Financial analysis of cooking energy options for India

Abstract

A financial analysis of cooking energy options is attempted for India using data from a field study and real costs and prices. The fuels considered are; fuelwood, kerosene, biogas, liquid petroleum gas (LPG) and electricity. Traditional and efficient devices and different discount rates are used in the analysis. Financial analysis for rural areas shows that the efficient Astra-stove using wood is the least cost option and biogas, which is the only quality fuel option for rural areas, is the most expensive option. The subsidised kerosene option is cheaper than wood in the traditional stove. The ranking of options from low to high costs is from fuelwood to kerosene to LPG to biogas. In the urban situation, the subsidy on kerosene distorts the energy ladder. Kerosene is the low cost fuel option, and fuelwood in the traditional stove is among the most expensive options. The existing subsidies on kerosene, LPG and electricity seem to benefit middle and high income groups, particularly in urban areas. Low income households in urban and rural areas are forced to use fuelwood in traditional stoves, which is not only a low quality fuel but is also a high cost cooking energy option. The efficiency of the device is shown to be a crucial factor in determining the cost of using a fuel. Low income households are disadvantaged, as they use traditional low efficiency wood stoves. A need to alter energy policies to promote quality fuels and efficient devices in an accessible way to low income households is highlighted.