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CHAPTER 2
REVIEW OF LITERATURE, OBJECTIVES
AND HYPOTHESES
CHAPTER 2
REVIEW OF LITERATURE
2.1 Introduction:
The earlier literature makes us to understand the economic analysis of the
energy and economic growth, Renewable Energy Sources, energy management and
solar energy consumption. The present chapter deals with the review of literature and
methodology adopted for the study to understand the work done on the study area.
An attempt has been made to review some important works related to the present
study.
It helps to identify the research gap, econometrics tools and techniques,
objectives, hypothesis, limitations and easily identify the study variables. The study of
the literature has been classified into two categories viz., Theoretical studies and
Empirical studies. The first part deals with theoretical studies and the second part
deals with empirical studies.
2.2 Theoretical Studies of Literature:
Theoretical studies have been sub classified into two sections. There are
2.2a. Related literature on Conventional Energy resources
2.2b.Related literature on Non-Conventional energy resources
2.2a Related Literature on Conventional Energy Resources:
Xavier Labandeira and BaltasarManzano(2012) study on “ Some
Economic Aspects of Energy Security” had explained that economic aspects
associated to energy security and cost associated to insecurity. They have illustrated
security of energy supply and the important of energy for contemporary economics
and how exhaustible and geographically concentrated resources are playing and are
likely to play in the future, a very important role within energy systems. Then they
26 indicated on the negative economic effects from both energy price volatility and
supply disruption, which claim the implementation of public policies.
They
concluded that, a reflection on the design of energy security polices, both taking into
account their overall costs and benefits, their efficient application through appropriate
policy instruments and the likely interaction that may occur with other energy and
environmental policies.
A study on “India’s Energy Options” by Sunder Gupta (2010) has
explained the energy sources like coal, natural gas, electricity, oil and nuclear energy
in India. He stated that, energy is the important source for economic growth and
sustainable development but India’s energy sources are limited and it has to depend
on imports for a long term to meet growing energy demands. Therefore, he has
suggested that private sector can be a good source of investment in energy generation
projects and oil exploration.
Sundar I and C.Venkatesan(2009) study on “Energy Economics” This
book explained the economics of energy, energy theories and economic development,
electricity demand forecasting and it is including econometric approach, time series
methods, integration, end-use approach(pattern of electricity consumption), energy
demand, forecasting new technologies, economics of depletable energy supply,
capacity investment and capacity constraints, market failures, renewable energy
sources and energy policy in India.
Parag Diwan and Chirag Shah(2009) study on “Energy Economics” this
book explained the energy depletable resources economics, supply energy resources,
economic distributional impacts environmental consequences, oil economics, Indian
downstream industry, natural gas economics, power sector, energy policy in India.
27 James L. Sweeney(2004) study on “Economics of Energy” studied energy
resources and energy commodities that include motivating firms and consumers to
supply, convert, transport, use energy resources, and to dispose of residuals; market
structures and regulatory structures; distributional and environmental consequences.
Energy commodities are economic substitutes. Energy resources are depletable or
renewable and storable or non-storable. Human energy use is dominantly depletable
resources, particularly fossil fuels. Market forces may guide a transition back to
renewable resources. Inter-temporal optimal depletable resource extraction paths
include an opportunity cost or rent.
David I. Stern (2004) study on “Energy and Economic Growth” explained
the relation between energy and economic growth and more generally the role of
energy in economic production and graphically explained the Neoclassical Growth
Model, Elasticity of Substitution for capital and resources, Macro-Level Limits to
Substitution, GDP and Primary Unadjusted Energy Use in US.
Pradeep Chaturvedi (2003) study on “Energy, Environment and
Sustainable Development” This book explained energy supply, energy demand,
sustainable development, energy efficiency, rural energy, renewable energy,
environment protection, quality of life, energy policy, programme, implementation
and energy management systems in India.
Gupta V.P. and Sneh Gupta (2002) study on “Energy Patterns in India”
this book analyzed the pattern of energy consumption both of conventional and nonconventional energy sources in India as well as in Rajasthan. It also describes the
prospective demand for and supply of energy in India as well as in Rajasthan. They
concluded that, there are around 2,800 villages in Rajasthan, which have been
identified far-flung and their electrification by conventional sources is economically
28 non-viable for power supply from grid, may be electrified by new and renewable
sources of energy.
Raikhy P. S and et.al (1990) has examined the pattern of energy consumption
in agriculture, industry and households in Amritsar district of Punjab. This study
based on the basis of a sample study of 128 households. The study pointed out that the
households consume around 14% of non-commercial fuels and rest commercial fuels,
in agriculture sector energy is being used for soil preparation, irrigation, threshing,
fodder chopping and for transportation of agricultural produced.
The industrial
sector, were making use of electricity, motor spirit, kerosene and diesel oil for power
purposes fire-wood, coal, rice-husk and furnace oil for heating purposes, petrol for
transport purpose and electricity for lighting purpose. They have concluded that the
industrial sample units consumed maximum amount of energy.
Veena D R (1988), studied the rural energy consumption in Gujarat. This
study based on both primary and secondary data. Primary data have been collected
from 10 villages of dhanerataluka of banarkantha in north Gujarat. Each taluka has
been divided into 5 sub-blocks and from each sub-block two villages have been
chosen with a view to cover different characteristics of house-holds such as their
occupations, castes, energy consumption pattern and infrastructural facilities. They
study has made an attempt to analyze the energy consumption in different sectors of
the economy like agriculture, industry and house-hold sector. They concluded that,
the share of electrical power in the total energy consumption in the agriculture sector
is the highest, in industrial units in rural areas make use of both commercial and noncommercial fuels, in domestic sector in ten villages there is no consumption of coal.
Jose Goldemberg and et.al (1987) study on “Energy for A Sustainable
World” explained the demand and supply side management, energy problems on oil
29 crisis in global level, energy and development, global climate change, alternative
energy futures, energy and employment, market-oriented countries, the role of
markets in end-use energy strategies, energy and basic human needs, energy
technology, economic activity in world.
2.2b Related Literature on Non-Conventional Energy Resources :
Owura Kofi amonabeng(2012), project study on “Assessing the Feasibility
of A Solar Water Heating System Based on Performance and Economic
Analysis” has investigated SWHs cost effective ways of heating water in residential
and public buildings such as hospitals and health centers in various places in Ghana.
They calculated annual energy and cost savings. The variables are type and size of
SWHs, usage habits, year of using. They concluded, SWHs with a better long-term
thermal performance when using the flat plate collector than the evacuated tube
collector.
The economic analysis of the system was done with an initial total
investment of US $28,829 and life cycle saving of US $76,127, it gives a positive net
present value of US $31,869 with a payback period of 6 years. It means economically
positive effect of the society.
Ganesh Hegde(2012), explained the scope of solar energy in Kerala and
Karnataka. The study primarily depends on parameters like geographic location,
earth-sun movement’s solar isolation, potential and availability of solar energy in
these region, techno-economic analysis of the power technologies and utilization,
emission reduction. They observed, both states are power deficit states where the
annual energy consumption is more than the energy generated. They concluded, state
witnessed for major power crisis from last few years and hence power harvesting
from renewable energy source could be the solution for this problems.
30 Valentina G (2012), explained the renewable energy potential, estimation and
achieve of renewable energy in India and challenges of renewable energy power
generation. She observed, India, estimated 150GW of renewable energy potential
and other challenges is transmission and distribution of the power to far flung areas of
the country and lower-cost scenario is based on developing low-diversity, low-cost
renewable energy sources, while the higher-cost estimate is based on a renewable
energy mix that
is high diversity, including high-cost sources like solar. She
concluded, Indian Government has increased its renewable energy target for 2020
from increased 4% to 15%, this achievement will be growing for renewable energy
technology and contribution to India’s energy mix sources of renewable energy.
Strategic Plan for New and Renewable Energy Sector for the Period 201117 By Ministry Of New And Renewable Energy Report (2011), MNRE has
initiated systematic programmes for renewable including for research and
development. Renewable energy is currently experiencing increasing all sectors of the
economy driven by sustained economic growth and growing global concerns
regarding climate change. There are various stakeholders that directly/indirectly
contribute towards the promotion of renewable energy, and each one has some
aspirations and expectations from this sector, just as they have a significant
responsibility. This is in a way laying foundation of a new economy that is inclusive,
sustainable energy in a definite time. However, there is a long way to go. In order to
create an enabling environment, the Ministry as a policy maker will have a significant
contribution to make.
Sian Adams (2011), study on “South African Consumer Attitudes towards
Domestic Solar Power Systems”, has investigated how solar energy consumers
groups adopters and early majority adopters in South Africa.
31 The calculated
descriptive analysis and cross-tabulation method to use statistical tools like, chisquare test and t-test for consumer attitudes towards characteristic of solar systems,
consumers decision making process and solar energy technology. The sample size is
89 households. The variables of demographic profile are, gender, age, education,
monthly household income, rood insulation, energy saving lights, geyser blanket,
water saving taps, gas heating, gas stove, recycling , automotive light switch. In solar
energy variables are, years of using SWHs, help to reduce pollution, generate savings,
maintenance as an electric geyser or grid, value for money, technology, reliable
source of power, value to property, easy to install, safe form of power generation,
compatible with modern living. They concluded, majority demonstrate a positive
perception of the environmental characteristic of solar power and if consumers cannot
identify the relative advantage of solar power over their current source of power
supplied readily and cheaply through the national grid, it is unlikely that wide-scale
adoption will follow.
The
study
conducted
by
Soteris
A.
Kalogirou(2011)
entitled
“Environmental Benefits of Domestic Solar Water Heating Systems” this paper
has analyzed the pollution caused by the burning of fossil fuels environmental
protection offered by domestic solar water heating systems. They calculated thermal
and economic analysis, environment benefits of solar energy and pollution control. In
economic analysis of this paper identified the parameters are total electric/diesel/both
system cost, annual fuel saving and pay-back time (year), solar energy system cost,
solar and conventional cost, conventional sources. The results shows that, by using
solar energy for domestic water heating considerable amounts of greenhouse polluting
gasses are avoided, energy savings, cost saving, long run benefit when compared to a
32 conventional system.
Concluded that, solar energy systems are offer significant
protection to the environment.
The study on “Solar Water Heating: Reducing The Barriers” by Jayson S
Naicker(2010), has investigated the current barriers to the mass rollout of solar water
heater in South Africa and provided possible solutions to reduce barriers. They
observed the barriers that are preventing the industry from developing are: the high
price of solar water heater, the lack of awareness of the technology, insufficient
training facilities leading to a shortage of skills and the low price of electricity. They
concluded, the development of cost effective financing mechanisms because the high
costs of production influences the price of solar water heaters. Financial incentives
models such as rebates could be more effective in assisting the low and middle
income groups with partial funding for the purchase of the solar water heater.
Sameer Maithel and et.al (2010) project submitted to MNRE, the study
conducted “Solar Water Heaters In India: Market Assessment Studies and
Surveys for Different Sectors and Demand Segments”, investigated solar water
heater
users
and
non-users
in
household
both
urban
and
rural,
commercial/institutional and industrial segments in 29 districts of India. They carried
out a primary survey 1000 users and non-users of SWH and also held semi-structured
interviews of 200 stakeholders, SWH manufactures, dealers, banks, municipal
corporations, electricity distribution companies, architects and builders to select based
in consideration with MNRE. They concluded, in the residential sector there are 0.7
million SWH user households in both urban and rural, 65% of which are concentrated
in Karnataka and Maharashtra, in industries used limited and scattered and hospitals
and hostels supply of hot water management is an advantages but more than 15 rooms
33 in not sufficient barriers. There is overall satisfaction with product-experience, some
concern being voiced over after sale support.
According to Thenmozhi S and N.Deepa(2009), study on “Conservation
and Saving of Energy - Need of the Hour” explained the energy sources, how to
conserve and save energy And environmental impact in India. They concluded that,
conservation and saving energy is most important, because growth and demand for
energy is increasing at a very fast rate, especially in the industrial sector, the transport
sector and household sector.
Srikanth Subbarao and Bob loyd (2009), study on “Development
Challenges under the Clean Development Mechanism (CDM) - can Renewable
Energy initiatives be put in place before peak oil?” discuses the global concerns of
developmental needs, energy and climate change, and their influence on the poor in
the developing world. They say that, this mechanism to promote clean carbon-free
energy for developing countries and modified CDM could deliver both reasonable
quantity of cost-effective emission reductions and increase the flow of technologies
and finance to some developing country.
Maximilian Auffhammer and et.al (2008), study on “Demand Side
Management and Energy Efficiency Revisited” explained the electricity savings
and underestimating costs associated with energy efficiency demand side
management programs in US. Using econometric model of residential electricity
demand, Variables are savings and cost. They construct nonparametric bootstrap
confidence intervals. They argued that, utility reported savings and costs true values
its mean reject the null hypotheses.
They concluded, DSM programs have the
potential to play an important role in mitigating the environmental impact associated
34 with meeting increasing demand for electricity end-uses and cost utility-reported have
indicated that DSM programs are highly cost-effective.
According to MNRE (2008), working paper on “Renewable Energy in
India: Progress, Vision and Strategy” explained the renewable energy programmes,
research and development, technology adoption, implementation, policy and
budgetary support in India. The paper outlines the basic strategy and approach being
followed for the growth of the renewable energy sector and emphasized the different
important roles that can be played in the off-grid particularly in meeting the
challenges of providing energy access to India's rural areas and reducing consumption
of fossil fuels which is essential for future energy security of the country.
House of Lords report (2007) explained The Economics of Renewable
Energy in UK. This report explained the main point is reducing carbon emission.
That purpose UK government’s has a contribution to a world-wide effort and
promoting renewable energy sources to generate the electricity.
Although their
declared purpose is to improve the environment, it is clear that renewable energy
installations can also have adverse environmental impacts which the government
should bear in mind as it weighs the benefits and costs of expansion of renewable
generation then also achieve security of electricity supply. Concluded that, U.K is
installed the renewable energy sources to solve the problem of electricity,
environmentally benefits, reducing the carbon emission and less use of non
conventional sources.
The study on “Renewable Energy Futures: Targets, Scenarios and
Pathways” by Eric Martinot and et.al (2007) explored and forecasted, renewable
energy scenarios for the future 2050 in global, Europe and country specific targets and
scenarios. It is considered possible or desirable and to inform policy making. They
35 considered common indicators are shares of primary energy, electricity, heat and
transport fuels from renewable. They concluded, by 2020, many targets and scenarios
show 20-35% share of electricity from renewable, Energy can increase to 50-80% by
2050 under the highest scenarios. These scenarios helps depending on degree of
future policy action, fuel prices, carbon prices, technology cost reductions, and
aggregate energy demand, with resource constraints mainly for biomass and biofuels.
Report compiled by ICLEI South Asia (2007) working paper on
“Renewable Energy and Energy Efficiency Status in India” analyzed the energy
problems of cities and to provide alternative energy solutions for industrial and
commercial establishments, it focuses on the development and application of
renewable energy technologies and energy efficient systems. He has concluded, local
governments are effective in promoting the generation of energy from renewable
resources. With their executive power they can implement sustainable energy at a
locally appropriate level, and also encourage the local community to switch to
renewable.
Rathore N.S and N.I.Panwar (2007) study on “Renewable Energy Sources
for Sustainable Development” this book explained the fundamental and design of
energy system, integrated rural energy planning system, energy integration
techniques, energy forecasting and rural energy modeling , renewable energy
resources, economic analysis of different energy options, energy programme,
development and implementation.
Peter Meisen and et.al(2006), study on “Overview of Renewable Energy
Potential of India” explained that, energy consumption and production, over the
period of 1980 to 2005, estimated on renewable energy potential, actual installed
capacity, availability and electricity consumption in India. They observed that, India
36 has a negative energy balance for consumption and production, which has forced the
purchase of energy from outside the country. They concluded, the next few years
shortage of conventional energy sources, so capacity exists to shift towards more
renewable energy, since only a fraction of available renewable energy potential has
been tapped.
Venkataraman B and D Elango (2006) study on “Renewable Energy
Sources” explained the huge consumption of exhaustible energy resources and
looking for renewable energy resources. They concluded that, the renewable sources
are cost effective, user friendly so that they can easily beat the fossil fuels. Then
promoting renewable energy sources, can avoid the air pollution, soil pollution and
water pollution and country’s economy will increase and without affecting the
environment.
Ronald Steenblik (2005), working paper on “Liberalization of Trade in
Renewable Energy Products and Associated Good: Charcoal, Solar Photovoltaic
Systems and Wind Pumps and Turbines” examined the implications of liberalizing
trade in renewable energy, focusing on several reprehensive fuels and technologies.
He observed that, eliminating tariffs on renewable energy and associated goods which
are 15% or higher in many developing countries, it would reduce a burden on
consumers of energy, particularly people living in rural areas of developing countries,
as it is in such areas that many renewable energy technologies are making, and are
likely to make, their greatest contribution. He concluded, additional reforms may be
required in importing countries, domestic policies, especially those affecting the
electricity sector in general, rural electrification in particular, and the environment.
Daniel Weisser(2004) study on “On the Economics of Electricity Consumption
in Small Island Developing States: A Role for Renewable Energy Technologies?”
37 has explained the economic implications like energy and economic development,
energy policy and planning, integrated renewable energy systems of power production
and electricity generation from renewable energy contribution and qualitative
potential in Small Island Developing States(SIDS). He says that, SIDS is gradually
changing from subsistence economies to monetary systems. This transition has been
accompanied by an increased use of energy, especially in the form of electricity,
which has many benefits for society, and has lead to a steady improvement in
standards of living.
Singh R.K.P and A.K.Mishra(1999) study on “Renewable Energy
Resources: Opportunities and Challenges In North-Eastern Region of India”
explained the energy resources like increasing demand and inefficient utilization,
depletion of fossil fuel forest resources, high price of petroleum products conservation
of conventional energy and renewable alternatives to conventional energy sources in
north eastern region of India. They said that, long term interest of our country’s
economic self reliance, free from environmental hazards and the accelerated economic
development of north eastern region; it measures for harnessing the renewable
resources of energy. The issue is not the technology but, awareness and motivation.
SomDutt Gupta and et.al (1999) study on “Renewable Energy Resources
Management in the North-East Region” explained the energy requirement in
villages, energy scenario in north east region, non-conventional energy technologies
and installed in north east, energy programme in north east region of India. They
said, renewable energy resource management is the electricity produced from nonpolluting sources such as wind, water and even rotting garbage is the only substitute
to overcome the present scenario of energy problem in the north eastern region of
Indian subcontinent
38 John Byrne, Bo Shen and William Wallace (1998) study on “The
Economics of Sustainable Energy for Rural Development: A Study of Renewable
Energy in Rural China” analyzed to evaluated the economic viability of off-grid
renewable energy technologies for rural application in developing countries. Case
studies have been conducted for a representative sample of 41 households from the
Inner Mongolia Autonomous Region of China and analyzed costs of off-grid,
household scale renewable energy systems are cost-competitive with conventional
energy. They have concluded, renewable energy technologies, such as photovoltaic
and wind, can provide an economical and environmentally sustainable option for
meeting energy needs of remote rural households in these countries.
According to SushmaKaushik and Tejverma(1996) study on “Rural Energy
Management" this book explained the rural energy systems from the generation of
technology till utilization, despite the emphasis on management, the study
emphatically attempts to identify sets of other crucial factors, that could influence the
implementation of rural energy projects in India and empirically analyzed for primary
data and used econometrics i.e. multiple regression analysis and correlation, that
variables are age, socio-economic status, change proneness, risk orientation,
conservation, perception of energy situation, communication behavior, energy use
extent, perceived feasibility.
Gary J. Jones and Griffin Thompson (1996), Study on “Renewable Energy
for African Development” explained the problem of delivering energy services to
the rural population in the context of economic, social and political development and
then discussed on the rural electrification program which has tried to address the issue
in a manner that is socially acceptable, commercially viable, and technically feasible
39 in Africa. They concluded, these issues empowered sustainable rural electrification
programs.
David Pimentel and et.al (1994), study on “Renewable Energy: Economic
and Environmental Issues” observed that, analyzed the potential of various
renewable energy sources i.e. solar energy technologies to supply in the US with its
future energy needs and assessed in terms of their land requirements, environmental
benefits and ricks, economic costs, and their advantages.
They said that, the
implementation of solar technologies will reduce many of the current environmental
problems associated with fossil fuel production and use.
MNRE Project Peport (2010), the title is ‘Scheme and Frame work for
promotion of solar water heating systems by utilities and regulations” explained solar
water heater system potential to reduce electricity consumption and consequent emission
reduction, policy of SWHs, and analyse the segmentation of market for SWHs and
Rationale for utility driven promotional scheme in India. Then also explain the SWHs and
programmes of other countries like Australia, South Africa, California and Florida. This
report concluded that, usage of SWHs is reduced the electricity consumption.
2.3 Empirical Studies of Literature related on Energy, Renewable Energy
Resources, Energy Management and Solar Energy
Empirical studies have been sub classified into four sections. There are
2.3a.
Related literature on Econometric tools like Co-integration and Causality
Test on Energy and Renewable energy resources
2.3b. Related literature on Techno-Economic Analysis of Solar Energy
2.3c.
Related literature on Cost and Benefit Analysis and Life Cycle Cost
Analysis of SWHs
2.3d. Related literature on End-Use Method and Regression on Energy Demand
40 2.3a. Related Literature on Econometric tools like Co-integration and Causality
Test on Energy and Renewable Energy Resources:
Nicholas Aperies (2009) study on “Energy consumption and Economic
Growth in Central America: Evidence from a Panel Co-integration and Error
Correction Model” has investigated the relationship between energy consumption
and economic growth for six Central American countries (Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, and Panama) over the period 1980–2004 and using
Time series data test i.e. panel co-integration, test of panel unit root and tests of
dynamic heterogeneity. These tests consist of four variables i.e. real GDP, energy
consumption, labor force, and real gross fixed capital. He has observed energy
consumption and economic growth will be of help to energy conservation policies
which reduce energy consumption and its impact on a country's growth prospects.
A study on “Renewable Energy Consumption and Income in Emerging
Economies” by Perry Sadorsky (2009) has empirically analyzed the renewable
energy consumption and income for 18 emerging countries over the period 1994-2003
and has used tests for Panel unit root test, Panel co-integration and Panel causality test
for both variables. He said, Renewable energy can play an important role in reducing
an emerging country’s dependence on imported energy products (like oil and gas).
Renewable energy through reduced emissions of greenhouse gasses can also play an
important role in helping to address climate change issues.
Haurie A (2009) study on “Modeling Uncertainty and the Economics of
Climate Change: Recommendations for Robust Energy Policy” analyzed the
Environmental Modeling and Assessment is meant to gather front-edge research and
innovative analysis in the modeling of uncertainty related to the economics of climate
change. He has focused on advancements in probabilistic integrated assessment
41 modeling and stochastic analysis of climate futures and used non-probabilistic
economic methods to treat uncertainty in global or regional dynamic climate change
models is explored and link between climate change and the nature of mankind’s
energy production and energy consumption.
Song Zan Chiou-Wei and et.al (2008), study on “Economic Growth And
Energy Consumption Revisited—Evidence From Linear And Nonlinear Granger
Causality” has empirically analyzed the linear and nonlinear Granger causality tests
are applied to test the causal relationship between energy consumption and economic
growth for a sample of Asian newly industrialized countries like Taiwan, Hong Kong,
Singapore, Indonesia, South Korea, Philippines, Malaysia and Thailand as well as the
U.S. from the period 1954 to 2006 and using econometric tests i.e. unit root tests,
Granger causality test, BDS test and nonlinear Granger causality tests.
They
concluded that, higher level of economic development could induce more energy
consumption and facing the goal of emission reduction set by Kyoto protocol to
mitigate global warming.
David G. Ockwell (2008) study on “Energy and Economic Growth:
Grounding our understanding in physical reality” summarized economics
literature on the possibility of decoupling economic growth from energy use.
Empirical analyzed also demonstrated that improvements in GDP/energy use ratios in
the USA are better explained by shifts towards higher quality fuels than by
improvements in the energy efficiency of technologies. This implies a need to focus
on decarbonising energy supply, energy- efficiency improvements, and energy
savings. They included ecological, evolutionary and institutional economics. All of
which can make policy-relevant contributions to achieving a transition to a lowcarbon economy.
42 Alberto Longo (2006) study on “The Internalization of Externalities in the
Production of Electricity: Willingness to pay for the attributes of a policy for
renewable energy” investigated the willingness to pay for a sample of residents in
England and explained the programs, then how to promote the production of
renewable energy. He has Used choice experiments, i.e., the preferences of
respondents for a policy for the promotion of renewable energy that: (i) contributes to
the internalization of the external costs caused by fossil fuel technologies; (ii) affects
the short-term security of energy supply; (iii) has an impact on the employment in the
energy sector; and (iv) leads to an increase in the electricity bill. He has suggested that
consumers are willing to pay a higher price for electricity in order to internalize the
external costs in terms of energy security, climate change and air pollution caused by
the production of electricity.
Jebaraj S and S.Iniyan(2004), study on “A Review of Energy Models”
explained reviews on various types of energy models i.e. energy planning model,
energy supply-demand models, forecasting models, renewable energy models,
emission reduction models and optimization models. These models based on neural
network it can be used in the energy forecasting and fuzzy theory can be used logic
for energy allocation of the country. They observed that, these energy models will
help in the proper allocation of widely available renewable energy sources such as
solar, wind, bioenergy and small hydropower in meeting the future energy demand in
India.
Wankeun Oh and Kihoon Lee(2004), study on
“Causal relationship
between Energy Consumption and GDP revisited: the case of Korea 1970–1999”
studied the relationship between energy consumption and economic growth in Korea,
over the period 1970-1999 and using VAR model and multivariate model from the
43 variables are capital, labor, energy, GDP and Divisia energy. They suggested that,
Korea existence of a long run bidirectional causal relationship between energy and
GDP, and short run unidirectional causality running from energy to GDP. The source
of causation in the long run points to the ECMs in both directions.
UgurSoytasa and RamazanSarib(2003), study on “Energy Consumption
and GDP: causality relationship in G-7 countries and emerging markets”
empirically analyzed the relationship between energy consumption and GDP in G-7
countries(Italy, Korea, Turkey, France, Germany, Japan and Argentina) and explained
the markets. They used VEC model and causality test for variables i.e. energy
consumption and real GDP.
They says, bi-directional causality in Argentina,
causality running from GDP to energy consumption in Italy and Korea, and from
energy consumption to GDP in Turkey, France, Germany and Japan. They concluded,
energy conservation may harm economic growth in the last four countries.
Boudri J.C. and et.al (2002) study on, “The Potential Contribution Of
Renewable Energy In Air Pollution Abatement In China And India” analyzed,
the cost effectiveness of renewable energy sources in air pollution abatement in Asia.
They used acidification model i.e. RAINS-ASIA model (Regional Air Pollution
Information and Simulation Model), this model approach demonstrates that
optimization analysis and to help found that, cost effective strategies for air pollution,
for the coming 20 years. They concluded that, increased use of renewable energy
sources could reduce sulfur and carbon free, to conventional fuel supplies.
George Hondroyiannisa et.al (2002), study on “Energy Consumption and
Economic Growth: assessing the evidence from Greece” empirically explained the
relationship between energy consumption and economic growth in Greece from the
period of 1960-1996 employing the vector error-correction model and test for co44 integration. It consist of three variables i.e. energy consumption, real GDP and price.
They concluded, there is a long-run relationship between the three variables,
supporting the endogeneity of energy consumption and real output. They found that,
this empirical evidenced to help the policy implications aiming at improving
economic efficiency can induce energy conservation without impeding economic
growth.
Ashishrana and P. R. Shukla (2001) study on “Macroeconomic Models for
Long-term Energy and Emissions in India” described the complex dynamics
between energy, emissions and Indian economy. They also described two top-down
models that is ERB (Edmonds and Reilly, 1983, Reilly et al., 1987; Edmonds and
Barns, 1992) model it indicated long-term model of global energy and greenhouse gas
emissions, another model is SGM (Second Generation Model) it indicated national
model. They concluded that India’s energy system will remain largely dependent on
coal and to change under a regime of carbon taxes towards less carbon-emitting fuels
like gas and renewable energy.
John Asafu-Adjaye(2000), study on “The relationship between Energy
Consumption, Energy Prices and Economic Growth: time series evidence from
Asian Developing Countries” examined, the causal relationship between energy
consumption, energy prices and economic growth for time series evidence from four
Asian countries like India, Indonesia, Philippines and Thailand and used cointegration and error-correction models, it consist of three variables i.e. energy
consumption, energy price, economic growth. He concluded, India and Indonesia are
causally related but, Philippines and Thailand mutually causal and do not support that
energy and income are neutral with respect to each other.
45 A study on “A note on the causal relationship between Energy and GDP in
Taiwan” by Hao-Yen Yang (2000) has examined the causality between energy
consumption and GDP in Taiwan, time series data for the period 1954-1997 and used
the tests for unit root (PP test), Co-integration test and Granger’s technique has taken
five variables i.e., GDP and energy consumption including coal, oil, natural gas, and
electricity. He says, causal relationship between GDP and the aggregate as well as
several disaggregate categories of energy consumption and Granger’s technique find
bi-directional causality between total energy consumption and GDP, find further that
different directions of cause exist between GDP and various kinds of energy
consumption.
A study on “A Multivariate Co-Integration Analysis of the Role of Energy
in the US Macro Economy” by David I Stern (2000) has analyzed the causal
relationship between GDP and energy use in the USA and using the econometric
models i.e. VAR model, integration, Single equation specification co-integration test
and Multivariate co-integration analysis. These tests consists of three variables, that
is GDP, energy input, capital input and labor input between the years of 1948 and
1994. He observed that, Single and Multivariate co-integration analysis shows that
energy is significant in GDP and also shows that, there is co-integration relationship
including GDP, energy, capital and labor. He has concluded, energy is a limiting
factor in economic growth but energy supply will tend to reduce output.
Suganthi L and A.Williams(2000), study on “Renewable Energy in India-a
modeling study for 2020-2021” explained, the energy requirement is being met by
both commercial and renewable energy sources in India. They have empirically
analyzed the source of renewable energy systems by used the optimization model.
This model constraints are demand, potential, social acceptance, reliability, emission
46 and employment. They concluded that, commercial sources are non-availability of
sufficient resources and create emission of pollutants, it is now being felt that
renewable energy has to be utilized to a greater extent.
Elizabeth Cecelski(2000), study on “Enabling Equitable Access to Rural
Electrification: Current thinking and major activities in energy, poverty and
gender” has explained the ways of thinking in energy, poverty and gender, with a
focus on rural electrification and renewable energy, as an initial attempt to
conceptualize linkages like sustainable energy development and poverty, poverty and
some energy implications, rural development and poverty,
energy-poverty and
gender.
Sun J.W. (1998) study on “Changes in Energy Consumption and Energy
Intensity: A Complete Decomposition Model” empirically analyzed the energy
consumption and energy intensity in developing country China and developed
countries Eastern Europe and USSR and used common problem in the general
decomposition models, i.e. the residual term. He has taken three variables i.e., energy
consumption, energy intensity and GDP for the period of 1973-1990.
He has
concluded, China increased energy consumption and USSR decreased energy
consumption. The energy intensity in developed countries, Eastern Europe and USSR
and China still declined in this period, the intensity effect decreased the energy
consumption. The real energy consumption was still less than the activity effect in
developed countries.
Benjamin S. Cheng and Tin Wei Lai(1997) study on“An investigation of
Co-integration and Causality between Energy Consumption and Economic
Activity in Taiwan” analyzed the causality relationship between the energy and
GDP, Energy and Employment in Taiwan and used the tests for unit root test i.e., PP
47 test, co-integration and Granger causality test for the period of 1955-1993. They
found that, causality running from GDP to energy consumption and also energy
consumption to employment unidirectional causal but not vice versa.
They
concluded, in the newly industrializing countries in general, energy is an important
ingredient of economic development and economy which is well-developed but not
highly developed. Therefore, an increase in output influences energy consumption,
which in turn boosts employment. Additionally, increased energy consumption also
directly affects employment.
Abul M.M. Masih and Rumi Masih (1996), study on “Energy
Consumption, Real Income and temporal causality: results from a multi-country
study based on co-integration and error-correction modeling techniques”
empirically analyzed the energy consumption and economic growth for multi
countries like India, Pakistan, Malaysia, Singapore, Indonesia and Philippines. They
used co-integration tests and dynamic vector error-correction model. These tests
consist of two variables i.e., energy consumption and economic growth by each
countries, during the period of 1955-1990. They said that, India, Pakistan and
Indonesia countries were co-integrated but, temporal causality were mixed with
unidirectional causality from energy to income in India, reverse for Indonesia and
mutual causality for Pakistan.
2.3b. Related Literature on Techno-Economic Analysis of Solar Energy:
Solaiman O and et.al (2011), study on “Techno-Economic study of
potential using solar energy as a supporting power supply for diesel engine for
landing craft” explained the comparative analysis of fuel power consumption and
solar energy consumption in Malaysia’s company. They observed that the potential
of using solar PV system onboard a landing craft by analyzing the reduction usage of
48 fuel and diesel, exhaust as well as carrying out economical analysis. They calculated
fuel and money saved by using solar panels, economically analysis were obtained by
determining data of cost, cash flow, annual average cost (AAC), and return
investment of both vessel with the support of solar PV system and without solar PV
system. They concluded, the use of solar panels will give benefits to the vessel and
also to the investment. Reduction of fuel consumption and diesel exhaust are proven
to show that there are potential in using solar energy to support the power requirement
for the landing craft as the installation of the solar hybrid system give benefits to the
company and also the environment.
Samara Sodrin and et.al (2009), study conducted on “Alternative Solar
Water Heater for Domestic Purpose”, investigated SWHs and EWHs in domestic
household. They said, every household has domestic electric water heaters which
consumes lot of electricity. Therefore to faced the problem of electricity. They
economically calculated, cost analysis, the variables are energy price, energy unit of
usage, electric system price, maintained cost in electric heater system to compare the
SWHs. They concluded, SWHs is efficient because of used to supply hot water 80%
of the time, and rest 20% will be supplied by the electric water heater, SWHs cheap,
abundant and free, very small amount of electricity and reduces of expenses for the
user.
Abdulkarim H T (2001), study on “Techno-economic analysis of solar
energy for electric power generation in Nigeria” has investigated global and
regional availability of solar energy and its feasible utilization for power generation.
He also discussed on technologies involving the concentration, collection and
conversion of solar energy to power. He analyzed, solar technologies were compared
economically with conventional technologies of power generation considering present
49 social-economic environment to emphasize the need to supplement with and
eventually replace existing power generation systems with available, abundant and
inexhaustible solar energy system because of Nigeria power generated presently is
insufficient. He concluded, the utilization of solar energy for power generation would
reduce the over-dependence on hydropower, the adverse environmental effects of
fossil power and the dangers of nuclear power.
2.3c. Related Literature on Cost and Benefit Analysis and Life Cycle Cost
Analysis of Solar Energy
Yogesh Sharma and et.al (2013), studied on “Energy-Cost Analysis of
Alternative Sources” explained cost advantages and disadvantages of alternative
energy sources in Gwalior. The data collection was carried out for selected sites
coupled with their energy auditing to obtain the total energy consumed at house, and
analyzed energy specifications and installation-cost of the alternative energy sources,
cost analysis of cost of illness analysis, cost-minimization analysis, cost- effectiveness
analysis, cost utility analysis, cost consequence analysis, cost-benefit analysis, in
surveyed sites. They observed, the source of alternative energy powered in applying
homes reduce the emery cost.
Christopher J.Koroneos and EvanthiaA.Nanaki (2012), study on “Life
Cycle Environmental Impact Assessment of a Solar Water Heater” investigated
technical and environmental performance of a solar water heater in Greece. Using for
Life Cycle assessment method and techno-economic analysis.
This LCA study
quantifies the environmental benefits of the installation a SWH with electricity an
auxiliary for domestic use in the city of Thessaloniki in Greece. They examined the
manufacturing stages of the SWH and records resource consumption and waste
streams to the environment. The test of LCA economic parameters are initial cost of
50 SWHs and annual cost of other sources of DHWs, Size of water heater system,
energy cost, energy saving. The result gave LCA savings equal to 4280.0V and payback time equal to 5years. They concluded renewable energy sources could provide a
solution to the problem, as they are inexhaustible and have less adverse impacts on
the environment than fossil fuels then especially solar energy systems offer significant
environmental protection.
Panapakidis D (2010), study on “Solar Water Heating Systems Study
Reliability, Quantitative Survey and Life Cycle Cost Method”, has investigated
overview of the solar water heater system , benefits, types of SWHs, and life cycle
cost analysis and comparative analysis of SWHs and other fuels in UK and Greek.
They calculated life cycle cost analysis; variables of performance are solar energy
available, family size, SWH size and type, time of use, type of building. The
economic variables are current fuel cost, inflation rate, discount rate, homeowner’s
income tax rate, investment time period, maintenance cost over time.
They
concluded, both countries are the cost reduction and people believe that SWHs are
quite expensive compared to other sources of water heating.
Fouad Kamel(2010), study on “Life-Time Cost Benefit Analysis of Solar
Energy System in Queensland”, analyzed life time cost and benefit analysis for a
solar system comprising a grid connected photovoltaic unit and a solar water heater
operated at Toowoomba Queensland. The work represented technical and economic
assessment of the technology at local condition. They observed solar KWh price
indicated the ability of the system to provide competitive prices to cover demand
peaks in Queensland. Additionally, the solar system being located on site offers the
advantage of avoiding transmission and distribution losses throughout the electrical
network.
The work is addressing advantages of associating solar heaters to
51 photovoltaic systems covering energy demands for most of conventional domestic and
industrial users. Case studies for different technologies, different economic conditions
and system life times are presented. The results indicated SWHs economic benefits at
present equipment and energy prices, it provided the shortest payback time and the
lowest cost per kWh when compared to the other alternatives, the combined system
and the gird connected PV only then, technical and economic ability to reduce peak
electrical demands on the national grid.
The study on “Solar Water Heating Systems In Georgia: Cost-Benefit
Analysis” the document prepared by USAID, Rural Energy Program (2008). This
document basically interested in solar water heating systems or willing to use in
Georgia. Explain the technologies and products of hot water system. This document
calculated economic viability analysis of cost-benefit analysis of SWHs and EWHs.
The variables are solar system life time years, maintenance cost SWHs, expected
electricity charge, location, collectors type, temperature in small and large
family/hotels. The result of cost and benefit analysis indicated that, SWHs cover 7585% of annual hot water demand and cost of hot water decreases in similar ratio.
Concluded that, the bigger and more dimensioned the system is the more beneficial
and economically justified is installation of such system i.e. the more water is
consumed daily the more reasonable for the consumers is installation of such system.
Mousa and et.al (1996), evaluated the domestic solar water heating system in
Jordan using cost and benefit analysis of hierarchy process. They observed in this
paper the term of cost, the SWH system was the least expensive on a percentage basis
is the SWH cost about 13% compared to the most expensive heating system LPG of
about 28% and the term of benefit is the SWH was also the most beneficial, were
52 about 31%. They concluded, both cost and benefit ratio of solar was also the least
expensive compare to other sources.
2.3d.Related Literature on End-Use Method and Regression analysis on Energy
Demand:
Nagaraja R (2008), study on “Unrestricted Electrical Energy Requirement
in Karnataka” has explained the power sector reforms in the state of Karnataka and
ushered in new policies, practices and guidelines for the administration, management
and development of the generation, transmission and distribution facilities. He said
that, grid code mandates each of the distribution and transmission company in the
state to submit the energy and peak demand projections for the next 10 years to state
regulatory commission energy year. He calculated, trend analysis, linear multivariable regression, partial end use method, scenario approach during the period of
1980-2007 based on secondary data.
He concluded that, improving the private
electricity company can solve the shortage of electricity.
Aguilar C and et.al (2005), study on Domestic Water Heating and Water
Heater Energy Consumption in Canada”, estimated on SWH is second largest
energy end-use for Canadian households. They calculated, DWH efficiency, types of
fuels, relative cost efficiencies, factor influencing domestic hot water and energy
consumption, life cycle cost analysis, residential end-use model. In this paper study
parameters are household income, consumption of water, types of fuels use, total
number of persons in households, water heater tank size, energy use, life time of
system, and demand for water heater. They found that, used in residential end-use
model for the amount of energy required for household for base load requirement and
for personal use are broadly consistent with the value. These values differ to the fuel
53 type that is used for water heating as well as other factor such as the type of
household.
2.4 Research Gap:
From the above literature reviews, majority of the studies found that,
•
The past reviews focused on macro level studies and quantitative in nature
captured on energy consumption and production of conventional energy
sources. These reviews tries to understand the long run and short run
relationship between the economic structures are GDP, energy
consumption, labor force, energy price, employment, and capital in some
countries including India.
•
These reviews are based to identify the causation and scarcity of
conventional energy sources that effect environmental problems.
•
Some of the studies are at the macro level, to promote the non-renewable
to renewable energy sources and technology benefits.
•
Most of reviews are based on technical aspects and empirical tests on solar
water heater consumption, cost-benefit, LCC, DSM, SSM, conservation of
conventional energy sources and environmental impact. So the studies are
based only on macro level and micro level.
But several studies have not considered the following issues. They are,
•
Past reviews have not considered on economic viability to management of
renewable energy sources in Karnataka.
•
Reviews have not focused on renewable energy potential, generation capacity
and distribution in Karnataka.
54 •
Reviews have not identified micro level study on solar energy availability and
it’s changed the energy demand, cost, and standard of living in Karnataka
•
Reviews have not focused on primary data analysis of segment area selection
to analysis the solar water heater technology benefits, cost and benefits, LCC,
conservation of energy in Karnataka as well as other districts (Mysore) of
Karnataka.
Hence, the present study is focused on energy, energy generation, shortage of
electricity in India as well as Karnataka and also focused on issues relating to
renewable energy resource management in Karnataka. So, solar water heater
consumption is chosen as a micro level study in the city of Mysore.
2.5 Statement of the Problems:
Both in India and also in Karnataka electricity sector has faced many issues to
the problem of energy crisis and demand, supply for energy. They are,
•
Due to the major shortage of coal, oil, and gas production of Electricity is
insufficient.
•
Energy shortage is found during transmission, distribution and
management (Including Thermal power).
•
Consumers are faced with load shedding problem of electricity. Because of
less power generation and management.
•
Distribution of free electricity to farmers and to the BPL Cardholders has
caused financial losses.
•
Environmental Hazards are eradicated due to the burning of coal,
firewood, oil and natural gas.
55 Therefore, in number of problems are identified in India and Karnataka in
respect of Power generation, transmission and management in the energy sector. So,
the Government of Karnataka is promoting non-conventional energy for power
generation in the long run to fill the gap between demand and supply.
2.6 Objectives of the study:
The objectives framed for the study are,
1. To examine the long run and short run relationship between the energy
consumption and GDP in developing countries.
2. To study on renewable energy resources in Karnataka.
3. To examine Solar Water Heater Consumption to Reduce the Energy
Consumption in Mysore city
4. To examine the Solar Water Heater Consumption for economic viability of
cost effectiveness in Mysore city
5. To study the impact of family income and family size on energy consumption
in Mysore city
2.7 Hypotheses of the study:
The Hypotheses of study are,
1. There is long run and short run relationship between the energy consumption
and GDP in developing countries.
2. Installation of SWHs consumption has significantly reduced energy
consumption.
3. SWH is cost effective to compare the conventional energy.
4. Energy consumption, family income and family size are positively related in
households of Mysore city.
56