Why AgDSM? Water-Energy Nexus (WENEXA): An exp erience in Agricultural D emand Side Management ( AgDSM)

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1 Water-Energy Nexus (WENEXA): An exp erience in Agricultural D emand Side Management ( AgDSM) Why AgDSM? Agriculture consumes 23% of power & 38% of water (90% groundwater) 55 60% population dependent on groundwa ter Ms. Apurva Chaturvedi USAID Financia l health of power sector Availability of water for irrigation and dr inkin g Livelihood of farmers Demand supply gap in p ower sector Subsidy of Rs. 40,000 Crores per annum Mr. Rakesh Kumar Goyal Tetra Tech India Ltd February 12 th 2011 Power Savings Potential S.N Measures Potential for. 1 Efficient Pump sets Sav ings 25-40% 2 Suction Pipe & Foot Valve 5-15% 3 Efficient Irrigation Methods 15-25% 4 Total Saving Potential 45-80% Financing Models for Implementing AgDSM Project Model 1 DISCOM as a borrower Model 2 - ESCO as a borrower Model 3 - Far mer as a borrower Model 4 - HT Industr y as a borrower

2 ESCO Based Solution Demonstrated First Ever ESCO deal in AgDSM on a performance contract basis Public Private Partnership with 10 Years Agreement Project Na me Designed by Imp leme nted by Water Energy Nexus (WENEXA) USAID In dia Tetra Tech ES Ind ia L imited DISCOM Partner Bangalore Electric ity Su pply Company (BESCOM) ESCO Selected Enzen Global So lutions, Bangalore Project Site Geographical area Doddaballa pur, 60 KM from Bangalore city 11,000 acres No. of villages/population 29/17,000 % net sown/irrigated area 75%/16% Major crops Mulberry & grapes Depth to ground water Ft. No. of feeders/pumpsets 4/700 Typical pumpsets capacity 5-10 HP Farmers - get NHEP, after-sales services, good quality power & required amount of water Utility energy savings with greater opportunity cost 46% ESCO profit from saving energy, payback in three years Innovation developed Win-win situation Innovati on Process adopted Market based approach Project based on commercial principles Long term horizon no snap back effect Project risks shared amongst stakeholders & ESCO Rules of public procurement followed Active engagement of all stakeholders Extensive groundwork studies, information reduce perceived project risks WENEXA Project: Key Features BESCOM provided all the preconditions for the project HVDS installed. One Distribution Transformer for each pump. Meters on all Distribution transformer NGO working and educating farmers for four years Detailed data available on pumps and pump efficiency BESCOM ob tained in principle agreement from KERC & the Government of Karnataka to proceed on a pi lot program Farmers get a new branded energy efficient pumpsets free with a 18 mon th warranty. ESCO to i mplement the pumpsets replacement as a part of the Ag DSM program ESCO finances the investment required Provides ongoing O&M support to farmers and establishes a site o ffice ESCO recoups investments through sharing of the energy saved Selection: Technical & Financial Criteria Technical Criteria Maximum Points Understanding of the Problem & Technical Approach 30 Proposed Organization, Staffing and prior experience related to the project Innovation & other factors 15 Usage of (BEE) Star-ratedpumpsets 05 Applicant with a score of 70 or more shall be declared as technically qualified. Financial Criteria Energy Saving in the project with reference to the base line (in %) Proportion of Energy saving proposed to be shared with BESCOM (in %) Bidding Parameter (in %) Applicant proposing the highest value of bidding parameter shallbe the finalist ESCO. 50 X (say) Y (say) X*Y

3 Implementation Overview ENZEN invests in replacing pumpsets with New High Energy Efficiency Pumpsets (NHEPs) Recovery of investment Through energy savings achieved paid for by BESCOM on a monthly basis Applying for carbon credit benefits 10 year agreement signed between BESCOM and ENZEN 8 months baseline completed Electrical network up gradation Separate agriculture feeders H VDS Capacitor banks and electronic meters Data related issues Data collection Mining Presentation >>> Preparing business model Bid process Draft RFP and marketing Pre NIT Floating of RFP Pre- bid meeting Site visit Selection of ESCO Bid evaluation Presentation by bidders Financial evaluation Negotiation and award Capacity building Farmers DISCOM employees ESCO Project execution Agreements Pump replacement Monitoring and evaluation Keeping stakeholders informed JAN 2009 FEB-M AR 2009 ONGOING M AY Electricity savings Salient Findings of Base Line TOTAL CONTRACTED LOAD AS PER UT ILIT Y AVERAGE PU MP CAPACITY AS PER UTIL IT Y = kw = 4.31 Kw AVERAGE SUPPLY AVAILABILITY = 230 HRS /MONTH qtotal CONTR ACTED LO AD AS PER BASE L INE q AVERAG E PUMP C APACIT Y AS PER BASE L INE =10.52kW = kW qaverage PU MP RUNNING HOURS = HRS/MONTH Agriculture Load Curve of Sub-Division Doddaballapur CAPACITY BUILDING SITE ACTIVITIES W ENEXA COMPONENT S POLICY Source: R eport s from M onthl y Base line Study c onduc te d by ERDA (Im plementati on Partner of Tetra Tech) DOCUMENTATI ON

4 Energy-Side interv entions Electrical network upgradation Baseline development Pump replacement Site Activities Water-Side Interventions Cons tructi on of che ck Cons tructi on of fiel d Farmers Street Plays Workshops on cultivation practices & irrigation methods Group discussions BESCOM Importance of AG DSM and business case Elements o f deal and project implementa tion Capacity Buil ding Initiativ es ESCO & Pump Manufactures Pre NIT Pre-Bid mee ting Site Visit Workshops dam bun ds Electrical net work Upgrad atio n Pump replac ement Promotion of Dri p irrigation Farmer awareness - Cropping Pattern & Cultivation Practices More than 4,400 participan t days of training/capacity building was deliver ed Other stakeholders Regulators State Govt Pre-Bid Meeting 14 Policy Initiatives Guide to imp leme nt AgDSM pr ojects Electrical case studies Documentati on Activ ities Audio-Visual Film o n WENEXA 15 Financing Ag DSM Projects Course mo dules for farmers training Policy Issues: Is there any better mechanism to deliver annual Ag DSM subsidy of about $ 8 Billion? Does converting current revenue subsidy into capital subsidy makes a good business case for States? How to enhance the capacity of Pump Manufacturers to meet requirement of the country? How to convert manufacturing of inefficient pumps into efficient pumps? Building capacity of utilities, State Govt, Regulators, Financers, ESCO, Pump Manufactures and Farmers (A study with the he lp of IIM A to su ggest po licy in itiative w ith Maharashtra as Facts about Maharashtra: Maharashtra has 3 million pump sets sample state is under way ) Total Annual subsidy is $ 1 Billion. Maharashtra planned to install 100k IP sets in coming one year Estimated annual electricity consumption in agriculture is about13 Billion units

5 Scalabilit y and Possible Impact of W ENEXA WIN WIN WIN for all participants and stakeholders Scalability of the project can be gauged from the fact that: There are 15million energised irrigation pumpsets, consuming 104 Billion units of electricity Irrigation pump sets consume about 90% of India s groundwater and 23% of its electricity. subsidy to the tune of Rs 40,000 Crores per annum Public Recognition India Gujarat KarnatakaHaryanaPunjab Maharashtra No. of agriculture pumpsets (lacs ) Units consumed ( M.U.) Capital invest men t (Rs c rore ) Yearly saving s (MU ) Yearly saving s (Rs c rore ) Payback period CO2 emissio n re duction (10 00 t n) Sources: Bureau of Energy Efficiency, 2010 for India data; ARRs of utilities for 2010 for Gujarat, Haryana, Punjab and Maharashtra; Annual Report (pg 37) of KERC for Karnataka ARRs of utilities for 2010 for Gujarat, Haryana, Punjab and Maharashtra; Annual Report (pg 36) of KERC for Karnataka; Report on the Performance of the State Power Utilities, Power Finance Corporation, ; for India data Emission factor of 0.78 kg/kwh {Greenhouse Gas Mitigation inindia: Scenarios and Opportunities through 2031,The Energy and Resources Institute (TERI) and The Centre for Clean Air Policy (CCAP), 2006} Project Partners NABARD THANKS!!! 20