The Value of Off-Grid Renewable Electricity’s Non-Market Benefits in Rural Sumba, Indonesia

Off-grid renewable energy systems have become a cost-effective way to supply electricity in remote rural areas, contributing to achieving universal energy access as mandated by Sustainable Development Goal 7 (SDG7). However, benefits are often compromised by limitations in the financial and technical capacity and capabilities of rural beneficiaries to operate and maintain the technology, raising concerns about the cost-effectiveness of investment in the systems. This study examines the non-economic social benefits of providing electricity through off-grid renewable systems and whether these benefits justify investment in the efforts and costs borne by rural communities. Using the case study of the community-managed Kalilang micro-hydro power plant (MHPP) operating on Sumba Island, Indonesia, we estimate the value of non-market benefits of off-grid renewable electricity in rural Indonesia. By applying a mixed-methods approach, this research qualitatively identified perceived non-market benefits through 16 key informant interviews and subsequently employed contingent valuation (CV) with 105 households to estimate their willingness-to-pay (WTP) for these benefits. The results suggest that off-grid renewable projects remain socially viable even when direct economic returns are lacking. Inclusion of these social values into project evaluation and appraisals is needed to better reflect the contribution of off-grid renewable energy systems to community well-being.