Renewable Energy Economics, Policies and Planning
Vasundhara Sen
Abstract
Despite the falling costs of Renewable Energy (RE), RE adoption in Indian residential households is still attepid growth rates. With the onset of retail electricity market deregulation in India, the introduction of “greentariffs” for residential households can be effective in resolving the ...
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Despite the falling costs of Renewable Energy (RE), RE adoption in Indian residential households is still attepid growth rates. With the onset of retail electricity market deregulation in India, the introduction of “greentariffs” for residential households can be effective in resolving the issue of low RE adoption. This studyinvestigates the willingness to pay for green tariffs/renewable energy-based electricity contracts using thecontingent valuation method. Data collected from 476 Indian residential households are analyzed by theDouble-Bounded Dichotomous Choice technique. The results of the conducted maximum LikelihoodEstimation (MLE) method reveal the mean willingness to pay 308.52 Rs per household/month for consumption of green power in a premium-paying setting. Results indicate that although households hold positive perception of renewable energy, the willingness to pay is not commensurately high, indicating an attitude-action gap. The study recommends green energy defaults in residential energy contracts, direct marketing of non-use value of RE use (altruistic and bequest) by power supplying utilities, and promoting RE use through RE opinion champions/influencers as measures to enhance RE adoption amongst Indian residential energy consumers.
Vasundhara Sen
Abstract
India seeks to achieve 175 Giga-Watt (GW) of Renewable power by 2022. As of December 2017, out of 333 GW of total installed capacity of electricity, close to 62GW come from renewable sources. Meeting the set targets calls for augmentation of renewable energy based capacities as expeditiously as possible. ...
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India seeks to achieve 175 Giga-Watt (GW) of Renewable power by 2022. As of December 2017, out of 333 GW of total installed capacity of electricity, close to 62GW come from renewable sources. Meeting the set targets calls for augmentation of renewable energy based capacities as expeditiously as possible. However, the sick financial health of the distribution companies/utilities, who act as the primary purchasing authorities of such power, is posing as a threat to the success of the renewable industry. This paper highlights that while the cost of procurement of renewable power, to the utilities, has gone down significantly in the recent past; the worsening financial health of utilities remains a key concern. Data is presented to substantiate that the said distribution companies/utilities are saddled by high gaps between Average Cost of Supply (ACS) and Average Revenue Requirement (ARR). Revenues to the power supplying utilities are under-recovered due to the long standing practice of cross- subsidization in the Indian power sector – agricultural and residential consumers of electricity consume power at lower tariffs, than commercial and industrial consumers. A case is therefore suggested for implementing evidence based tariff setting by the utilities. Under the suggested framework, electricity tariffs for different consumer categories can be charged with a premium for green power, based on their willingness to pay for such power. Collected funds, then can be used towards purchase of green power, by the said utilities, and consequently help foster the development of green energy in the country. This study also presents limited empirical evidence, recording the willingness to pay for such premiums, across different categories of “paying” consumers.