538
a
This is an estimate without trend and with a delay. ***, **, and * denote a rejection of the
hypothesis of absence of cointegration at the 1%, 5%, and 10% levels of significance, respectively.
Sources: Authors.
Econometric Analysis: Table 8 presents the results of the panel’s estimates

using the ARDL method. The table gives the short-term coefficients (CT) and the
long-term coefficients (LT). The two first models are estimated. Model 1 integrates
renewable energy consumption, labor, and capital stock, while Model 2 adds trade
openness. The results first show that the error correction component is negative
and significant at the 1% threshold in Model 1 and at the 5% threshold in Model 2.
This means that in Model 1 there is a long-term relationship between GDP per cap-
ita and explanatory variables. In the long term, the model corrects short-term
deviations of 0.114 points in Model 1 and 0.07 in Model 2.
In Model 1, renewable energy consumption (REC) is positively and significantly
linked to GDP per capita at the 5% threshold. Indeed, an increase in the level of
energy consumption improves the level of GDP per capita by 0.393 points in the
short term. An increase in labor supply also improves the level of GDP per capita by
0.72 points at the 1% threshold. These coefficients are not significant in the long run.
In Model 2, we add trade openness to the estimate. We find that the REC has a
positive and significant effect on GDP per capita. The significant coefficient at the
10% level is associated with this variable and assumes that a 1% increase in the
REC improves the level of per capita income by 0.309 points in the short term.
However, the sign reverses in the long run. This result can be explained by the low
level of integration or popularization of renewable energy in Sub-Saharan Africa.
Furthermore, with balance-of-payments deficits and an external imbalance, Sub-
Saharan African countries may find it difficult to subsidize the use of this technol-
ogy in the long run.
Table 8
RESULTS OF THE PANEL ESTIMATES USING THE ARDL METHOD ON GDP
PER CAPITAa
Model 1 Model 2
Short-Term Long-Term Short-Term Long-Term
Coefficients Coefficients Coefficients Coefficients
Variables (CT) (LT) (CT) (LT)
REC 0.393** 20.0309 0.309* 20.153***
(0.182) (0.174) (0.173) (0.0546)
LF 0.722*** 20.943 0.490*** 20.808
(0.127) (1.382) (0.122) (1.087)
S 0.0670 0.202 0.143** 0.0483
(0.0561) (0.130) (0.0595) (0.0525)
Trade 0.314*** 20.0533
(0.0734) (0.0367)
ECT 20.114*** 20.0789**
(0.0219) (0.0318)
Constant 20.706*** 20.408***
(0.172) (0.145)
Observations 540 540 467 467
Number of 20 20 18 18
countries
a
ECT is the long-term error correction component, *** denotes 1% significance; ** denotes 5%
significance, and * denotes 10% significance.
Sources: Authors.
In Table 9, we have provided the results of the estimates by adding variables to

the base model. Indeed, in Model 3, we added the level of inflation. In Model 4,
following possible multi-collinearity with GDP, we removed inflation to take into
account the effect of the rate of depreciation of the physical capital stock. The
results show that there is no long-term relationship between the REC and GDP per
capita considering the general price level. Indeed, the negative effect of short-term
inflation in Sub-Saharan African countries means that in the long run, the effect of
the REC is not stable despite its significant and negative coefficient. Model 3 does
not bring the relationship between GDP per capita and the REC back to its equilib-
rium path in the long run.
Table 10 presents the results of the panel’s ARDL estimates of income inequal-
ity and poverty. We capture inequality with the Gini index and poverty is captured
by the poverty line. The estimates are made in several steps and we add the control
variables gradually to attain a better estimate. These results show that there is a sig-
nificant short-term relationship between poverty and the consumption of renewable
Table 9
RESULTS OF THE PANEL ESTIMATES USING THE ARDL METHOD ON GDP PER
CAPITAa
Model 3 Model 4
Short-Term Long-Term Short-Term Long-Term
Coefficients Coefficients Coefficients Coefficients
Variables (CT) (LT) (CT) (LT)
REC 0.445*** 20.343** 0.265 20.171**
(0.170) (0.156) (0.240) (0.0723)
LF 0.446*** 21.125 20.0372 20.278
(0.132) (1.354) (0.101) (1.036)
S 0.200*** 0.0534 0.480*** 0.0531
(0.0574) (0.0476) (0.118) (0.0478)
Trade 0.286*** 20.0579 0.259*** 20.0422
(0.0598) (0.0410) (0.0927) (0.0352)
Inf 20.0257*** 0.00507
(0.00943) (0.00365)
Delta 20.278** 0.215
(0.138) (0.203)
ECT 20.0339 20.114***
(0.0398) (0.0418)
Constant 20.205 20.132*
(0.213) (0.0676)
Observations 322 322 467 467
Number of 17 17 18 18
countries
a
Sources: Authors.
energy, on the one hand, and between income inequalities and the consumption of
renewable energy, on the other. Indeed, in the short-term models as a whole,
renewable energy consumption is significant and negative, which means that REC
significantly reduces poverty and income inequality in the French-speaking Black
African countries of our study. However, in the long term, there is no significant
relationship between the REC, poverty, and income inequality.
Given our ARDL panel results in Table 10, an increase in the REC of 1%
would lead to a reduction in income inequality of 0.784 points. Political stability is
positively linked to the increase in income inequality in Models 2 and 3. Indeed, in
Model 2, we note that a 1% change in political stability increases income inequal-
ity at the 1% threshold. This is the result of the low level of political stability in
Table 10
RESULTS OF THE PANEL ESTIMATES BY THE ARDL METHOD ON THE GINI INDEX
AND POVERTYa
Gini Poverty
Variable Model 1 Model 2 Model 3 Model 1 Model 2 Model 3
REC 20.784*** 21.046*** 22.342*** 21.297*** 21.233** 21.132*
Short-term (0.239) (0.244) (0.644) (0.447) (0.481) (0.630)
REC 0.0304** 0.0269** 20.00234 3.108 3.881 0.609
Long-term (0.0129) (0.0121) (0.0212) (5.142) (6.945) (6.797)
Geff 0.0994*** 0.105*** 0.0846 0.0900 0.221
Short-term (0.0309) (0.0348) (0.167) (0.171) (0.177)
Geff 0.00270 0.0195 20.0749 20.160 20.298
Long-term (0.00287) (0.0140) (0.628) (0.715) (0.682)
Trade 0.261*** 20.167 20.0953
Short-term (0.0805) (0.393) (0.460)
Trade 0.0120 3.870 3.844
Long-term (0.00798) (2.449) (2.387)
PIB 23.292*** 23.343*** 23.075***
Short-term (0.746) (0.801) (0.789)
PIB 210.43* 211.23 29.327
Long-term (5.833) (6.961) (7.050)
S 20.392**
Short-term (0.172)
S 2.464
Long-term (3.201)
ECT 20.0610 20.0560 20.0057** 20.863*** 20.884*** 20.908***
(0.0436) (0.0418) (0.00222) (0.0828) (0.0855) (0.0890)
Constant 0.450 0.450 0.0718** 69.39*** 71.99*** 74.04***
(0.324) (0.337) (0.0282) (8.318) (8.750) (8.882)
Observations 540 540 467 513 455 455
Number of Countries 20 20 18 19 17 17
a
Sources: Authors.
most of the countries in our study. In Model 3, we add trade openness and note
that the unequal distribution of trade revenues increases income in French-
speaking Black African countries.
Regarding the relationship between the REC and poverty, the results show that
the REC significantly reduces the poverty line in Sub-Saharan Africa. In Model 1,
we control the estimate with the GDP per capita of each country. The results show
Table 11
GRANGER CAUSALITY TESTS ACCORDING TO DUMITRESCU AND HURLIN (2012)a
Null hypothesis Z-bar-stat Z-bar tilde-stat
REC does not cause GDP per capita 7.7076*** 6.3427***
GDP per capita does not cause REC 1.9771** 1.4442
REC does not cause Pov 2.4520** 1.8565*
Pov does not cause REC 0.9418 0.5655
REC does not cause Gini 3.0685*** 2.3772**
Gini does not cause REC 5.6593*** 4.5918***
a
*** denotes a rejection of the null hypothesis at the 1% significance level.
Sources: Authors.
that an increase in per capita income leads to a decrease in the depth of poverty in
the short and long term in Model 1. The results are similar in Model 2 after adding
trade openness. In Model 3, we add the physical capital stock. The result shows
that a change in the level of physical capital stock could lead to a decrease in the
depth of poverty of 0.392 points at the 1% threshold.
The aim here is to establish the meaning of the short-term relationship between
the variable of interest and the variables to be explained as specified in the method-
ology using the Granger test. The causality analysis takes into account the statio-
narity of the study variables. Since all variables are stationary, this analysis
requires establishing differences two by two. The results of the test, according to
Dumitrescu and Hurlin (2012),50 and given in Table 11 and show that there is a
bidirectional relationship between GDP and the REC and between the Gini index
and the REC. Indeed, the REC can cause the level of per capita income, in the
same way, the per capita income can cause the REC. Similarly, income inequality
can cause REC and REC can cause income inequality. However, there is a unidi-
rectional relationship between the depth of poverty and the REC. Indeed, the
results show that the REC causes, in the sense of Granger causality, the poverty,
but the reverse is not verified. These results are in line with those of Favennec
(2015).51 This requires the implementation of a policy to promote the consumption
of renewable energies and increase in the level of investment in renewable energy.
Conclusion
This article aimed to analyze the implications of renewable energy consumption

on household well-being (measured by GDP per capita), income inequalities cap-
tured by the Gini index, and poverty captured by the depth of poverty in French-
speaking Black Africa. Specifically, it was a question of analyzing the short- and
long-term relationship between renewable energy consumption and these develop-
ment indicators in this part of the continent. Following the work of Bhattacharya
et al. (2016) and Damette et al. (2018),52 an ARDL model shows that the con-
sumption of renewable energies positively influences well-being in the area in the
short term. The results clearly show that the REC improves per capita income,
reduces income inequality and the depth of poverty in French-speaking Black Afri-
can countries in the short term. For these results to be valid in the long term, much
effort remains to be made by these African countries, particularly in terms of
investment in physical capital. Therefore, governments should focus their public
policies in the long term on huge investments in infrastructure and the fight against
corruption to promote the emergence and adoption of renewable energy sources,
which are favorable to the well-being of the African populations.
NOTES
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Appendix
SYNTHESIS OF RECENT EMPIRICAL WORK ON THE RELATIONSHIP BETWEEN

RENEWABLE ENERGY CONSUMPTION AND POVERTY
Authors (Year of Publication)
D. S. Pereira, A. C. Marques, and J. A. Fuinhas (2019)
Study Area: Western countries Type of Energy Studied: Renewable energies Growth
and Poverty: Household income and risk of poverty Model: Kao residual co-integration
test and an autoregressive distributed offset approach Data: A panel of data from European
countries Results: (1) The transition to renewable energy has had negative consequences
for households. (2) In both the short and long term, renewable energy is directly linked to
household income and poverty risks).
M. W. Zafar, M. Shahbaz, F. Hou, and A. Sinha (2019)
Study Area: Asia-Pacific Economic Cooperation (APEC) countries Type of Energy
Studied: Break down energy consumption into non-renewable and renewable energy
(R&D expenditures and trade opening) Growth and Poverty: Economic growth (GDP)
Model: Westerlund cointegration test is used to examine fully modified ordinary least
squares methods (CUP-FM), calculation of long-term production elasticities, and second-
generation unit root test. Data: The period 1990-2015 Results: Bidirectional causal
associations between economic growth, renewable energy consumption, and non-renewable
energy consumption.
Z. Wang, Danish, B. Zhang, and B. Wang (2018)
Study Area: Developing and developed countries Type of Energy Studied: Hydrogen-
based renewable energies Growth and Poverty: GDP per capita, social awareness,
urbanization Model: Ordinary least squares estimator and group fixed-effect estimator
Data: Panel data from 32 countries Results: (1) The market mechanism is not entirely
responsible. (2) The use of renewable energy should be encouraged. (3)The role of climate
change and energy security in the use of renewables.
(continued)
(continued)
P. K. Wesseh and B. Lin (2016)
Study Area: Africa Type of Energy Studied: Renewable energy sources (wind,
hydropower, and solar) Model: Translog production model Results: (1) Capital, labor,
renewable energy, and non-renewable energy generate production in African countries. (2)
Renewable energy is a more important growth factor than conventional fossil fuels.
I. Ackah and R. Kizys (2015)
Type of Energy Studied: Demand for renewable energy Growth and Poverty: Energy
security, access to energy, and climate change Model: Panel data models, a random-effects
model, a fixed-effect model, and a dynamic panel data model Results: The main drivers of
renewable energy in oil-producing African countries are real per capita income, per capita
energy resource depletion, per capita carbon emissions, and energy prices.
S. Adams, E. K. M. Klobodu, and A. Celery (2018)
Study Area: 30 countries in Sub-Saharan Africa (SSA), democratic vs. non-authoritarian
states Type of Energy Studied: Consumption of renewable and non-renewable energy
Growth and Poverty: Economic growth Model: Cointegration in heterogeneous panel and
error correction tests on a panel Data: Over the period 1980 to 2012 Results: (1)
Investments in the energy sector are effective in the long term. (2) Both renewable and
non-renewable energies have a significant positive effect on economic growth. (3) Non-
renewable energy has a more stimulating effect on growth than renewable energy. (4) A
10% increase in renewable energy consumption is associated with a 0.27% increase in
economic growth.
T. N. Sequeira and M.S. Santos (2018)
Study Area: All Type of Energy Studied: Political determinants of renewable energy
(income, energy dependence, pollution emissions) Growth and Poverty: Governance, with
public acceptance, with markets and prices Model: Reviews the literature on the
intersection of renewable energy and policy from a multidisciplinary perspective in the
social sciences Data: 853 contributions from 1998 and then focus on the 186 contributions
approached from a social sciences perspective Results: More democratic countries tend to
invest more in renewable energy, taking into account the other determinants of this
investment.
M. Balcilar, Z. A. Ozdemir, H. Ozdemir, and M. Shahbaz (2018)
Study Area: G-7 countries (Germany, Italy, Canada, France, Japan, United Kingdom, and
the United States) Type of Energy Studied: Renewable energy consumption Growth and
Poverty: Economic growth Model: Historical decomposition method with bootstrap Data:
After the early 1990s Results: The effect of renewable energy consumption on economic
growth shows remarkable temporal variations for all G-7 countries but does not produce
any consistent effect over the entire analysis period.
S. Tiba and A. Omri (2017)
Type of Energy Studied: Energy use variables (electricity, nuclear, renewable, and non-
renewable) Growth and Poverty: Growth of production and environment Data: A survey
from 1978 to 2014 based upon individual and collective data Results: Energy consumption
can boost economic growth through improved productivity and cause environmental
damage by increasing pollutant emissions.
(continued)
(continued)
A. A. C. Teixeira, R. Forte, and S. Asuncion (2017)
Type of Energy Studied: renewable energies, share of oil, coal, and gas exports in total
exports or proven reserves of oil, coal, and gas Growth and Poverty: FDI inflows
(imports and exports) Model: Panel data estimates Data: For 125 host countries between
1995 and 2012 Results: (1) The endowment of a country with non-renewable energy
resources (NRER) to attract FDI. (2) FDI inflows, countries with low export
diversification, heavily dependent on mineral fuel exports, tend to be successful in
attracting FDI.
A. N. Menegaki and A. K. Tiwari (2017)
Study Area: American countries Type of Energy Studied: ISEW (Index for Sustainable
Economic Welfare), carbon emissions, use of energy, renewable energies Growth and
Poverty: work, capital, rents, and trade Model: multivariate panel Data: Period from 1990
to 2013 Results: (1) Different implications between GDP growth and growth, well-being,
and sustainable energy. (2) Energy-saving measures will curb the growth of both
conventional and sustainable energy.
M. Kahia, M. S. B. Aïssa, and C. Lanouar (2017)
Study Area: MENA Net Oil Importing Countries (NOIC) Type of Energy Studied:
Energy use (renewable and non-renewable energy) Growth and Poverty: Economic
growth (real gross domestic product (GDP) and labor Model: A multivariate panel
framework and Granger and panel causality tests Data: The period from 1980 to 2012
Results: (1) Confirms the existence of bidirectional causality between the use of renewable
energy and short- and long-term economic growth. (2) Proves the substitutability and
interdependence between these two types of energy sources.
P. K. Wesseh and B. Lin (2016)
Study Area: Economic Community of West African States (ECOWAS) region Type of
Energy Studied: Renewable and non-renewable energies Growth and Poverty: Work,
capital, and energy Model: Sustainable growth Results: The results show that non-
renewable energy promises more benefits for ECOWAS’ economic transition with
production elasticities between 0.052 and 0.579 and -0.055 to 0.223 on average,
respectively, for non-renewable energy and renewable energy.
M. Bhattacharya, S. R. Paramati, I. Ozturk, and S. Bhattacharya (2016)
Study Area: 38 countries Type of Energy Studied: Renewable energy consumption
(attractiveness index developed by Ernst & Young Global Limited) Growth and Poverty:
Economic growth Model: Chronological analyses Data: 1991 - 2012 Results: The long-
term dynamics between economic growth and traditional and energy-related inputs,
renewable energy consumption has a significant positive impact on economic production
of 57%.
A. Bhide and C. R. Monroy (2011)
Study Area: Ghana and Germany Type of Energy Studied: Low carbon development
(LCD) Growth and Poverty: Energy Poverty Index (EPI) Results: Implementation of
LDCs reducing energy consumption and expanding access to high-quality energy carriers.

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THE JOURNAL OF ENERGY

Volume 48, Number 1

Green Crypto Mining: A Quantitative Analysis of the Profitability of

Is Access to Electricity a Relevant Determinant of Subjective Well-being

Environmental Life Cycle Assessment of Using Electric Vehicles Compared

Estimation of the X-Factor in the Colombian Electric Power Distribution

Renewable Energy Consumption, Poverty, and Inequality in

Dedication: This volume is dedicated to Dr. Fred Rufus Glahe, Professor of

John Dorrell, Abhilash Kancharla, AND Matthew Ambrosia*

The Journal of Energy and Development, Vol. 48, Nos. 1-2

substantial amount of electricity to power the advanced computing required for

Source: Yahoo Finance, NasdaqGS - NasdaqGS Real Time Price, https://ﬁnance.yahoo.com/quote.

year.28 This translates into approximately 0.59% of total worldwide consump-

Source: Cambridge Bitcoin Electricity Consumption Index, available at https://ccaf.io/cbeci/index/,

The contribution of this research is multifaceted. There is a lack of peer reviewed

Materials and Methods

Model: Our model combines multivariate analysis to determine the ﬁnancial

Source: PlanB@100trillionUSD -PlanBTC.com.

Source: PlanB@100trillionUSD -PlanBTC.com.

Jacques Simon Song, Georges Ngnouwal Eloundou, AND

E conomists have become increasingly interested in the concept of Subjective

The Journal of Energy and Development, Vol. 48, Nos. 1-2

well-being:2 life evaluations, positive emotions, and negative emotions.3 Interna-

on a panel of 98 countries in the developing world. Second, we complement the lit-

Some Stylized Facts

Source: Authors’ compilation based on World Happiness Database (2021).

Source: Authors’ compilation based on World Development Indicators (2021).

Source: Authors’ compilation.

As can be seen in ﬁgures 3A through 3D, the relationship between happiness

Brief Review of the Current Research Topic

The theoretical roots of happiness go back to the seminal contribution of Adam

LLi, t 5 a 1 Xi9, t b 1 gEleci, t 1 mi 1 dt 1 «i, t (1)

In equation (1), LL is subjective well-being as measured by the scale-of-life

LLi, t 5 a 1 ­LLi, t1 1 bðGDP=hbti, t 1 Inf i, t 1 Popi, t 1 Expi, t Þ

The introduction of the lagged dependent variable on the right-hand side of

Lifeladder (LL) 5 subjective well-being as measured by the scale-of-life index, Electricity

2009 (7.61%). Furthermore, access to electricity is marked in the sample by an aver-

Discussion and Results

the governance variables: governance effectiveness (Gov-effec), political stability

Appendix Table 1 (continued)

Dominican Republic Nepal

Source: Authors’ construction.

Source: Authors’ construction.

Ghassan Tashtoush, Osama Saadeh, AND Ashraf Dawagreh*

D ue to the depletion of fossil resources and climate change, electric vehicles

*Ghassan Tashtoush is a Professor of Mechanical Engineering at Jordan University of Science and

The Journal of Energy and Development, Vol. 48, Nos. 1-2

body-in-white. Additionally, C. Kofﬂer studied the environmental implications of

Material and Method

A one-kilometer driving distance is used in the analysis to calculate GHG

Source: Data collected by authors based upon Jordanian vehicle ownership.

Data Collection for Fuel Cycle (Well-to-Wheel Phases)

Electricity generation in Jordan depends largely on conventional energy sources

EOL 5 end of life.

power plant efﬁciency. According to the National Electricity Company’s (NEPCO)

EOL 5 end of life.

Results and Discussion

EOL 5 end of life.

EOL 5 end of life.

EOL 5 end of life.

EOL 5 end of life.

EOL 5 end of life.

EOL 5 end of life.

Well-to-Wheels Basis,” Transportation Research Part D: Transport and Environment, vol. 74

LLi, t 5 a 1 LLi, t1 1 bðGDP=hbti, t 1 Inf i, t 1 Popi, t 1 Expi, t Þ

ln ðTFPit =TFPis Þ 5 ln ðTEit =TEis Þ 1 yit =t

Technical Change ðTCÞ 5 yit =t,

where Equation (1) implies that yit =t 5 a.