How could energy efficiency help India meet growing power demand?
A nation’s per-capita electricity consumption is one of its biggest indicators of growth and development. The availability of reliable, uninterrupted, and affordable power can ensure holistic growth across various sectors of the economy. At present, India’s installed capacity is around 319 GW. However, close to 700 million people across the country don’t have access to adequate power supply. Faced with a pressing need to provide uninterrupted energy solutions, the country needs to use its energy as judiciously as possible. Energy efficiency is a key component in the government’s bid to help India transform into a clean energy hub without significantly compromising upon its growth objectives. With implementation of various energy efficiency measures in various sectors such as agriculture, municipalities, buildings, domestic, industries a considerable quantum of electricity can be saved.
Over 90% of our time is spent in buildings – home or workplace. Retrofitting buildings with energy-efficient appliances is one of the simplest ways to reduce power consumption. Measures like switching to LED bulbs and tubelights for lighting, using higher star rated air conditioners and fans is also the most cost-effective actions to reduce energy use. It can reduce the household lighting costs by half. Light Emitting Diode (LED) bulbs only use around 20% of the energy to produce the same amount of light as an incandescent light bulb and last much longer than sodium bulbs. Using LED lights in households, shops, supermarkets, and malls can reduce energy consumption by at least 75%, and last much longer than incandescent lighting. Using LED lights gives out more light, more savings, and a lower energy bill. The Government of India, through the UJALA scheme is distributing LED bulbs, tubelights and energy efficient fans in every DISCOM office of the state. The appliances, which are cheaper than the market price can help buildings easily switch to energy efficient buildings.
According to you, what are the significant government policies that can help boost industry initiatives towards energy efficiency?
The National Mission on Enhanced Energy Efficiency (NMEEE) of the Government of India is one of the eight missions under the National Action Plan for Climate Change to promote the market for energy efficiency by fostering innovative policies and effective market instruments. Its roots lie in the overall objective of the Energy Conservation Act of 2001. The Mission document, which was approved in 2010, established the immense energy efficiency potential of India, which was about Rs 74,000 crore. The mission, upon its complete execution, envisages achieving total avoided capacity addition of 19,598 MW, fuel savings of around 23 million tonnes per year and greenhouse gas emissions reductions of 98.55 million tonnes per year. NMEEE consists of four initiatives to enhance energy efficiency in energy intensive industries which is shown is chart 1.
Chart 1
What is the status of National Streetlight Program? What is the success rate of this program? What percent of energy savings has the program achieved?
On 5th January 2015, the Prime Minister launched a national program to replace the conventional streetlights with smart and energy efficient LED streetlights. With a target to retrofit 1.34 crore (13.4 million) LED streetlights across the country through the Street Lighting National Programme (SLNP), Energy Efficiency Services Limited (EESL) will reduce energy consumption in lighting for Municipal Corporations and help DISCOMs to manage peak demand. EESL has already retrofitted over 35 lakh streetlights across 23 states and four Union Territories in the country, leading to an annual energy saving of 46.63 crore kWh to Urban Local Bodies (ULBs) while resulting in an avoidance of 117 MW peak demand as well as a reduction of 3.8 lakh tonnes of CO2 annually. EESL has also illuminated over 50,000 kilometer of Indian roads, which has made it the world’s largest streetlight management company. In each of the ULBs, the installed streetlights are leading to an estimated energy saving of 58%.
Chart 2
EESL has reduced the costs of LED lights by as much as 85 per cent within three years, leading to the lowest prices for LEDs worldwide. What is your strategy to procure these lights?
The challenge initially was to increase accessibility and affordability of energy efficient appliances to the common man. To overcome this, EESL facilitated bulk procurement of LED household lamps which subsequently lowered the cost of the product, making it affordable for consumers, keeping in mind the government’s vision of replacing 77 crore inefficient bulbs with LED bulbs in Indian households by 2019. With this, EESL became the first company in South Asia exclusively focused on energy efficiency implementation. Through the practice of bulk procurement, the procurement price of the 9-Watt LED bulbs under the UJALA programme has been brought down by 88%. Due to this market intervention, EESL has been able to distribute LED bulbs under UJALA for ` 70/- (inclusive of GST) and has resulted in the drop of retail price of LED bulbs to approximately `150/- per unit. This has led to faster adoption of LED bulbs amongst the citizens of India, and we can see them installed even in the remotest of villages in the country today. In addition to LED bulbs, EESL has increased affordability of other energy efficient appliances such as 20-Watt LED tubelights as well as 50-Watt BEE 5-star energy efficient fans available under the UJALA scheme. Under the scheme, the 20-watt LED tubelight is priced at ` 220/- per unit, as against the retail price of ` 350-450, while the energy efficient fans are priced at ` 1,200/- per unit, as opposed to the market price of ` 1,500-2,500.
Air-Conditioner is one of the major factors for inflated energy bills? Do you have plans to bring any energy efficiency program for ACs?
India is part of the Global Cooling Challenge initiative that seeks to leapfrog to super energy efficient air conditioning technologies through a market transformation approach. To accelerate the introduction of super-efficient air conditioners and to meet the challenge of increasing electricity demand from ACs sustainably and reduce GHG emissions, 1 lakh ACs superior to the most efficient technology (>ISEER 5.0) available presently in Indian market have been procured by EESL through an open competitive bidding process earlier this year. Currently, the Super Energy Efficient ACs are being made available to institutional buyers. As part of the existing Buildings Energy Efficiency Programme (BEEP), EESL retrofits these super-efficient ACs in buildings.
What is the execution strategy for creating an energy-efficiency market as well as meeting targets for national programs?
EESL focuses on stimulating the demand for efficient and sustainable technology by bulk government procurement. As against subsidies, financing is done by monetizing the savings generated through efficient technology. On one hand where huge demand generated through this process creates incentives for the industry to invest in manufacturing, on the other hand transparent and highly competitive bidding ensures that the product prices are brought down to enhance consumer access.
Example in hand the market of energy efficient LED lighting till three years ago, these LED bulbs were not affordable, even for the middle-class consumers. But the government took it upon itself to procure high-quality LED bulbs through bulk procurement under the Unnat Jyoti by Affordable LEDs for all (UJALA) scheme. The country could not have depended on the industry alone to bring about this transformation. As a result, EESL, under the UJALA scheme has distributed 26. 7 crore LED bulbs, while the industry has distributed approximately 42 crore LED bulbs. Therefore, the UJALA scheme has not only driven the cost of the LED bulb by 88% in the last three years through bulk procurement impacting market prices, but also increased manufacturing. More than energy and cost savings, the LED bulb has transformed lives by better lighting and an improved living environment. It is an example of a self-sustaining government initiative that has not only surpassed traditional benefits, like energy savings and reduced carbon emissions, but has also triggered large scale investment in the manufacturing of LED bulbs, generated employment and other macro benefits.
What innovative model does EESL follow for installing and maintaining street lamps as well as for retrofitting buildings?
EESL employs the following business models for both streetlights and energy efficient buildings:
a) Energy Services Company (ESCO) model:
The upfront capital cost shall be borne by EESL and the resultant savings from projects used to repay for EESL investments on deemed basis. The ESCO agreements shall be finalized wherein modalities, if implemented, sharing of energy savings between, scope of services, etc., shall be worked out subsequent to results of the energy audits. The audit fee could be capitalized as part of the project capital cost. The complete investment for the project would be borne by EESL. The project financing would be done using debt and equity in the ratio of 80:20. This model is preferable generally for large investment projects/ Urban Local Bodies (ULBs) or cluster of buildings.
b) Project Management Consultancy (PMC):
The investment is borne by the organization directly and EESL provides technical advisory services, comprising of project designing, bid management, supervision of implementation, and impact assessment at a mutually agreed cost (roughly 14% of the capital investment).
You have launched several new projects; please elaborate the details of some of them
Electric Vehicles
EESL recently concluded bidding for 10,000 electric vehicles on behalf of the Government of India, wherein Tata Motors and Mahindra & Mahindra will supply 500 vehicles in phase 1. The remaining 9,500 vehicles shall be procured in phase 2. This tender was the world’s largest competitive bidding for electric vehicles. EESL is proud that the supply of electric vehicles is being led by Tata Motors and Mahindra & Mahindra. This certainly embodies the Government of India’s Make in India philosophy, and the vision for 100% e-mobilty in the country by 2030.
Smart Meters
The Central Government has framed a policy under UDAY (Ujwal DISCOM Assurance Yojana) where implementing smart meters is one of the operational performance parameters. The scheme is aimed at improving the billing efficiency and strengthening the distribution infrastructure. Therefore, smart meter programme has been designed and deployed to address these issues. In line with this, EESL has floated a tender for 50 lakh Smart GPRS meters in Uttar Pradesh and Haryana on 1st August 2017. EESL shall source these smart meters within a period of 3 years in a phased manner. The tender floated by EESL is the world’s largest single Smart Meter procurement. The initial phase will see deployment of 40 lakh smart meters in Uttar Pradesh and 10 lakh in Haryana. Smart meters are a part of the overall Advanced Metering Infrastructure Solutions (AMI) aimed at better demand response designed to reduce energy consumption during peak hours. The overall AMI solution will also have a system integrator who will be responsible for meter installation, data storage on cloud, preparing dashboards, etc.
Solar Rooftops
EESL has signed a memorandum of understanding with the New Delhi Municipal Council to install 65,000 solar modules on all major buildings located in the areas under the civic body’s jurisdiction. We are currently carrying out a field study to assess roof-top solar power generation potential of various institutions before beginning the work of installing the required infrastructure. Based on the findings, the owners of the buildings will be asked to choose between two models. The capital expenditure model will involve the building owners putting in the money and EESL supplying, designing, installing and commissioning the solar set-up. Under the other model, the operational expenditure one, the entire burden, including financing, will be borne by EESL.
Municipal Energy Efficiency Programme (MEEP)
EESL is currently under way to conduct Investment Grade Energy Audits (IGEA) in over 150 cities identified under the Atal Mission for Urban Rejuvenation and Transformation (AMRUT) and the target is to audit the functioning of existing municipal water pumps in all 500 AMRUT cities. Thereafter, based on the approval of the ULB/ State Government, the existing inefficient pumps will be replaced by energy efficient ones on the streetlight business model, i.e, the ESCO model.
International Operations
EESL has set up office in UK and has started operations with the current turnover of £ 1 m. The EESL Board has approved a business plan of £ 150 m over the next two years and the turnover from UK operations next FY will be over £ 100 m. Further, a pipeline of 40 m LEDs has been identified in UK. The UJALA scheme was also launched in the state of Melaka in Malaysia on September 6, 2017. Orders of 2 crore LED bulbs have been received from Nepal and similar orders are being finalised in Thailand and Vietnam.
What kind of active role would you like to play in 100 smart cities Project?
Smart Cities Mission is an urban renewal and retrofitting program by the Government of India with a mission to develop 100 cities all over the country making them citizen friendly and sustainable. The Municipal Energy Efficiency Programme being implemented by EESL, wherein inefficient water pumping shall be replaced by energy efficient pumps, as well as the CCMS technology in street lights, where lights are switched on/off automatically using sensors, are just some of the examples of EESL’s progression towards enabling smart city-ready infrastructure. Additionally, EESL already is either implementing or in the process of implementing a multitude of programmes that blend in with the essence of smart city, be it UJALA, Street lighting, retrofitting energy efficient appliances in existing buildings, electric vehicles and smart meters. All these elements fitted in together are a significant element of the smart cities mission.
What are some of the challenges you face in maintaining energy efficiency?
The biggest challenge we face is that there is a lack of capacity and understanding about energy efficiency. For the same, EESL develops products and business cases that are simple and easy to understand by the common man, an example of the case is UJALA, which means ‘light’ in Hindi. Another challenge we face is the issue of monitoring and verification. This is addressed through demonstrated and deemed savings approach with stress on service delivery. The Street Lighting programme has components like the Centralised Control and Monitoring System (CCMS), regular maintenance, mobile vans, night patrols, and a guaranteed grievance redressal mechanism wherein citizens’ complaints are addressed and solved within 48-72 hours. EESL has also developed various Mobile apps tailor-made for UJALA as well as the street lighting programme. As far as project structuring and financing is concerned, EESL undertakes risk mitigation by deemed savings, developing annuity model linked to Service Level Agreements (SLAs) and not energy savings, while also establishing Payment security measures in the form of letters of credit (LCs) and ESCROW. EESL also faces the issue of inadequate capacity of service providers and manufacturers, which is addressed through regular engagement with them with advance information of project requirements, as well as adequate and appropriate training and capacity building workshops.
What are your expansion plans for 2017-18?
By 2020, EESL seeks to be a $1.5 billion-dollar (`10,000 crore) company putting together all the programmes of EESL – UJALA, SLNP, Buildings, Solar rooftops, Mini solar plants in Maharashtra, Acquisitions in UK, Smart Metres and E-vehicles.
