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The awkward case for expensive power

Is solar energy becoming a Veblen good for India?

Vandana Gombar

Imagine a “Sale: 90 per cent off” sign in a shop, and no one turns up. There are goods for which a fall in price actually leads to a fall in demand, and there is a term for them — Veblen goods. Most of these would be luxury retail goods, where the higher price is part of the appeal of the product. Think Birkin bags. When solar power was offered at Rs 15 per unit back in 2009-10, India was setting up new plants, and it continued to add capacity and increase targets, as prices declined. When solar power price dipped to a low of Rs 2.4 per unit in the last auction in ...