JAUE2014-035 Energy Conservation as a Measure to Mitigate the Existing Electricity Market Distortion to Meet the Increasing Demand in Developing Countries

Abstract

In a lot of developing countries, the governments are facing common problems; “how to secure financial sources for increasing electricity subsidy”. The electricity prices have been set at lower than their costs, and with the growth in national economy, the amounts of electricity consumption and subsidies are becoming larger and larger. On the other hand, these low tariffs spoil people’s incentive for electricity saving. An early introduction of functional programs to mitigate or reduce the increasing subsidy is strongly required. Proposed programs are as follows: 1. Regulatory and incentive programs to promote electricity/energy conservation and evening peak cut/shift; the policies and technologies, which have been proven and experienced in developed countries, should be introduced at first. 2. In order to escape from the electricity market distortion, the governmental financial sources should be applied not to subsidies for power generation in general, but to incentive schemes to deploy energy conservation and renewable generations up to economically rational levels. 3. Functional tariff systems; more effective time of use (TOU) tariff and fuel price adjustment mechanism, which can contribute the reduction of the subsidies, should be investigated and developed.