Quality Matters: Power Reliability and Grid Connection in Rural Guatemala

Electrification rates have been increasing within low and middle income countries. However, the prevalence of outages is still a relevant issue for rural households when considering whether to connect to the grid. We test this by exploiting a shock in quality that unequally affected different municipalities in Guatemala during 2012–2014. Our main estimates, which are robust to using an instrumental variable strategy, suggest that households affected by severe outages are about 13–17 p.p. less likely to get a connection to the grid. We further check this result by combining household-level data from the 2018 Census with a complete register of electricity quality service. Although 2018 was a good year in terms of quality, a 1% increase in the number of outage hours affected the probability of connection by 3 p.p. Efforts to expand the electricity grid to rural areas should thus be analyzed in parallel with actual power grid quality levels.