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This overview covers the Energy Conservation Act of 2001 in India, emphasizing energy efficiency in commercial and residential buildings. The Bureau of Energy Efficiency (BEE) plays a central role with State Designated Agencies (SDAs). The focus is on achieving sustainable growth, reducing the need for new capacity, and lowering greenhouse gas emissions. Specific measures, such as the Energy Conservation Building Code (ECBC) for new commercial buildings and retrofitting existing buildings, aim to transform the market towards energy-efficient products and practices. The implementation strategy involves partnerships, innovative financial instruments, and certification programs to promote energy conservation. Addressing financing barriers for Energy Service Companies (ESCOs) is critical. Ongoing audits and energy conservation measures in government buildings have been successful, showcasing significant energy savings and paving the way for further initiatives.
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Building Energy Efficiency in India An Overview BEE
Energy Conservation Act, 2001 • Reduction of energy consumption using efficiency and conservation measures. • Reduce the need to create new capacity thereby saving resources and green house gas emissions. • Secure environmentally benign and sustainable growth • Stimulate market transformation in favour of energy efficient products and appliances. • Created Bureau of Energy Efficiency (BEE) as the nodal agency at the center and State Designated Agencies (SDAs) at the state level to implement the Act.
Energy Consumption in the Commercial and Residential Buildings Residential buildings 116 billion units Commercial buildings 33 billion units
ENERGY CONSERVATION BUILDING CODE [ECBC]- New Commercial Buildings Bureau of Energy Efficiency Government of India
Addressing Climate Zones Variations • Five climate zones • Composite (Delhi) • Hot Dry (Ahmadabad) • Hot Humid (Kolkata), • Moderate (Bangalore) • Cold (Shillong)
Existing Buildings- Road Map • ESCO promotion- branding and rating of ESCOs • Creating a pool of trained manpower- certification programme for energy auditors • Partial Risk Guarantee fund being created • Innovative financial instruments being evolved • Standardised performance contract documents released • Securitisation of performance contracts • Strong focus on Government buildings- almost 500 large buildings being targeted
Implementation Strategy • Partnership with PTC • Scope: Flexible, overarching framework with collaborative activities and partnerships in the field of Demand Side Management (DSM) • Areas of Cooperation: • energy efficiency improvements in existing government buildings, • financing as well as implementing other DSM initiatives in lighting, pumping and industrial sectors • energy efficiency measures in PSSs, industrial complexes, SEBs/ Utilities, power plants, etc.
Financing Barriers for ESCOs • The number of ESCOs is limited. • Absence of strong balance sheet to secure funding.-Non-recourse finance is also not easily available given a high risk perception associated with this activity. • Most banks require collateral of at least 100% of the loan value, which in light of the above, is difficult for ESCOs to provide. • Lack of capacity of Indian banks to consider energy efficiency projects. • Commitment Risk as a result of information asymmetry between the ESCOs and banks. • Little or no experience in lending to ESCOs and thus are not familiar with the energy performance contracting model. • Some banks are interested in the performance contracting model offered by ESCOs, but in most cases ESCOs do not sufficient assets to provide comfort to the bank. • Focus on a minimum first cost and hence only rudimentary levels of energy efficiency are currently considered by building owners.
Partial Risk Guarantee Fund • Act as a first loss, subordinated recovery guarantee and will be placed in a guarantee reserve account and will be paid out to participating banks in the event of a loss or default. • Amount paid out will be equal to the amount of outstanding principal times the guarantee percentage, and will not cover accrued interest or other fees owed to the bank • The lending banks will also pursue recovery procedures in the event of default, and will pay to PGFE any monies recovered after first satisfying its own receivables • PRGF will act as guarantor and will enter into agreements with commercial banks who will originate transactions • Guarantee percentage: Upto 50% of principal • Maximum guarantee term: 5 years; • Maximum single transaction guarantee limit: To be decided by the PGFE Committee • Guarantee fee pricing: one-time up-front fees based on guarantee liability – range of 0.5% to 1.0% • Recovery: PGFE subordinate to lending bank;
Energy Efficiency Programme in Buildings • 8 Government buildings (including President House, PMO, Shram Shakti Bhawan) have been audited. Implementation of energy conservation measures in 4 buildings completed and remaining are on their way. • Impressive Energy savings achieved in Rashtrapati Bhawan • 17 additional Central Government buildings undertaken for second phase through ESCO mode. • Energy Audit study in 15 Government buildings completed
