Rural household preferences in transition from traditional to renewable energy sources: the applicability of the energy ladder hypothesis in North Gondar Zone

Adequate, uninterrupted, and environment-friendly energy practices are indispensable for maintaining the quality environment and the health of the households in most developing countries, like Ethiopia. However, for the successful implementation of adequate energy options, the preferences of households should be taken into consideration. The main aim of this study was to analyze the determinants of rural household preferences in transitions from traditional to renewable energy sources and estimate the WTP for various energy alternatives. The study is based on the data collected in 2019 from 212 randomly drawn respondents living in the North Gondar zone. The key result from the descriptive statistics revealed that hydropower was the most preferred with the highest average WTP, 36.86 per month by households' followed by solar energy and transitional fuels. Therefore, the total average WTP of hydropower for the surveyed respondents becomes 93,771.86 per year in the study area. This considerable amount of money implies that households are willing to share the cost of providing renewable energy services. Results of the multinomial logit model revealed that the majority of the sampled households preferred and support the transition from conventional to cleaner energy sources. The results further indicated socioeconomic characteristics of the respondents such as age, family size; income, education, and credit facility were the determining factors of households' fuel choices to satisfy daily energy demand. In this study, an inconclusive result was investigated on the relationship between income and adoption of improved energy sources. Generally, the finding showed that analyzing households' preferences is very important to prioritize among alternatives for the implementation of good energy services. In closing, to achieve adequate energy options, it is recommended that any concerned body takes into account households’ preferences and WTP for the successful implementation of sound energy use practices and creates opportunities that can facilitate the use and advancement of better energy options.