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Scaling up Energy Efficiency Implementation with Innovative Business Models

This presentation discusses the progress and implementation of energy efficiency initiatives, such as the LED Programme, energy efficient fans, agriculture pump projects, and government buildings EE, through innovative business models. It highlights the market aggregation outcomes and the successful implementation of the UnnatJyoti by Affordable LEDs for All (UJALA) and Energy Efficient Fan Programme. It also addresses the potential challenges and opportunities in scaling up energy efficiency efforts in India.

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Scaling up Energy Efficiency Implementation with Innovative Business Models

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  1. Energy Efficiency: Scaling up Implementation with innovative business models Presentation to FOR 24th June, 2016 Saurabh Kumar Managing Director Energy Efficiency Services Limited

  2. Energy Efficiency: Scaling up Implementation Energy Efficiency Services Limited

  3. Progress so far LED Programme – coverage in 17 states/ UTs – more than 12.2 crore LEDs distributed benefitting over 3.5 crore households More than 10 lakh street lights replaced in over 110 ULBs – no capital costs for ULBs – payments through savings Energy efficient fans programme initiated in AP and UP – target 20 lakhs this year Agriculture pump projects in Karnataka, AP, Maharashtra – targeting 10 lakh pumps this year Government buildings EE through CPWD Turnover increased 10 times (> Rs. 720 crore) -Avoided capacity addition of over 3200 MW

  4. EESL – Business Models • Two different models – both on the principle of aggregation of demand and Pay As You Save (PAYS) - Repayments from energy and maintenance cost savings • On Bill Financing Model- Interventions directly with consumers – LEDs, Fans, ACs, etc • Consumers (for LED bulbs and Fans) pay EMIs through their electricity bill for 1-2 years • ESCO Model- Dealing with institutions like Buildings, Agriculture, DISCOMs, Municipalities • Implementation and investment by EESL in the whole facility • Payments from savings in energy and maintenance cost • Monitoring and verification – regularly on deemed energy savings

  5. Market Aggregation - outcomes • Share of LEDs in Indian lighting market increased from less than 1% to 15% in 1 year • Retail prices reduced by 1/3rd in last one year • Average price last year ~$ 5-7 – now between $ 1.5 - $ 4 • High levels of awareness about LED products and their energy efficiency benefits • Higher acceptability of ‘LED model’

  6. LED (UJALA), Fans and Tube Lights Energy Efficiency Services Limited

  7. UnnatJyoti by Affordable LEDs for All (UJALA) LED Model • 2-10 high quality 9 W LED bulbs to consumers – entire investment by EESL • Cost of LED, including distribution, awareness costs, EESL return on investments, all taxes is between Rs. 75- Rs. 95 ($1.1 to $ 1.3) – outcomes of market aggregation • On Bill Financing – PAYS through energy bill • 3 year free replacement of LEDs against technical defects • Online monitoring of programme through www.delp.in • Strong quality control – fault rate < 0.31%

  8. UJALA – Implementation Model

  9. UJALA – Awareness Strategy High intensity campaign – national and city level to engage stakeholders All media vehicles used – stress on digital media

  10. UJALA – Awareness Strategy (2)

  11. UJALA – Innovative Real Time Monitoring

  12. UJALA – Other Benefits Encouraged Make In India – domestic manufacturing increased from about 100,000 per month to 30 m per month

  13. Energy Efficient Fan Programme • 2-50 BEE 5 STAR rated fans to consumers – 50 W fans as against 75-80W • Consumers can pay Rs. 1100 upfront or pay Rs. 60 EMI in 2 years from electricity bills – Pay As You Save – LED strategy being used • Benefit of reduced fan prices passed on to consumers – retail price of 5 STAR fan between Rs. 1700 - 1800 – EESL bulk price Rs. 764 • 2 year free replacement of fans against technical defects • Programme started in AP and UP – to be expanded to Maharashtra, Rajasthan, Delhi, etc • LED tubelights being taken up

  14. Air Conditioners Energy Efficiency Services Limited

  15. Cooling Demand Potential in India Compared to other regions, climate in India has higher cooling requirements Cooling degree days indicate the overall space cooling requirement due to heat and humidity. Size of the bubble indicates population Source: Lawrence Berkeley National Lab (LBNL), USA Environmental Energy Technologies Division

  16. AC demand by 2030-2040 – China Experience Rising incomes made the AC sales in urban China jump rapidly; between 1995 and 2008, room AC penetration in urban China increased from 5% to over 100%. India 2011 Src: Zhou et al (2012) Appliance Penetration in Urban China Although current penetration in India is low, room AC sales are growing at 10-15% p.a. for the last several years Room AC prices have fallen by 60% in the last decade Current Room AC penetration is ~ 5%; could increase to more than 70% in the next 20 to 30 years Source: Lawrence Berkeley National Lab (LBNL), USA

  17. Significant contribution of ACs to peak demand in India One AC 2 Ceiling Fans 2 Incandescent Bulbs 4 Tubelights One TV One Refrigerator • Preliminary estimates show that the additional demand from room ACs in India is equivalent to 200-300 large (500 MW) power plants by 2030 i.e. 100-150 GW and 10% of energy demand (~ 300 TWh) • This implies • Significant addition to the coal capacity, OR • Shortages continue with diesel generators or inverters on the margin Source: Lawrence Berkeley National Lab (LBNL), USA Environmental Energy Technologies Division

  18. AC Contribution to the Peak Demand Load Curves on a Summer and Winter Day (Average) in Mumbai and Delhi ~700MW (25%) ~1600 MW (40%) ~2200 MW (60%) ~850 MW (40%) Mumbai Delhi • Space cooling demand makes the summer peak demand rise significantly in urban areas like Mumbai and Delhi • Afternoon peak difference = ~40% (driven mainly by commercial AC demand) - Night peak difference = ~60% (driven mainly by residential AC demand) Source: Lawrence Berkeley National Lab (LBNL), USA Environmental Energy Technologies Division

  19. Consumer tariffs may increase due to peaky load Average Distribution Cost (All utilities - Delhi) Average Power Purchase Cost (All utilities - Delhi) In Delhi, average distribution cost has increased by 40% in the last 5 years In Delhi, average power purchase cost has increased by 50% in the last 5 years Data Src: PFC Report on Electricity Utilities • ACs (or space cooling in general) are already making the urban load peakier; this has three consequences for consumer tariffs: • Power purchase costs increase due to expensive peak power purchase • Generator fixed costs (p.u.) increase due to low PLFs • Distribution costs increase (p.u.) due to lower load factor Source: Lawrence Berkeley National Lab (LBNL), USA

  20. International Experience - Similar California (US) New South Wales (Australia) • In California, the difference between the summer (July) and Autumn (October) load is nearly 15GW (~30% of the peak load) • In New South Wales, load during the hottest days is triple that of average days Source: Lawrence Berkeley National Lab (LBNL), USA Environmental Energy Technologies Division

  21. Current AC penetration levels in residential consumers Src: EESL Load Research Environmental Energy Technologies Division

  22. Despite efficiency improvement, AC prices continue to fall India – AC Efficiency and Prices Japan – AC Efficiency and Prices In Japan, between 1995 and 2005, the AC efficiency increased by 90% and the prices fell down by 80% (inflation adjusted) In India, between 2006 and 2016, the AC efficiency increased by 20% and the prices fell down by 35% (inflation adjusted) Source: Lawrence Berkeley National Lab (LBNL), USA

  23. Utility based AC programs - cost effective • Cost of Conserved Energy (CCE) - incremental cost of saving one unit of electricity; if CCE is lower than the Long Run Marginal Cost, efficiency improvement is cost-effective for the utility. • CCE for efficiency improvement and the total energy saving potential; total cost-effective potential by 2030 is 105 TWh/yr. Highest Eff Compressor and Heat Exchanger ISEER = 7.0 Long Run Marginal Cost of Supply Cost Effective Potential (Utility) Energy = 105 TWh/yr Peak = 50 GW Compressor Eff Improvement ISEER = 3.3 Source: Lawrence Berkeley National Lab (LBNL), USA Environmental Energy Technologies Division

  24. Market Aggregation – accelerate efficiency EESL price trend expectation • 1 star AC with 3.1 ISEER taken as base case. • EESL estimates conservatively taking a 70% mark up on ‘Mfg cost’ discounting dealer margins. • This costs is significantly lower than projected by ‘bottom up analysis’ due to ‘market aggregation’ and expected reduction in cost of efficient technology. • Payback time based on expected consumer savings over 1 star AC • Higher volumes could drive costs down – as in LEDs Source: EESL calculations

  25. Ag DSM Energy Efficiency Services Limited

  26. Ag DSM Potential 2 crore Grid Connected Agricultural Pumps Total consumption – 173 b KWh Total subsidy – Rs. 65,000 crore/ year 30% savings by replacement with BEE 5 STAR pumps 51 b KWh savings INR 21,861 crores Subsidy savings/annum 40 m t CO2 Reduction per annum

  27. Ag DSM – Business Model of EESL • BEE 5 STAR rated smart pumps given free of cost to farmers with 5 year maintenance – annual savings of Rs. 3000 – 4000 to farmers – remote operations • Minimum 30% energy savings – reduction in connected load by 30% • Entire capital investment by EESL • Distribution of pumps, training of local service providers and enhanced awareness by EESL • Monetised reduction of state government subsidy used to pay for EESL investment over 5-10 years

  28. Implementation Methodology •Start /Stop Motor by Mobile Phone • Set/Monitor/Control Motor from Mobile • In-built Electrical Protections • Site Status / Alerts through SMS & Voice Call in Regional language – Data communication of Electrical parameters • Saves Water • Saves farmer’s time & fuel • Panel & Motor anti-theft features Over the counter distribution – similar to UJALA of BEE 5 star rated and mobile operated Smart Control Panel Free 5 year on-site warranty Installation support by trained local technicians Distribution Agency to be selected having local connect - start-ups to be encouraged

  29. Thank You For more information contact skumar@eesl.co.in www.eesl.co.in

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