ENERGY-CONSERVATION IN ELECTRICITY-GENERATION - A CASE-STUDY OF THE ELECTRICITY AND WATER INDUSTRY IN KUWAIT

This paper has examined possibilities of energy conservation in the ge neration of electricity and water in Kuwait. This has been done throug h analysing the underlying production structure by employing a translo g flexible cost function and using series data. The results show that, in the absence of changes in factor prices, fuel intensity of electri city and water is expected to increase with increase in output. Furthe rmore, capital and fuel are found to be substitutes. Overall, the evid ence suggests that energy conservation can be achieved by using fuel p rices as instruments. This is likely to induce demand for new capital and hence promote productivity gains.