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Technology portfolio analysis for residential lighting

Author

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  • P. Balachandra

    (Indian Institute of Science)

  • B. Sudhakara Reddy

    (Indira Gandhi Institute of Development Research)

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.

Suggested Citation

  • P. Balachandra & B. Sudhakara Reddy, 2007. "Technology portfolio analysis for residential lighting," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2007-007, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2007-007
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2007-007.pdf
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    References listed on IDEAS

    as
    1. Sutherland, Ronald J., 1986. "A portfolio analysis model of the demand for nuclear power plants," Energy Economics, Elsevier, vol. 8(4), pages 218-226, October.
    2. Johnson, Blake E., 1994. "Modeling energy technology choices : Which investment analysis tools are appropriate?," Energy Policy, Elsevier, vol. 22(10), pages 877-883, October.
    3. Ronald J. Sutherland, 1991. "Market Barriers to Energy-Efficiency Investments," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 15-34.
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    Cited by:

    1. Olusola Olugbemileke Johnson & Abayomi Joseph Odekoya & Obinna Lawrence Umeh, 2012. "Factors Influencing the Usage of Compact Fluorescent Lamps in Existing Residential Buildings in Lagos, Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 2(2), pages 63-70.

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    More about this item

    Keywords

    Demand management; electricity consumption; energy resources; mixed integer-programming model; rate of return;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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