Efficiency gains and consumer savings from resource pooling in remote electricity systems

This study investigates whether resource pooling enhances the technical efficiency of off-grid electricity utilities and reduces household electricity costs in rural Alaska. We employ a two-stage empirical strategy that combines stochastic frontier analysis to estimate technical efficiency with propensity score matching to correct for selection bias when evaluating the impact of resource pooling. The results show that engaging in resource pooling improves technical efficiency by 0.9 to 5 percentage points. On the consumer side, resource pooling reduces unsubsidized residential electricity rates by 8.45 to 10.35 cents per kWh. These reductions translate into lowering the share of income spent on electricity from 15–17% to about 11–12%. Overall, the findings demonstrate resource pooling is a cost-effective mechanism for improving utility performance and alleviating energy poverty in remote, diesel-dependent regions, and offer insights for policymakers seeking strategies to enhance the sustainability of rural Arctic off-grid energy systems.