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Subsidy policy and the enlargement of choice

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  • Srinivasan, Sunderasan

Abstract

Development is the enlargement of people's choices. Optimal subsidy policy is intended to create the right incentives for each of the value chain participants. This paper contends that the interest subsidy offered by the Indian federal Ministry of New and Renewable Energy for solar thermal systems, through mainstream banking channels is superior in intent and outcome compared to the capital subsidy as currently offered for solar PV systems, routed through government controlled delivery channels. The interest subsidy enhances innovation, improves service delivery and expands the range of product available to consumers enjoying a wide range of endowments, thus leading to more inclusive development. The simple monopoly model developed by Atkinson [Atkinson AB. Capabilities, exclusion and the supply of goods. In: Basu K, Pattanaik P, Suzumura K, editor, Choice, Welfare and Development. Oxford University Press; 1995] is applied to the context of solar home systems to demonstrate price reduction and choice expansion in a liberalized market, facilitated by an interest subsidy scheme.

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  • Srinivasan, Sunderasan, 2009. "Subsidy policy and the enlargement of choice," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(9), pages 2728-2733, December.
    • Handle: RePEc:eee:rensus:v:13:y:2009:i:9:p:2728-2733
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    1. Dinçer, Furkan, 2011. "Overview of the photovoltaic technology status and perspective in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(8), pages 3768-3779.
    2. Saeed Solaymani, 2021. "Energy subsidy reform evaluation research – reviews in Iran," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 11(3), pages 520-538, June.
    3. Dinçer, Furkan, 2011. "The analysis on photovoltaic electricity generation status, potential and policies of the leading countries in solar energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(1), pages 713-720, January.
    4. Wei, Weixian & Zhao, Yurong & Wang, Jianlin & Song, Malin, 2019. "The environmental benefits and economic impacts of Fit-in-Tariff in China," Renewable Energy, Elsevier, vol. 133(C), pages 401-410.
    5. Zaman, Rafia & Das, Debasish Kumar & van Vliet, Oscar & Posch, Alfred, 2021. "Distributional inequality in market-based solar home system programs: Evidence from rural Bangladesh," Energy Economics, Elsevier, vol. 103(C).
    6. Jaroslav Košičan & Miguel Ángel Pardo & Silvia Vilčeková, 2020. "A Multicriteria Methodology to Select the Best Installation of Solar Thermal Power in a Family House," Energies, MDPI, vol. 13(5), pages 1-17, February.
    7. Wang, Hongwei & Zheng, Shilin & Zhang, Yanhua & Zhang, Kai, 2016. "Analysis of the policy effects of downstream Feed-In Tariff on China’s solar photovoltaic industry," Energy Policy, Elsevier, vol. 95(C), pages 479-488.
    8. Chang, Keh-Chin & Lin, Wei-Min & Lee, Tsong-Sheng & Chung, Kung-Ming, 2011. "Subsidy programs on diffusion of solar water heaters: Taiwan's experience," Energy Policy, Elsevier, vol. 39(2), pages 563-567, February.
    9. Sener, Can & Fthenakis, Vasilis, 2014. "Energy policy and financing options to achieve solar energy grid penetration targets: Accounting for external costs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 854-868.
    10. Gobong Choi & Eunnyeong Heo & Chul-Yong Lee, 2018. "Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea," Sustainability, MDPI, vol. 10(6), pages 1-19, June.
    11. Mani, Swaminathan & Dhingra, Tarun, 2013. "Offshore wind energy policy for India—Key factors to be considered," Energy Policy, Elsevier, vol. 56(C), pages 672-683.
    12. Yong Long & Chengrong Pan & Yu Wang, 2018. "Research on a Microgrid Subsidy Strategy Based on Operational Efficiency of the Industry Chain," Sustainability, MDPI, vol. 10(5), pages 1-26, May.
    13. Ramli, Makbul A.M. & Twaha, Ssennoga & Al-Hamouz, Zakariya, 2017. "Analyzing the potential and progress of distributed generation applications in Saudi Arabia: The case of solar and wind resources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 287-297.
    14. Wei-Min Lin & Keh-Chin Chang & Kung-Ming Chung, 2019. "The Impact of Subsidy Programs for Solar Thermal Applications: A Case Study for a Remote Island," Energies, MDPI, vol. 12(20), pages 1-11, October.
    15. Keh-Chin Chang & Wei-Min Lin & Kung-Ming Chung, 2015. "Sustainable Development for Solar Heating Systems in Taiwan," Sustainability, MDPI, vol. 7(2), pages 1-15, February.
    16. Levin, Todd & Thomas, Valerie M., 2014. "Utility-maximizing financial contracts for distributed rural electrification," Energy, Elsevier, vol. 69(C), pages 613-621.
    17. Mani, Swaminathan & Dhingra, Tarun, 2013. "Policies to accelerate the growth of offshore wind energy sector in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 473-482.
    18. Piotr Olczak & Dominika Matuszewska & Jadwiga Zabagło, 2020. "The Comparison of Solar Energy Gaining Effectiveness between Flat Plate Collectors and Evacuated Tube Collectors with Heat Pipe: Case Study," Energies, MDPI, vol. 13(7), pages 1-14, April.
    19. Lin, W.M. & Chang, K.C. & Chung, K.M., 2015. "Payback period for residential solar water heaters in Taiwan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 901-906.

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