Fuel Competition in Generation in India’s Electricity Sector

This research analyses the competition between various fuels (primarily coal, natural gas and petroleum) used for electricity generation in India by estimating the elasticity of substitution among them. This research can be viewed in two parts. The first looks at the numbers on the relative elasticities of fuel substitution in generation for India’s electricity sector and compares them with developed nations such as the USA, using existing literature. It draws on a method developed by the US Energy Information Administration which applies a linear logit model to US data. The second part considers the policy implications of these results for India by relating them to recent reforms on the pricing of natural gas and petroleum products, to electricity sector reforms, and to initiatives on decarbonisation.

By: Anupama Sen , Malcolm Keay

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