Utility-administered demand-side management (DSM) programs in India have been slow in achieving the shift to efficient appliances. Some of the reasons are: (1) lack of expertise in DSM in utilities and regulatory commissions; (2) utilities being preoccupied with other issues such as electricity shortages and high distribution losses; (3) reluctance of most utilities to propose and design programs on their own. An alternate approach is required to bring about rapid gains in energy efficiency of appliances. One promising approach is National Programs (NPs) with a focus on market transformation through incentives to manufacturers to develop and sell super-efficient products. The design of NPs and the monitoring and evaluation (M&E) plans, and much of the implementation will be done by a national agency, considerably reducing the burden on utilities and state regulators and bypassing many of the difficulties with utility-administered programs. The funding for the incentives can come from ratepayers or taxpayers.
NPs are expected to have several other benefits: (1) reduced transaction costs because interactions will be with a small number of manufacturers rather than millions of consumers; (2) rapid ratcheting-up of efficiency standards; (3) upstream incentives (to offset higher manufacturing costs) that are considerably smaller than customer rebates (to offset higher retail prices); (4) easier monitoring and evaluation; and (5) possibility of introducing products that are not only super-efficient but also better suited to Indian conditions. NPs have received in-principle approvals from the relevant government agencies. The authors are working with the government agencies to develop the institutional framework, financing mechanism, and monitoring and evaluation that are described in the paper. India’s experience with NPs may be relevant for other developing countries that are striving to bring about a market transformation to efficient appliances but have limited expert resources in energy efficiency programs.