Impact of Large Scale Energy Efficiency Programs On Consumer Tariffs and Utility Finances in India

The objective of this paper is to analyze the effect on utility finances and consumer tariffs of implementing utility-funded cost-effective energy efficiency (EE) programs in India. We use the state of Delhi as a case study. A number of studies have demonstrated that end-use EE improvements in the Indian electricity sector has large potential for reducing power shortages, which would enhance the country's energy security and could play a crucial role in India's climate change mitigation plan. However, consumers face several barriers to adopting EE measures, including high initial cost, split incentives, and lack of information. In India, high initial cost is the most important barrier given the low income levels of the vast majority of electricity consumers and the country's relatively underdeveloped credit markets. This barrier can be effectively addressed through utility-funded EE programs.