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 generation of electricity and water in Kuwait. This has been done through analysing the underlying production structure by employing a translog flexible cost function and using series data. The results show that, in the absence of changes in factor prices, fuel intensity of electricity and water is expected to increase with increase in output. Furthermore, capital and fuel are found to be substitutes. Overall, the evidence suggests that energy conservation can be achieved by using fuel prices as instruments. This is likely to induce demand for new capital and hence promote productivity gains.