Energy Efficiency in India Challenges & Lessons

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Energy Efficiency in India Challenges & Lessons In-session Technical Expert Meeting on Energy Efficiency ADP, Bonn, 13 th March 2014 Bhaskar Sarma Bureau of Energy Efficiency Slide 1 of 14

Energy demand in India will increase by a factor of 1.5 to 2.5 by 2030 Energy supply and consumption in India was about 819 and 493 mln toe in 2011 Per capita supply was about 0.6 toe Per capita consumption was 0.4 toe Supply is expected to grow to 1200 mln toe (IEA) to 1700 mln toe (India Integrated Energy Policy) by 2030 Page 2 of 14

How much energy is required? A minimum energy consumption of 2.3 toe/year/cap is needed today to achieve HDI of 0.9 Countries which develop later achieve transition at lower levels Probable that transition may occur at 1.5 toe in the future Enhanced energy efficiency is essential to enable early transition Slide 3 of 14

Energy efficiency in India the context Energy prices are high in India Industrial and commercial consumers pay electricity and petroleum product prices that are amongst the highest in the world Household consumers pay electricity and petrol prices that are highest in the world relative to their incomes Energy intensity of the economy has declined by 30% between 2000 and 2011; about half due to energy-efficiency improvements. Energy efficiency reduces costs, energy imports, GHG emissions, and pollution, but penetration is limited because: High first costs deter users, especially households New technologies are perceived as being risky Costs and benefits accrue to different people, especially in the case of buildings Page 4 of 14

Regulatory Framework for energy efficiency in India Energy Conservation Act, 2001 Created Bureau of Energy Efficiency Appliance standards and labeling Energy consumption norms, and energy-use reporting requirements for energy-intensive industrial units Energy Conservation Building Code for commercial buildings Certified Energy Managers and auditors National Action Plan for Climate Change, 2008 National Mission on Enhanced Energy Efficiency provides mandate for market-based mechanisms to promote energy efficiency National Mission on Sustainable Habitat seeks to incorporate energy-efficiency requirements in building byelaws Page 5 of 14

Number of Units Industries: Huge Diversity in Specific Energy Consumption within industrial sectors 16 14 2005-06 12 10 8 6 4 2 0 550-600 600-650 650-700 700-750 750-800 800-850 850-900 900-950 Thermal Specific Energy consumption, Kcal/kg-clinker Large bandwidth in specific energy consumption in all sectors In almost every sector, the most energy-efficient unit is also amongst the most efficient units in the world Slide 6 of 14

Perform Achieve and Trade Specific Energy Consumption (SEC) targets mandated for 478 units in 8 energy intensive sectors The sectors are: Aluminum, Cement, Iron & Steel, Chlor Alkali, Thermal Power Plants, Fertilizer, Pulp & Paper, and Textiles They account for one-third of fossil-fuel consumption Targets are less (in % terms) for efficient units; more for lessefficient units Targets to be accomplished in 2014-15; new cycle with new targets after that Energy Savings Certificates will be issued for excess savings; can be traded and used for compliance by other units Financial penalties for non compliance Baseline conditions have changed; normalization factors being developed Slide 7 of 14

Huge spread in Specific Energy Consumption within sectors Target is Plant Specific Less for Energy Efficient and more for Inefficient Plants Page 8 of 14

Appliances: Labels built up as a brand Every New appliances includes with a endorsement/voluntary labeling participative process Voluntary labels for refrigerators and air conditioners introduced in December 2006 Aggressive advertising and outreach promoted labels as a brand of superior products manufacturers piggybacked on label advertising Labeling became mandatory for four products (where market transformation was well under way) from 7 th January, 2010 Voluntary labels in place for eleven other appliances Refrigerator and air conditioner standards and labels tightened periodically Labeling seldom works if payback period is more than 5 years; maximum sales is of products with 2-3 years payback Independent accredited labs for check testing of labeled products Page 9 of 14

Buildings: New buildings have huge potential which very difficult to achieve Approximately two-thirds of the buildings that will exist in 2030 are yet to be built Energy Conservation Building Code (ECBC) issued in 2007 to guide design of new commercial buildings where there is largest scope for efficiency improvements ECBC has to be notified by states, and incorporated into building byelaws and enforced by municipalities; currently seven states (out of 35) have notified it; enforcement mechanisms are being strengthened ECBC-compliant buildings use lessthan-half the energy used by conventional buildings; incremental costs have reduced from 20% in 2007 to less than 5% now STAR RATING FOR BUILDINGS Energy Performance Index: kwh/ sq m/ year Name of the Building : Category of Building : Type : Climatic Zone : Connected Load : Build up Area : Page 10 of 14

Growth in the Commercial Building Sector Commercial Buildings Floor Area - Growth Forecast Currently, ~ 659 million m2 (USAID ECO-III Internal Estimate Using MOSPI, CEA and Benchmarked Energy Use data) In 2030,~ 1,900 million m2 (estimated)* 66% building stock is yet to be constructed 659 million m 2 Year: 2010 Yet to be Built 66% Current 34% 1,900 million m 2 * Assuming 5-6% Annual Growth Year :2030 11 Page 11 of 14

GHG Emission Reduction Potential Saving potential of 40% in end use energy in the building sector and potential to save about 60 Billion units annually Slide 12 of 14

SEEP Major Aspects Background Currently, 30 million ceiling fans are sold in India every year, with an average energy rating of 70 W; best in market is 50 W with sales of less than 3% (price of an fan is $24-30) Market forces and the star labeling programme have not been able to move the market Goals & Approach Enable accelerated introduction of super-efficient fans with rating of less than 35 W (currently there is a limited supply at a price of $40-45) Incentive of upto $8 for each superefficient fan sold Resources for incentive provided from the Budget and a loan from the Clean Technology Fund Independent agency for testing and verification of sales Current goal is 7 million super-efficient fans Potential Technologies for Super Efficient Fans: - High Efficiency Induction Motor: Brushless DC Motor based on rare earth magnet or Ferrite Magnet, or Hybrid Magnets - Replacement of 1 SE fan will result into saving of around 70-80 kwh per annum Page 13 of 14

Energy Efficiency Financing Models & Public Procurement Fiscal instruments to facilitate energy efficiency projects implementation have been developed: Partial Risk Guarantee Fund (PRGF) Debt guarantee to Financial Institutions for ESCO (Energy Service Companies) investments (up to US$ 0.55 million or 50% of loan, whichever is less) Venture Capital Fund (VCF) Equity investments in ESCO projects (up to US$ 0.36 million or 15% of equity, whichever is less) Public Procurement: Initially the appliances which have been considered for public procurement include Split air conditioners (usage more than 1000 hrs./year), ceiling fans & water heaters (all 5 Stars) and frost free refrigerators ( 4 Stars). This is expected to save 250 MW of Power. Page 14 of 14

Energy Savings Achieved Target has been surpassed, but pattern of savings is very different from that originally estimated Year-wise breakup of targeted avoided capacity during IX plan & Target achieved Sl.No. Schemes Target for XI Plan (in MW) Achieved during XI Plan (in MW) 1 Standards & Labeling 3000 7766 2 Energy Conservation Building Code 500 14 & Existing Buildings. 3 Bachat Lamp Yojana 4000 324 4 SDA Strengthening Programme 1065 5 DC & SMEs 500 2 6 Agriculture & Municipal DSM. 2000 1 7 EC Awards 1664 TOTAL 10000 10836 Total savings under 11 th plan (in million toe): 59.21 Page 15 of 14

Challenges & Lessons Difficult to predict outcomes of programmes; feedback mechanisms and decision processes to enable constant monitoring and adjustments are essential Benchmarking of use patterns and energy performance of technologies - is very country specific; enabling it is an essential first step Human and institutional capacity to measure, analyse and to integrate into mainstream sectors is limited; this is further confounded by multi-level governance regimes National and international programmes to strengthen capacity around policy, technological or commercial transactions is important Enforcement and monitoring are major challenges, and can add significantly to costs; public policies need to rapidly convert technological opportunities into branded products ; targeted outreach programmes can be very effective Higher first cost is a barrier; with adequate and credible information, people and organizations can make investments with paybacks of 2-5 years; higher payback periods require incentivization Page 16 of 14