1. Energy Efficiency Initiatives in India
Sanjay Seth
Energy Economist
Bureau of Energy Efficiency
Ministry of Power
Government of India

2. Energy Efficiency – the Indian experience
Energy efficiency makes economic sense – and is happening
Yet, there are unexploited opportunities – due to market failures
Public policy aims to address these market failures through:
Information on energy performance
Standards
Promoting demand side management and performance contracting
Market-based mechanisms
International cooperation can accelerate the introduction and early adoption of energy-efficient technologies
Public policy nudges have led to real and verified savings

3. Energy Intensity continues to decline3

4. Largely because energy is costly
Scope for further increases in energy prices are negligible

5. Future Energy Use in India
Energy demand is increasing due to rising incomes, accelerated industrialization, urbanization and population growth
: Mtoe
: Mtoe
: Mtoe 5

6. 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 6

7. Technological change is the key
Installation of energy-efficient infrastructure, equipment and appliances is essential for
Meeting energy demand
Managing energy security, and
Meeting climate goals
Technological transitions – both deployment and development - are important in
Power generation
Buildings, especially commercial buildings
Equipment and appliances
Industry
Mobility
Generally speaking, since choice of energy efficient technologies and products leads to lower energy bills, these are win-win situation, and so should occur on their own. However, there are many instances of market failures due to which these opportunities are not exploited.
One of the most important reasons is that users do not know of the comparative energy use data of different products This is particularly true of the household sector - most of us in India do not know how much electricity our refrigerator or air conditioner uses. Consequently purchase decisions are based on brand, colour etc., without accounting for energy use - which in the case of an AC, could cost 10 – 15 times more than the initial purchase cost, over the life of the AC. So, we need to ensure that users have comparative energy use information.
In the industrial and commercial sectors, the key problem relates to the fact that very few users have actually adopted more efficient technologies or practices, As a result, potential users are unaware of its actual performance, and thus hesitate to invest in the energy efficient technology. This implies risk mitigation measures are required.
Almost without exception more energy efficiency technologies have higher first cost than less efficient technologies. This becomes a barrier to the accelerated adoption of the new technologies, especially in the household sector where discount rates are high. Consequently it is important to facilitate a rapid decline in the prices of energy efficient technologies and products.
Finally a glaring market failure occurs in the building sector where the higher costs are borne by the builder, but the lower energy bills are enjoyed by the building tenant. The sharing of costs and benefits is difficult in this sector, and therefore market signals are inadequate to facilitate market transformation. Mandatory design codes therefore become necessary.
To sum up, there are often instances when regulatory intervention is necessary to promote energy efficiency 7 7

8. Information helps consumer decisions
STAR RATING FOR
BUILDINGS
Energy Performance Index:
Category of Building :
Type :
Climatic Zone :
Connected Load :
Build up Area :
Name of the Building :
kWh/ sq m/ year

9. Labels built up as a “brand”
Voluntary labels for refrigerators and airconditioners introduced in December 2006
Aggressive advertising and outreach promoted labels as a brand of superior products – manufacturers piggybacked on label advertising
In , 75% of refrigerators, and 50% of air conditioners sold in the market were labeled – showing consumer preference and market transformation
Labeling became mandatory for four products (where market transformation is well under way) from 7th January, 2010
Voluntary labels in place for eight other appliances

10. In industry, new plant is amongst most energy efficient in the world – but there is large bandwidth of energy efficiency
A wide bandwidth of energy efficiencies occurs in almost all industry sectors
This creates a differentiated potential for energy savings
Trading of savings allows maximum cost-effective savings as plants with “low-cost savings” exceed their “mandated “ savings for trading them with other plants which are unable to meet their targets
“Perform, Achieve & Trade” mechanism introduced for 580 industrial units which have to meet SEC reduction targets

11. Perform, Achieve and Trade (PAT)
The units covered by the programme consume about 200 million toe annually, of the total of 400 million toe of commercial fuels consumed annually in India
The goal is that the gate-to-gate specific energy consumption of these units, collectively, is about 5% less in than it was in
Each sector is subdivided into a number of clusters based on input and output differences, and on the basis of statistically significant differences in their SECs
The allocation of SEC reduction targets within a cluster is based on the relative SECs of units – less efficient units have larger SEC %-reduction targets – so that the collective SEC reduction in a cluster is 5%
ESCerts (and penalties) would be based on the achieved SEC and the target SEC, and will be computed on the basis of the baseline-year production

12. Certification of Energy Managers and Energy Auditors
National exam to certify energy managers and energy auditors
Candidates who qualify in three base papers are certified as energy managers
Energy Auditors have to qualify in an additional paper
Exam conducted by National Productivity Council
Ten national exams have been conducted
Over 15,000 candidates have appeared
About 7,000 have qualified as energy managers; about 5,000 are also energy auditors
EC Act mandates roles
Each designated consumer has to employ an energy manager
Periodic energy audits of DCs have to be carried out by energy auditors

13. Energy Conservation Building Code
ECBC covering the following components prepared:
Building Envelope (Walls, Roofs, Windows)
Lighting (Indoor and Outdoor)
Heating Ventilation and Air Conditioning (HVAC) System
Solar Hot Water Heating
Electrical Systems
Voluntary introduction of ECBC in May 2007; mandatory after capacity building and implementation experience
Easy to use guides, tip sheets launched
Panel of architects prepared to help dissemination of ECBC
Curriculum enhancement in architectural institutions
Government agencies taking the lead in ECBC implementation 13 13

14. Enhancing Energy Efficiency of Existing Buildings
Program for energy audit and retrofit in central government and state government buildings
8 building retrofits completed; 6 buildings used ESCOs to carry out retrofits through performance contracting
Experience used to develop model agreements for ESCOs
Over 500 buildings now being targeted for upgrades through ESCOs
ESCOs promoted through model contracts, accreditation, ratings, and financing
Identification, accreditation and rating of ESCOs
Project-based financing of accredited and rated ESCOs
Also being promoted for:
Municipal lighting and water pumping
Agricultural pumpsets
Supporting initiatives by electricity distribution companies 14 14

15. Bachat Lamp Yojna (Lamp Savings Project)
Of the approximately 1 billion light points in India, about 600 million use CFLs
CFL penetration in commercial sector is almost complete – but low in household sector
“Bachat Lamp Yojana” facilitates firms in providing CFLs to households at the price of incandescent bulbs
The difference in cost would be recovered through the carbon credits that accrue because of their lower energy use
CDM Programme of Activities has been registered to enable quick registration of many small projects
About 300 to 400 million lamp replacements are targeted
Approximately 20 million have already been replaced since October 2010

16. Verified energy efficiency gains – 11th Plan
Fuel Avoided Savings Generation Capacity million toe MW
(upto Dec 2012 )
Total * ,836
* Compounded cumulative fuel savings
Strategies to address these market failures suggest 3 kind of regulatory interventions. The first enables the provision and sharing of information. Examples of these include energy labeling of appliances, as well as of the sharing of energy use information by units within an industrial sector so as to provide least efficient units with a benchmark to improve their performance.
The second kind of intervention reduces the perceived risk of adoption of energy efficient technologies, and can be achieved through a range of interventions such as bulk procurement of energy efficient products – such as CFLs - to drive down prices, or through utility driven DSM to ensure large scale adoption of energy efficient products, spurred by discounts on electricity bills or by utility-backed performance guarantees. In addition, performance guarantees by Energy Service companies, with payments based on the achieved savings, is another means to reduce risks.
Finally in cases where market transformation is not achievable by “market-supportive regulations”, mandatory standards become essential. Energy building codes become necessary because of the asymmetry of costs and benefits sharing, as discussed earlier, leads to weak market signals. Similarly in some industrial sectors, energy consumption benchmarks are essential to ensure that the least efficient units upgrade their performance. 16

17. Both supply “push” and demand “pull” are necessary
Coal-based generation
Minimum efficiency requirements for new plant
Tariff-based bidding to sell electricity
Commercial buildings
Energy conservation building code
Retrofits by ESCO-driven performance contracting
Energy performance labeling
Industry
Energy consumption norms in industry
Market mechanisms to promote energy efficiency in industry
Equipment and appliances
Minimum energy performance standards

18. International Cooperation can accelerate introduction of energy-efficient technologies
Rapid development and adoption of much-more energy efficient technologies is often constrained by:
Costs that are higher than those which a large number of consumers are able and willing to pay
High risk perception regarding performance of new technologies
Lack of large markets that incentivize manufacturers to bring super-efficient products early into the market
Global cooperation – especially on appliances/devices amenable to global standards – can help in aggregating demand and finalizing specs
SEAD (Super-efficient Appliance Deployment) initiative is a good first step in this direction
LED standards have been finalized
TV standards are in the process of being finalized

19. International Cooperation has been central to our efforts
Programme design has been influenced by, and has drawn on:
Energy Conservation Law of Japan, and the Japanese energy manager and top-runner approaches
Building energy efficiency programme of the US
Appliance standards and labeling programmes of the EU and US
DSM programmes in EU and France
Institutional outreach for energy efficiency technology dissemination in Germany
Several national experts (from Germany, France and Japan) have been located in BEE to support programme design
International study tours build capacity of public sector officials and private-sector experts

20. Public policy nudges are important to enhance the rapid adoption of cost-effective technologies
Energy efficiency makes sense – in most instances, people and firms make energy-efficient choices; yet instances of non energy-efficient investments – which are of economic disbenefit - continue to abound
Lack of information, risk aversion, and high discount rates seem to be drivers of these (irrational) decisions
Public policy nudges help create and strengthen markets for energy savings which are sustainable
Voluntary programmes a good way to find out if people will respond; this also helps fine-tune them
“Branding” has turned out to be a very effective tool
Market “creation” incentivizes early introduction of energy-efficient technologies
In retrospect, perseverance, consultation, impact assessment and course-correction have been of most importance