Capstone Project On

A Study of Consumer Behavior towards Renewable Energy Technologies for domestic use: A case study of Jalandhar as a Market.

Submitted to Lovely Professional University In partial fulfillment of the Requirements for the award of Degree of Master of Business Administration

Submitted by: Manoj Saini VishvVijendra Sharma Himanshu Rao Aditya Kumar

Supervised by: Vishwas Chakranarayan Assistant Professor Faculty of Business and Applied Arts LPU

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY

JALANDHAR NEW DELHI GT ROAD PHAGWARA PUNJAB

TO WHOMSOEVER IT MAY CONCERN This is to certify that the project titled ________________________________________________________________ carried out by Mr/Ms_________________(student name), S/o or D/o____________(Fathers Name). Mr/Ms_________________(student name), S/o or D/o____________(Fathers Name) Mr/Ms_________________(student name), S/o or D/o____________(Fathers Name) Mr/Ms_________________(student name), S/o or D/o____________(Fathers Name) has been accomplished under my guidance & supervision as a duly registered MBA student of the Lovely Professional University, Phagwara. Their project represents his original. ___________________________________ (Name & Signature of the Faculty Advisor) Date:

DECLARATION sWe,"______________________________________________________________ _____________________________________________________ (student's name), Hereby declare that the work presented herein is genuine work done originally by us and has not been published or submitted elsewhere for the requirement of a masters program. Any literature, data or works done by others and cited within this synopsis has been given due acknowledgement and listed in the reference section. _______________________ _______________________ _______________________ _______________________ (Students name & Signature) Date:__________________

Acknowledgement

It is a great pleasure for me to acknowledge the assistance and contributions of many individuals in making this dissertation a success. First and foremost, I would like to thank our mentor, Mr. Vishwas Chakranarayan, for his assistance, ideas, and feedbacks during the process in doing this Capstone Project. Without her guidance and support, this dissertation can not be completed on time. Secondly, it is a pleasure to express my thanks to all respondents from interviews for sparing their time to participate in this study. I deeply appreciate their helpfulness and willingness in providing the useful information for this study. Lastly, I wish to express my sincere gratitude to our families and teachers for their encouragement and moral support.

EXECUTIVE SUMMARY

INDEX
TOPIC PAGE NO Chapter1 Introduction. Chapter 2 Review of Literature.. Chapter 3 Research Methodology... Chapter 4 Data Interpretation.. Chapter5Findings and Recommendations.
5.1 Findings.. 5.2 Limitations.. 5.3 Recommendations... 5.4 Conclusion...

Chapter6 References..... Chapter7 Annexure.

CHAPTER 1 INTRODUCTION

Introduction The population of the world continues to grow, as does the average standard of living, increasing demand for food, water and energy and placing increasing pressure on the environment. The population of the world doubled from 3.2 billion in 1962 to 6.4 billion in 2005 and is forecasted to grow to 9.2 billion in 2050.Supplies of oil, gas, coal and uranium are forecast to peak as reserves are depleted. At the same time, fear of climate change is putting pressure on the energy sector to move away from carbon burning to nuclear, solar and other environmentally friendly. World Energy Scenario According to the 2007 BP Statistical Energy Survey, world 2006 electricity generation was 19,028 terawatt-hours (TWh). The countries generating the most electricity were, in order, the USA, China, Japan, Russia, India, Germany, Canada and France. World electricity demand in 2006 was 15,000 TWh and is forecast to be 30,000 TWh in 2030. In 2004, 18% of world electricity came from hydro and 16% from nuclear. In 2006, according to the IEA, the main sources of electricity worldwide were coal (39.8%), gas (19.6%), hydro (16.1%), nuclear (15.7%), oil (6.7%) and other renewable (1.8%). The contribution of coal is growing at a rapid rate compared to all the others. There is renewed interest in nuclear but hydro is stagnant. As of March 2007, Africa was using 5% of its hydro potential compared to Asia (40%) and Europe (80%). Indian scenario India is one of the countries where the present level of energy consumption, by world standards, is very low. The estimate of annual energy consumption in India is about 330 Million Tones Oil Equivalent (MTOE) for the year 2004. Accordingly, the per capita consumption of energy is about 305 Kilogram Oil Equivalent (KGOE). As compared to this, the energy consumption in some of the other countries is of the order of over 4050 for Japan, over 4275 for South Korea, about 1200 for China, about 7850 for USA, about 4670 for OECD countries and the world average is about 1690. 4. In so far as electricity consumption is concerned, India has reached a level of about 600-kilowatt hour (kwh) per head per year. The comparable figures for Japan are about 7,800, for South Korea about 7,000, for China about 1380, for USA about 13,000, for OECD countries about 8050 and world average are about 2430. Thus, both in terms of per capita energy consumption and

in terms of per capita electricity consumption, India is far behind many countries, and as a matter of fact, behind even the world average. Therefore, to improve the standards of living of Indian people and to let them enjoy the benefit of economic development, it is imperative that both energy consumption and electricity consumption level is enhanced. India is targeting a growth rate of 9 10%, having already reached a level of almost 8%. To sustain the double-digit growth rate for next 10-15 years, it would be essential that the level of energy availability and consumption, and electricity consumption in particular, is enhanced substantially. In the profile of energy sources in India, coal has a dominant position. Coal constitutes about 51% of Indias primary energy resources followed by Oil (36%), Natural Gas (9%), Nuclear (2%) and Hydro (2%). To address the issue concerning energy consumption, and more particularly, the need for enhancing the energy supply, India has accorded appropriate priority to both - supply side management and demand side management. On the supply side management, while it is essential for India to radically expand the capacities on all the fronts and all the segments of energy, equally important is the need for efficient consumption of energy for which a number of initiatives have been put in place. On the supply side, the mis-match between demand and supply is so large that India can ill-afford to choose one option in preference to the other. For several years, in fact may be for next few decades, India would need to exploit all possible options to create reasonably large capacity base on the energy side. It needs to expand manifold the coal production, extract through all possible means, the oil and gas reserves, herever possible, resort to import of coal, acquire coal and gas reserves abroad, will need to continue substantial dependence on import of oil, and exploit fully the large hydro electric potential which is of the order of over 1,50,000 MW. Only about 32,000 MW i.e. about 20% of the hydroelectric potential has been exploited so far. Increase in the capacity base of power generation through dependence on the coal reserves of the country, which are of the order of 200 billion tones is inevitable. Nuclear programme has proved to be effective and successful. After initial teething problems in mid eighties, from early nineties, the nuclear power plants have demonstrated to be utilized at substantially high level of availability and efficiency and this is one of the important options that India is pursuing. Gratifyingly, a number of companies in India have discovered huge gas reserves, both on the Western, and more particularly, toward

the Eastern coast. Besides, a number of LNG terminals have also been developed and are being developed so that the use of gas could be supplemented through import of Liquefied Natural Gas. India is one of the very few countries which has been successful in employing wind turbine technology and today of the total capacity of 1, 25,000 MW in the country about 5% is constituted by the various non-conventional sources of generation, wind being the largest contributor. Scenario of Punjab Punjab as a state does not have coalmines, natural gas, tidal power, and oil as a source of energy. the possibility of wind energy is also very low since the wind speed is low and the distance from the sea is vast. There is good scope for nuclear and solar energy which is yet to be harnessed. The state has three perennial river which are a source of hydroelectric power and also the state has three thermal power plants .The state is among the highest peak hour consumer of electricity, around 7700MW .Since the shortage of water is there the state has to rely on thermal power but cost of thermal energy is high and it is polluting also. The state government is now considering the option of nonconventional energy sources and has also commissioned two power plants from this source. The finances of states with respect to electricity are in a bad shape since it continues to supply subsidized power to the 37 % of its consumers, the farmers. 2. Renewable energy technologies for domestic use. Solar Photovoltaics Photovoltaic technology means converting solar light directly into electricity. Thus, the most abundant free energy - that from the sun - can be harnessed to power domestic electrical equipment such as kitchen appliances, computers, and lighting. This is different from solar thermal technology used for hot water. The technology consists of PV cells connected together in PV modules (panels or arrays) which are semiconductors, typically made of crystalline silicon. When exposed to sunlight, the PV cells produce direct current (DC) electricity, which in order to use in the home is conducted to an inverter and transformed into AC electricity. The PV cells respond to both direct and diffuse solar radiation, meaning that even in overcast days a PV system can produce electricity. The

output however is greater when there is more sunshine. The conversion efficiency range is between 5-15%.PV technology is ideally suited to use on residential buildings, providing pollution and noise-free electricity without using extra space. The use of photovoltaics in households has grown substantially in the UK over the last few years, with many impressive examples already in operation (see photo). PV systems can be incorporated into buildings in various ways. Sloping rooftops are an ideal site, where modules can simply be mounted using frames. Photovoltaic systems can also be incorporated into the actual building fabric, for example PV roof tiles are now available which can be fitted as would standard tiles Solar Thermal Solar thermal energy (STE) is a technology for harnessing solar energy for thermal energy (heat). Solar thermal collectors are classified by the USA Energy Information Administration as low-, medium-, or high-temperature collectors. Low temperature collectors are flat plates generally used to heat swimming pools. Medium-temperature collectors are also usually flat plates but are used for heating water or air for residential and commercial use. High temperature collectors concentrate sunlight using mirrors or lenses and are generally used for electric power production. STE is different from (and indeed much more efficient than photovoltaics, which converts solar energy directly into electricity. Windmill A windmill is a machine which converts the energy of wind into rotational energy by means of vanes called sails or blades. Originally windmills were developed for milling grain for food production. In the course of history the windmill was adapted to many other industrial uses. An important application was to pump water. Windmills used for generating electricity are commonly known as wind turbines. Biogas Biogas typically refers to a gas produced by the biological breakdown of organic matter in the absence of oxygen. Organic waste such as dead plant and animal material, animal

dung, and kitchen waste can be converted into a gaseous fuel called biogas. Biogas originates from biogenic material and is a type of biofuel. Energy efficiency solutions These include Power monitoring, Power quality, Critical power, Pump and fan control, Refrigeration control, Industrial application control, HVAC control, Lighting control, Building automation, Public lighting control, Room control, Home control..

CHAPTER 2 Review of Literature

Review of Literature
1.Brown, M.A. (November 2001). Market Failures and Barriers as a Basis for Clean Energy Policies. Energy Policy.Study was conducted in United States.This paper describes the cost-effective energy efficiency opportunities that could be realized by overcoming the market failures and barriers that are causing an efficiency gap (the gap between actual investment in energy efficiency and the higher level that would be economically beneficial to consumers). 2.Dymond, C. (October 2002). PV Focus Group Report. Portland, OR: Energy Trust of Oregon. The sampling method they used is Focus groups. They conducted the survey in United States (Oregon) This report summarizes findings from seven focus-group meetings held in 2002 throughout Oregon with people involved in PV delivery, education, and installation (6-10 people per focus group). The purpose was to learn about market barriers, opportunities, and requirements from people knowledgeable about PV in preparation for launching a PV program in Oregon. The consensus barriers are shown below. Link: www.energytrust.org/Pages/about/library/reports/02_PVFocusGroup.pdf

3. Faiers, A.; Neame, C. (September 2006). Consumer Attitudes Towards Domestic Solar Power Systems. Energy Policy Surveys administered to 100 solar power early adopters and 1,000 members of the assumed solar power early majority in the United Kingdom; differences between the groups attitudes indicate barriers to solar power adoption.The study area used is United Kingdom .This paper uses Diffusion of Innovations theory to determine attitudes toward characteristics of solar systems and barriers to adoption. Surveys were administered to two types of homeowner in central England: early adopters (who have already purchased solar power systems) and an assumed early majority (who have invested in energy efficiency measures but not solar power). Attitudes toward various characteristics of solar power systems are isolated to determine which characteristics are preventing the pragmatic early majority from

adopting solar power. Recommendations for bridging the chasm between the early adopters and early majority are given. 4. Florida Solar Energy Center (March 2000). Florida Photovoltaic Buildings Program: Status Report, Observations and Lessons Learned. Cocoa, FL: Florida Solar Energy Center.The method used is Observations and lessons learned from the Florida PV Buildings Program .The focus region taken in the study is United States (Florida). This report summarizes observations and lessons learned from 2 years of operating the Florida PV Buildings Program, a collaborative effort among the Florida Energy Office of the Department of Community Affairs, Sandia National Laboratories, the PV industry, the Florida Solar Energy Center, and nine end-user groups: municipal utilities and rural electric cooperatives, commercial building owners and operators, government and public agencies, school and church organizations, manufactured building corporations, investor-owned utilities and energy service companies, commercial roofing companies, builders and developers, and homeowners and buyers.
Link: www.fsec.ucf.edu/pvt/Resources/publications/pdf/LESSONSLEARNED.PDF

5. Foxon, T.J.; Gross, R.; Chase, A.; Howes, J.; Arnall, A.; Anderson, D. (November 2005). UK Innovation Systems for New and Renewable Energy Technologies: Drivers, Barriers and Systems Failures. Energy Policy Analysis of UK innovation systems for new and renewable energy technologies, including interviews of UK academic, industry, and policy stakeholders. United Kingdom was taken as the geographic focus in the study. This paper summarizes results from a 2003 study commissioned by the UK Department of Trade and Industry. It examines the systemic processes by which innovation occurs related to UK new and renewable energy technologies. It identifies gaps preventing technologies from moving along the innovation chain and provides policy recommendations for facilitating successful commercialization of new and renewable energy technologies.
Link:-www.dti.gov.uk/files/file22069.pdf

6.Caird and Roy in their study User centered improvements to energy efficiency (2006) observed that the users of the renewable energy products were less satisfied with the reduction in fuel and energy use. The study was conducted on a sample of 390 respondents from UK using random sampling as a technique. The major concern of the users was performance reliability and durability and cost. The consumer was also not satisfied with the design. 7.Bhargav and Gupta in their study titled Power in Punjab have concluded that there has been a gap in the demand and supply of power and it can be balanced by the use of Renewable energy technologies in Punjab. The study has forecasted the demand and supply of electricity using regression analysis. 8.Dhumal and Tiyade in their study Rural marketing consumer behavior have concluded that the positioning communicated by T.v and print media have a very significant effect on the purchasing pattern of the consumers as a literacy rate of rural population is increasing at a very high rate and thus creating awareness about the product and its brand. The study used spss as the software for measuring the variables. They used chisquare test. 9.Bollino in his study titled The willingness to pay for renewable energy sources have concluded that WTP estimate of Italian households is not enough to cover the subsidy cost necessary to attain the goal of additional GWh to be produced by Res in 2010. The study used traditional referendum and hypothesized model. sample size were 1601with random sampling. 10.The study is conducted by Govt of India titled commercializing renewable energy in India had studied how to create energy infrastructure in rural areas , that would directly the alleviation of poverty through income generation and to introduce climate friendly solutions to meeting rural energy need in a manner in keeping with India national commitment to sustainable development. 11.Johnson in her study titled Green technology consumer buying behavior have concluded that a higher income or education level does not predict which eco-grouping consumers fell into eco-considerate or eco-wary and most affluent consumers are engaged in wide range of activities and personal behavior that reflect their support for

environmental issues. The study used graphical method to identify the green behavior businesses need to promote. 12.Sidhu in his study titled Non conventional energy resources have analysed that Developing countries could have the competitive advantage for driving the world market. Nevertheless, India must give more thrust too research and development in the field of non conventional energy. 13.LU ,N& RICE in his study titled demand drivers and price support for bioethanol use as fuel in the U.S have concluded that there are potential benefits from the development cellulosic ethanol including oxygenation and octane increases, lower green house gas and air pollutant emissions, and a favorable energy balance. The study used graphical method to show the demand. 14.Shahi in his study titled Energy markets and technologies have concluded that adequate availability of energy would be feasible for this objective to materialize. The ultimate goal is to develop these markets and facilitate through various policy initiatives. Their matured functioning in competitive manner. over last 10-15 yrs private investments are being encouraged. 15.Another study conducted in United Kingdom Lighting up the rural Lao. The project provides Rental, solar equipments making electricity affordable for the majority of rural households or villages without the use of subsidies. The rental system encourages reliable, servicing, allows consumer flexibility of returning or changing the system to suit their needs. 16.Wilhite in his study titled will efficient technologies save the world? Have concluded that new technologies do not determine new pattern of consumption, but creates potentials for change that connect with the changing socio-cultural practices in an outside the town. 17.Graber and Stewart (2010) observed in their study that though the response of the consumer towards green marketing varied from country to country, but the consumers are showing a positive response toward green marketing. The objective of the study was to find, How do green marketing efforts affect consumer behaviors exhibited by their purchasing references during a recessionary period. The study which was conducted on a

sample of 2500 respondents at a significance level of 95 %, with an error rate of +/- 2 .The date for the survey was sourced from a global research firm PSB and an index of GCI was also used for the study. The study concluded that consumers from the developed economies like US, UK, China and Brazil etc though responsive towards the green marketing products are not willing to compromise on the core benefit of the product. 18.Reake.R (2010) concluded that the consumer with the help solar cells can generate electricity and by way of a power purchase agreement can actually bill the local authority for the power generated by it. In a study titled Villages lit up done in 2010 the author has discussed the state of electricity supply in South Africa where the supply of electricity in the sub Saharan region is less than 70 %.The article discusses how Rural energy foundation has helped more than 300000 families in installing the SHS (Solar home systems) .And to continue with it the organization is also developing the necessary infrastructure to support the growth of these systems by way of training the technicians and developing the dealer network. 19.Lee and Gushee (2009) have observed that the contribution of the renewable energy to the local grid is just one third to the capacity to which it can be increased if the system for Mass electricity storage is developed. 20.Wang, Z. & Li, J. 2009, in their study "China's renewable energy development, concluded that most of China's renewable energy technology is still in the transitional period from research and development to industrial production, and that the renewable energy industrial development needs the establishment of a series of technical experiments and demonstration projects to analyze and investigate the resources, the conversion and market development experience, and then form complete sets of equipment design and manufacturing, cultivation and collection of biomass resources and technology development capabilities, and that regulations should be established to provide a solid foundation for the large-scale development of China's renewable energy. 21.An article titled "Lighting up rural India", 2007, Appropriate Technology, mentions about $1.5 million pilot project, managed by the United Nations (UN) Environment Programme, has improved so many lives in India that sister programs to boost energy

access are being initiated in other developing countries. Even a few hours of 20-watt solar-powered to 40-watt solar-powered lighting in homes and small shops nightly has been credited with better grades for schoolchildren, better productivity for cottage-based industries such as needlework artisans, and even better sales at fruit stands, where produce is no longer spoiled by fumes from kerosene lamps. Behind these quality-of-life upgrades is an innovative UN-led project to persuade Indian bankers to finance small loans for solar systems -- typically $300 to $500 for a system to power two to four small lights or appliances. When the program began, only 31% of India's rural households had electricity connections compared to 76% of urban households. The typical home system comprises a roof-mounted solar photovoltaic module, storage battery, charge controller, interior wiring and switches and electric lighting fixtures. 22.In another article "Solar power shines on rural Bangladesh", 2006, Appropriate Technology it is has been elaborated how Grameen Shakti and Rahimafrooz Batteries Ltd, Bangladesh, were jointly awarded the Light Award for supplying and installing thousands of solar home systems (SHS) bringing the simple benefit of electric light and power to families across Bangladesh. In their efforts to spread the technology and make it yet more affordable, Grameen have come up with a new and innovative way of making solar yet more affordable to families. This method known as micro-utility model has become very popular in rural market places because it allows a number of people to share the cost and benefit of an SHS. SHSs have led to increased production in areas such as fishing, rice processing, poultry farming and handicraft. New business opportunities are also made possible, such as renting mobile phone time. The benefits to the environment are also significant with each SHS cutting household carbon emissions by around 350 kg450 kg per year, by avoiding the use of kerosene lamps. 23.Blyth, L. 2004, "Micro-solar technologies - testing the market", Appropriate Technology details about a collaborative project in Kenya that is pioneering the commercial development of low cost micro-solar systems, as well as their distribution and marketing. The need is to develop micro-solar technologies that are modular power supply systems able to provide poor people, who have no electricity, with small amounts of electricity for running appliances such as radios, cassette players, LED lights and mobile phones. Three different systems were proposed, developed and trailed in Kenya.

The smallest and cheapest aimed to provide power solely for radios and an LED torch, while the medium and large systems aimed to provide larger amounts of power to enable simultaneous use of radios/cassette players, charging mobile phones and an LED desklight. This emphasis on the long-term viability of the products is central to the commercial aim of this project. 24.Atabi, F. 2004,in his work "Renewable energy in Iran: Challenges and opportunities for sustainable development". Has observed that around the globe, developing countries have reported different cases of successfully implemented Renewable Energy (RE) program supported by bilateral or multilateral funding. In developing countries subsidy has played a big role in RE program marketing and whether this will lead to sustainable development is yet to be determined. The adoption of implementation strategies that will support sustainable development and overcoming barriers that hinder expansion of Renewable Energy Technologies (RETs) still remains as a big challenge to stakeholders involved in promotion of RE resources in developing countries. In this respect, developing countries need to re-examine their environmental policy for promotion of RETs in order to define its role in revitalization of their economies. This paper reviews the policy incentives for promotion of RETs in the Islamic Republic of Iran. Setting-up international collaborative business ventures between local industry in Iran and RE companies in developed countries is proposed as an implementation strategy that will appropriate diffusion of RETs in the country. An organizational framework that may help to attain this objective is discussed and a structural model for RE business partnership is presented. It is concluded that with appropriate policy formulations and strategies, RETs can bring about the required socioeconomic development in Iran. 25.Mbogo, S. 2001, "Solar energy - the potential in East Africa", Appropriate Technology Despite abundant global energy resources, approximately 2 billion people, most of them in developing countries, struggle to meet their basic needs due to limited access to modern energy supplies. The Intermediate Technology Development Group (ITDG) has developed an innovatively-tailored solar lighting system, known as the Glowstar Lantern. This promises to revolutionize lighting systems especially in rural Africa. The lantern has an in-built battery that can serve for 2 years without any need for

a replacement. Among other solar energy initiatives in Kenya, Trans World Radio Solar Project has been promoting Solar box cookers since 1992.

CHAPTER 3 Research Methodology

Methodology Objectives of the study (Problem area to be investigated) To identify the factors affecting the buying decision for Renewable energy technologies. To identify the gap in the consumer value expectation, value creation, value delivery and policy initiatives. To ascertain an approximate market size for the renewable energy technologies To identify the focus area in the policy initiatives of the government.

Scope of the study (Definition of problem area) Geographical Area: The study would be conducted in the district of Jallandhar (Pb) and both urban and rural blocks would be covered. Primary study Questionnaire: Quota sampling (Prospective customers) from 100 respondents. Observation: Convenience sampling (Walk-in customers to the stores) of 50 respondents Secondary study The following secondary sources would be referred for the study Websites of government agencies responsible for power generation and distribution. Databases like Proquest , EBSCO,Emrald etc Websites of companies into production of renewable energy technology firms.

CHAPTER 4 DATA INTERPRETATION AND ANALYSIS

CHAPTER 6 References

References
Anonymous, (2007), Lighting up rural Lao, ProQuest Central, UK , 34(2), 60-61 Bollino, Nov-(2006), The Willingness to Pay for Renewable Energy Sources, The Energy Journal, Italy, Vol. 30. No-2, page -81-96 Bhargava and Gupta ,(2007), Power Scenario of Punjab with special reference to Forecasting and Management, Punjab (India), 11,(2007), 1-20. Caird and Roy, (2008), User-Centred Improvements to Efficiency, International Journal of Innovation Management, UK, Vol. 12, No. 3 (Sept. 2008) pp. 327355 Guru,(2003), Renewable Energy Sources in Indias it viable, Liberty Institute New Delhi, page,1-16 Rowlands, Scott, Parker, P. 2003, "Consumers and green electricity: profiling potential purchasers", Business Strategy and the Environment, vol. 12, no. 1, pp. 36-36.

Lu, N. & Rice, R.W. 2010, "Demand Drivers and Price Supports for Bioethanol Use as Fuel in the United States: A Brief Review", Forest Products Journal, vol. 60, no. 2, pp. 126-126-132.

Wilhite,(2007), Will efficient technologies save the world. A call for new thinking on the ways that endues technologies affect energy using practices, Centre for Development and the Environment, Norway vol.11, pp. 23-30 Shahi,(2007-2011), Energy Markets and Technology In India, The business review, vol.13. page. 1-14 Govt. of India,(2005), Commercializing renewable energy, The business review, India, Vol.15,No.4(2005)pp.45-56 Johnson(2008), Green technology: Consumer buying behavior, The business review, U.S, 33(2),pp. 1-10.