Evaluating energy inefficiency in energy-poor households in India: A frontier analysis approach

Abstract: Energy-poor households often compromise their thermal comfort and refrain from operating mechanical cooling devices to avoid high electricity bills. This is compounded by certain behavioral practices like retention of older, less efficient appliances, resulting in missed energy savings. Thus, the need to enhance efficiency becomes critical in these households. However, due to a lack of comprehensive data in India, little is understood about their electricity consumption patterns and usage efficiency. Estimating inefficiency and assessing its determinants is crucial for improving their quality of life. This study measures the inefficiency in electricity consumption due to household practices and appliances in social housing in Mumbai, India. It considers technological determinants in addition to socio-economic variables. The study employs primary data collected from rehabilitation housing and slums in Mumbai. Stochastic frontier analysis, a parametric approach, is applied to estimate indicators of electricity consumption and inefficiency. While household size and workforce participation significantly affect consumption behavior in rehabilitation housing, it is limited to the workforce in slums. The ownership of appliances, except for washing machines in slums, also exhibits considerable impacts. The mean efficiency scores of 83% and 91% for rehabilitation housing and slums, respectively, empirically quantify the potential savings achievable. Factors that positively influence inefficiency include the duration of operating refrigerators, washing machines, iron, and AC. These results hold implications for enhancing the uptake of efficient appliances in addition to accelerating energy efficiency retrofits in the region. Policies should focus on awareness and the development of appliance markets through incentives.