Economics of Energy Conservation: Financial and Economic Feasibility of Adoption of Energy Saving Technology in Household Sector in Sri Lanka

Global energy security still heavily relies on exhaustible fossil fuels, use of which also contributes significantly to global environmental problems. Recent unprecedented rise in oil prices and threatening global worming reminds the urgent need to find solutions to energy and environmental crises. Shifting to clean renewable energy sources - the long term solution - have been slow despite the efforts of global community since 1970s. Demand side management (DSM) will play an important role until technology provides affordable solutions to the energy crisis. Amongst DSM measures, energy conservation seems to have greater potential in developing countries to cut down energy use and protect the environment. This paper examines the financial and economic feasibility of adoption of energy conserving technology in the household sector in Sri Lanka. Paper shows that adoption of energy conserving technology is financially profitable and economically feasible. It also discusses policy measure to solve affordability issues and information failures in adopting energy conserving technology.