Consumer discount rates and energy carrier choices in urban households

Abstract

Consumer discount rates are good indicators of the potential of energy conservation programmes. They can also be used to evaluate the penetration of different energy carriers and are useful to study the carrier shifts. This paper analyses the trade-off between the capital cost of the energy-efficient device and the operating costs of the standard one using the household energy consumption data of Bangalore, a city in southern India. The results show that households shift from one energy carrier to another if their income increases and the consumer discount rates decrease exponentially with household income. This income-dependent consumer discount rate for the carrier shifts implies that the cost aspects dominates the decisions of Bangalore's households regarding the choice of energy carrier.