Informal Markets for Electricity: Economics of Lighting for Hawkers in India

International Journal of Energy Sector Management, Vol. 3 Iss: 3, pp.308-323, 2009

18 Pages Posted: 10 Apr 2016

See all articles by Anoop Singh

Anoop Singh

Department of Industrial & Management Engineering; Centre for Energy Regulation (CER) & Energy Analytics Lab (EAL)

Date Written: 2009

Abstract

Purpose – The purpose of this paper is to investigate the economics of supplying energy needs for illumination requirements by hawkers using alternatives like compact fluorescent lamps battery lamps, liquefied petroleum gas mantle lamps or supply from mini‐grids supported by local diesel generators. Further, the prevailing business models like the lamp rental and the mini‐grid models, which epitomise informal electricity markets, are also analysed.

Design/methodology/approach – Three localities in Kanpur city are identified and data on techno‐economic characteristics of illumination options used by hawkers are collected. To compare the available options with varying capital life‐span, equivalent annual cost approach is utilized. This is used to calculate the levelised cost of 1 kiloWalthour energy used for providing illumination.

Findings – The daily user cost of illumination ranges from Rs 6.1 to 17 (for four hours) across the four existing models studied in the paper. This translates to Rs 31.3 to 312.5 per kWh of electricity use. The technology choice by hawkers is influenced by lack of initial capital and inconvenience associated with cheaper options than overall economics of the alternative option is found.

Practical implications – The paper highlights the absence of financial and institutional intervention that can help significantly reduce the cost of electricity access by such users and also help adoption of greener options like solar lanterns or solar battery bank charging stations. A practical solution may include a greater role of micro‐finance institutions. Greater awareness and capacity building needs of local entrepreneurs as well as of end‐users also need attention.

Originality/value – This is perhaps one of the few attempts to unravel the informal electricity markets in India and help identify issues that need attention so as to address needs of millions of consumers at the margin of the electricity grid in the country.

Keywords: Electricity, Energy supply systems, Lighting systems, Vendors, Solar power, India

Suggested Citation

Singh, Anoop, Informal Markets for Electricity: Economics of Lighting for Hawkers in India (2009). International Journal of Energy Sector Management, Vol. 3 Iss: 3, pp.308-323, 2009, Available at SSRN: https://ssrn.com/abstract=2760788

Anoop Singh (Contact Author)

Department of Industrial & Management Engineering ( email )

Room No. 324
Indian Institute of Technology (IIT), Kanpur
Kanpur, Uttar Pradesh 208016
India

HOME PAGE: http://www.iitk.ac.in/ime/anoops/

Centre for Energy Regulation (CER) & Energy Analytics Lab (EAL) ( email )

Department of Industrial & Management Engineering
Indian Institute of Technology Kanpur
Kanpur, 208016
India
(+91) 512 2597679 (Phone)

HOME PAGE: http://cer.iitk.ac.in/

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