Abstract:
Electricity consumption in India is increasing rapidly over the years. The increased demand for electricity forces the electricity utilities to increase their generating capacity. The huge investments on generation, transmission and distribution (at the cost of alternative development projects) adversely affect India's scarce capital resources. Also, internal energy resources like coal are utilised with a great risk to the environment. This paper attempts to show analytically the benefits of shift in the focus from supply augmentation to demand management through a case study of replacement of inefficient devices with efficient ones for residential lighting. This is being done by analyzing the economics of various alternatives and developing an optimal portfolio for meeting the lighting requirement of a typical household in Maharashtra State in India. A mixed integer-programming model has been used for developing the optimal portfolio and a comparison of annual returns is made. Finally, the results for the typical household have been extended to the state of Maharashtra and the cost and benefits are estimated. The results show that the optimal lighting portfolio provides a far higher return at a lower risk compared to other investment alternatives like the stock market while providing substantial savings both in terms of energy and peak demand.
