World Energy Outlook 2007

Figure 18.10: Reduction in Final Energy Consumption in the Residential and
Services Sectors in the Alternative Policy Scenario* by Fuel, 2005-2030
Coal
Gas
Biomass
Electricity
Oil
–25 –20 –15 –10 –5 0
Rural
* Compared with the Reference Scenario.
Mtoe
Urban
Cost-Effectiveness of Policies
The implementation of the policies considered in the Alternative Policy
Scenario yields vastly different investment patterns, compared with the
Reference Scenario. Cumulative savings of $78 billion are possible over the
Outlook period, with total supply-side investment savings of $132 billion being
offset by increased investment on the demand side of $54 billion
(Figure 18.11). Supply-side savings come mainly from the power sector, where
lower demand for electricity greatly reduces investment needs in power
generation and networks.
The role of government is important, as investment requirements fall
differently across the community. Greater investment in energy efficiency
results in lower energy bills for individual consumers, but at the expense of
higher initial funding. In the Alternative Policy Scenario, in the year 2030
alone each household saves $152 on average on transport fuel and $30 on
running costs for domestic energy needs (mainly for lighting and cooking)
(Figure 18.12). The total energy bill is lower by 23%.
Payback periods for end users in India tend to be long, as energy prices are
heavily subsidised; so the time taken to recover the initial investment is
artificially long. Reducing subsidies, so as to allow prices to reflect the true costs
of electricity supply, would lead to shorter payback periods and encourage the
554 World Energy Outlook 2007 - INDIA’S ENERGY PROSPECTS