Introduction

1. ESCO projects Municipal Energy Efficiency Innovative Financing Structure Highly Replicable Infinite Potential Guaranteed Deliverability A presentation by: Nalin Kanshal ,Director, Elpro Energy Centre nalin@ecoenergycentre.com Introduction Strategies Results Lessons Learned

2. Indian scenario • Energy efficiency measures could potentially reduce these emissions considerably. • The Total Energy saving potential is estimated to be 95000 (GWh)2 (with domestic, commercial and industrial Lighting sector energy saving potential to be 10000 GWH)-Tenth Plan Report,Planning Commission , Govt. of India. • While there are energy efficient technologies, equipments and products available, there seems to be a need to accelerate their diffusion through strategies that improve their competitiveness vis-a-vis conventional technologies/products/etc.

3. India-Street Lighting ENCON Market Potential Assesment The number of towns and cities has already reached 43784. The total estimated connected load of street lighting in 4378 towns in India, based on class and definition of cities is estimated to be in the region of 4737 MW which amounts to an annual consumption of 21 billion kWhrs(Kilo watt hours) and resulting in a CO2 emission of 15.56 million tonnes CO2 per annum For the same level of services, there is tremendous potential to reduce this consumption(6.25 billion kW hrs per annum and a corresponding 4.1 million Metric Tonnes of CO2 abatement ) through the use of advanced technologies for energy management of the street lighting systems.

4. Business Development Strategies • Pilot project to demonstrate Technology • Seminar/Business meet to disseminate Results among Municipalities/Urban Local bodies/Government Bodies • Presentations to various committees with detailed project reports • Association and approvals from various national agencies like CPRI,BEE,IREDA,MOEF,TERI • Successful Commissioning of maiden project(India’s first fully completed Municipal Street Lighting Energy Efficiency project) added value to company credibility and increased trust among probable customers

5. The Million dollar question??? • Common reactions from Municipal Governments • No budget • Municipal Governments are cash strapped • There are more important issues than energy efficiency improvements requiring their resources • Huge capital investments- A No! No! Where is the Money to implement all the Energy Efficiency measures?

6. Indicative Case Study CRITICAL CONCERN AREAS ADDRESSED Remote Energy Tracking and Control of Street Lighting System for BDA,Bangalore • Energy Saving • Maintenance and operation of Street Lights • Public image Functions REMOTE Switching – Dimming - Remote Energy Metering - Fused and non-working lamps report

7. Elpro Energy’s Integrated Business Process for the project Project Development Identification of Viable Savings Projects Signing of ESCO agreements Arrangement of Project Financing Project Implementation Turn - Key Design/Build Construction by Elpro itself Performance Tracking Achievement of Savings and Operating Cost targets

8. Introductory meeting Information gathering through site visit & questionnaire Discussions with BDA Senior management to secure an agreement Detailed energy & engineering studies Sign Agreement Mutually arrive at baselines and schedules Prepare financing Report(DPR) Secure project financing Project construction & commission project Measurement & verification Ensure specified performance is met Monitor performance & savings Elpro’s Approach for the project

9. Basis of the Elpro-BDA ESCO model Energy Efficiency project Loan Financial Institution (KSFC) ESCO (Elpro) Client (BDA) Balance of Share of Savings after paying all dues and debts Baseline Energy Bill less share of Savings of BDA-22% Debt Servicing And First charge TRA Account Actual Energy Bill to Electricity Board Trust and Retention A/C

10. ESCO Business Process-Cash Flow Cash Flow Project Funding Project Development CustomerESCO 0 -- 0 -- 0 -- 0 or + + or 0 ESCO ESCO 3rd party 3rd party ESCO Investment Grade Audit Project Financing Construction Savings Guarantee

11. Comforts and Guarantees To Financial Institution • Any Incentive ,Grant , seed money,Carbon Money(equals almost 50% of Project Cost) to be credited to DSRA a/c • Hypothecation of all equpt. Purchased with equity of ESCO and F.I. • Guarantee of payment supported by Energy Management Service Contract and a Irrevocable letter from Client To Client(BDA) • ESCO Contract • Minimum 25% guarantee of savings • Exit clause in Contract • “Event of default” clause in contract

12. Energy savings from last 6 months- 44% • Reduction in Maintenance Budget( not quantified yet) • The ESCO is getting good ROI • Financial Institution Debt repayment started • First ever successfully completed private-Government partner ship project in the ESCO Municipal energy efficiency sector ETRACS-BDA Project-Results

13. The ESCO contract should be carefully drafted to cater to all eventualities Innovative Financing models required if ESCO projects have to be executed in India Still lot of barriers exist which need to be removed especially with FI’s to finance such projects Guarantee mechanism are the biggest obstacles in securing finance for projects involving Government agencies ETRACS-BDA Project-Lessons Learned

14. Benefits to BDA • Huge Energy savings annually • Excellent Central Operation and maintenance of Street Lights • Centralized monitoring of all street lights • Less Labour costs • Less Capital Expenditure on lamps and fittings • Less Contract Charges and better Contractors’ monitoring • Improved public image as a cost conscious and efficient public service provider

15. Benefits to General public • Improved street lighting • Less Complaints • Better light management • Faster response to complaints from BDA • Lesser Pollution

16. Summary • Integrated Energy Management system • Efficient Energy Tracking and Control • Long term Energy Planning Possible • Cost saving,reliable and profitable • GHG gas reduction

17. For further details , please contact: ELPRO ENERGY DIMENSIONS Pvt.Ltd. No.6,7 and 8, IV th N Block, Dr.Rajkumar Road,Rajajinagar Entrance, Bangalore-560010.India. Ph.:91-80-23122676,23123238,23132035 Fax:91-80-23487396 e-mail: nalin@ecoenergycentre.com