Market aggregating models – scaling an EE portfolio INDIA@COP22 Market aggregating models – scaling an EE portfolio Session: How India Scaled up Energy Efficiency via Innovative Business Models Manu Maudgal Programme Advisor Sustainable Lifestyle = Positive Climate Action www.indiaatcop22.org

EESL-Who We Are Promoters with net worth of over $40 billion (1 October 2016) Implementing possibly the largest Energy Efficiency Portfolio in the world – in sync with national priorities- achieving actual energy savings Authorized share capital $ 220 million; Debt appetite of $ 220 million in short term (FY 2017) In the works over $ 1 billion ‘Lines of Credit’ under bilateral/ multi-lateral agencies (ADB, WB, KfW, AfD) 1 billion USD= Rs 6800 Euro 100 mn Line of Credits obtained from KfW (Euro 50 mn) and AfD (Euro 50 mn) under Bilateral arrangements. Discussions going on for additional line of credits with World Bank (USD 300 mn), ADB (USD 200 mn) and KfW (Euro 200 mn).

EESL – Two Business Models On Bill Financing Model (OBF)- 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 ‘Service’ 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 Common Under pin Turnkey execution - no cost and manpower resources from Utilities/ Municipal bodies No subsidy ; Entire upfront investment by EESL

Our Impact

Lighting Market Aggregation Share of LEDs in Indian lighting market increased from less than 1% to 15% Near 80% Price reduction – from ~$ 5 to $ 1 High levels of awareness about LED products and their energy efficiency benefits 15%

Street Lighting National Programme Conventional Street Lights replaced by smart LED street lights 20-30% energy savings guaranteed 7 years maintenance part of the project Entire investment made by EESL – no capital cost to Urban Local Bodies (ULBs) Utility re-pays to EESL from savings in energy and maintenance cost Centralized Control and Monitoring System (CCMS) for measuring consumption, monitoring faults and remote operations Strong quality control – fault rate < 2% Social audit in every project to assess in social impact In Vizag Actual electricity bill reduced by 45% Light levels have improved between 70-100% High levels of public satisfaction – social audit

Snapshots of LED Street Lighting in India Conventional lighting LED lighting

Four Lessons: Biz Model

Lesson # 1: Adopt Standard Technology Standardization of Technology to match the necessary output Selection of equipment that could lead to significant savings by scale up and is cost effective Barrier Addressed: Technical Improved penetration of energy efficient product in the market There can be other barriers as well: absence of technological solutions, unavailability of solutions in local market, absence of secure payment mechanism

Lesson # 2: Adopt Demonstrated & Deemed Savings M&V One time demonstration to validate outputs and energy savings (~30-50% savings) Trunkey implementation and maintenance over the contract period IT enabled real time monitoring of energy consumption Barrier addressed: Institutional Overcome absence/ authenticity of baseline data Overcome in-availability of managers who can assess and guarantee the energy savings Other: mandatory energy audit non-availability of an appropriate delivery mechanism & absence of Institutional framework, Lack of coordination amongst different initiatives-different Government Ministries/departments

Lesson # 3: Aggregate Demand Aggregation of demand across states; Pooling of prices to pass on benefits of reduced prices Aggregation of supply; Transparent procurement in bundles to ensure continuous price discovery and sustainability of demand Barrier addressed: Information, Financing Overcomes access to standard templates for Procurement and quality control etc. Lower capex and investment by ESCO overcome access to financing lack of awareness, Lack of data on actual building stock, energy consumption by different sectors, Low electricity tariff, Lack of energy subsidies, Non-payment& electricity theft

Lesson # 4: Make EE Visible Online and real-time monitoring tools developed; to monitor the performance http://www.ujala.gov.in/ www.eeslindia.org/slnp http://49.207.2.109/ www.mie-street.net https://eeservices.energyoperation.schneider-electric.com/ lack of awareness, Lack of data on actual building stock, energy consumption by different sectors, Low electricity tariff, Lack of energy subsidies, Non-payment& electricity theft yojanabhawan.demo SSBhawan.Demo

Our Green Portfolio

Our Green Portfolio Overall project pipeline > US $ 2 billion Execution Capabilities “Different Sectors” Irrigation Pumpsets Municipalities – “Public lightings, water pumping” Buildings – “HVAC, BMS, lighting solutions” Energy Efficient Appliances – “ Lighting, Fans, Air conditioners” Tri-generation Smart grid Meters Implementation of Central & State Gov. Initiatives Standard & Labelling Programs Perform Achieve & Trade Scheme for industries Advisory Services Institutional capacity building Policy inputs to government Energy Efficiency under CSR activity

…ready to work globally Do attend the next session on Green Bonds !