1. Perform, Achieve and Trade
Asst Energy Economist
Bureau of Energy Efficiency
Ministry of Power , Government of India

2. Background
The National Mission for Enhanced Energy Efficiency (NMEEE) is one of the eight national missions of the NAPCC launched by Hon’ble Prime –Minister on 30th June ,2008 with the objective of 1. Promoting innovative policy and regulatory regimes. 2. Creating Financing mechanisms, and business models markets for energy efficiency in a transparent manner with clear deliverables to be achieved in a time bound manner.

3. NMEEE – Four new initiatives
Energy Intensive Industries
Targets for Mandatory
Energy Saving
PAT
EEFP
FEEED
MTEE
Stimulate Funding
for ESCOs
NMEEE
Fiscal Instrument for EE
PRGF
VCF
Public Procurement
Energy Efficient
Appliances
BLY
SEEP
DSM

4. PAT Scheme : Scope Covers 478 designated consumers in 8 sectors
All DCs consume about 165 mtoe energy
Targets would be given to all DCs to achieve the same within a time frame
Achievement > Target ECScerts
Achievement < Target Purchase ECScerts / Penalty
National Target = 6.6 mtoe at the end of 1st PAT Cycle (by )

5. Perform, Achieve & Trade (PAT) Mechanism
The market based mechanism to enhance the cost effectiveness in improving the Energy Efficiency in Energy Intensive industries through certification of energy saving which can be traded
Reward over achiever
Penalize under performer
Market Based Mechanism
Administrator
Set target and compliance period
Designated Consumers
8 sectors Thermal Power Plant, Steel, Cement, Fertilizer, Pulp & Paper, Textile, Aluminium, Chlor-alkali
Auditing Agencies
Independent
Monitor, verify and certify
Market Place
Transaction of energy efficiency instrument
Stakeholders
Set Targets
Setting targets on the basis of current specific energy consumption
Set compliance period
May take into account Location, Vintage, Technology, raw materials, product mix etc.
Monitoring & verification of targets by Designated Energy Auditors (DENA)
Check if designated consumer has achieved targets
Underachievement: Obligations to buy ESCerts or pay penalty
Overachievement: Issuance of ESCerts for banking for later use or trade
Trading of ESCerts
Participation by Designated consumers on platform provided by Power Exchanges
Symmetrical flow of information
Processes Involved

6. PAT steps Constituted PAT Steering committee
Draft Mechanism for overall structure for PAT
Approval of NMEEE including PAT scheme by Cabinet
Constituted Sector Technical Committees for the formulation target setting methodology
Collected Baseline Data
Prepared PAT Consultation document
Conducted stakeholder consultation workshop
Developed rules for implementation of PAT based on consultation workshops
Notified rules and targets for Designated Consumers

7. PAT Activity Flow Sheet
Getting Information Through Base Line Format
Data Compilation/ Evaluation
[Declaration of Base Year, Target Year ]
Target Setting
Communication to Designated Consumer
Preparation Performance Assessment Document (PAD or Form A)
Communication to BEE and SDA
Verification of PAD through DENA
(Form B)
Check Verification of PAD (Form C) through DENA & submission of compliance doc (Form D).
Baseline & Target Setting (based on last three years)
(Annual submission but the target compliance for three years)
Issuance of ESCerts after successful M&V
Market for Trade

8. Time lines Mandatory Voluntary Submission of Form 1 Once in a year
30th June NA
Submission of Form A
(Performance Assessment Document)
Once in 3 years
30th June 2015
Before Compliance year
Submission of Form B
(Verification by AEA)
Issuance of ESCerts
Aug 2015
Aug
Submission of Form D
(Performance Compliance Document)
30th Nov 2015

9. Specific Energy Consumption
As the SEC is calculated on a Gate-to-Gate concept, the definition of plant boundary plays an important role.
Plant Boundary
All forms of Energy
PROCESS
Electricity (KWH)
FO (Ltr)
NG (SCM)
Coal (KG)
Others (KG or Ltr)
Product (Kg) E P
SEC = E / P
Baseline SEC
Reduction in SEC
SEC
Target SEC
Year 1
Year 2
Year 3

10. PAT Scheme : Approach Towards Target Setting
Sectoral Target have been assigned on pro-rata basis of energy consumption among 8 sectors to achieve National Target
Establishment of Baseline :
As per reported data of last 5 years ( to )
Normalization Factor (capacity utilization)
Arithmetic Average of last 3 years value
Targets to be statistically calculated based on relative SEC approach after grouping the DCs suitably
The target reviewed by an expert committee before notification

11. General Rules for Establishing Baseline
Definitions:
Baseline Year :
Baseline Production (Pbase) : Avg. of , &
Baseline SEC (SECbase) : Avg. of , &
Baseline CU% (CUbase) : Avg. of , &
Target SEC (SECtarget) : SEC as estimated in
Target : % reduction from SECbase
Estimation of Energy Saving (mTOE) :
P base ( SEC base – SEC target )

12. Target is Plant Specific …… Less for Energy Efficient & High for Energy Inefficient Plant
Covers units using about 165 million toe/year
Gate-to-gate specific energy consumption, collectively, to be about 5.5% less in than it was in
Less efficient units have larger SEC %-reduction targets – so that the collective SEC reduction is 5.5%
Energy Savings Certificates (and penalties) would be based on difference between the achieved SEC & the target SEC and the base year Production

13. Market Design
Designated Consumers are obligated to improve energy efficiency
Energy Efficiency Targets are %-age reduction in SEC expressed in Absolute Savings terms
Various plants in an industry clustered on the basis of different parameters like technology etc
Each DC will get an energy efficiency improvement percentage target
The target would be converted into absolute energy saving target (in mToE terms) on the basis of plant capacity
The absolute energy saving target (obligations) would be applicable for a compliance period of three years
Designated consumer can meet target by
Undertaking energy efficiency measures themselves
Buy ESCerts from someone else to comply with the targets

14. Concept of Target, Compliance, ESCerts & Penalty
Issued Escerts
Penalty
Baseline SEC
Target
Achieved SEC
Compliance
Target
SEC
Purchase Escerts
Scenario 1
Scenario 2

15. Market Design Compliance and Reporting
Total compliance period of 3 years (march 2015)
Designated Consumers would undertake energy efficiency measures and submit annual reports
If submitted annual reports show over-achievement, ESCerts to be issued for level of over-achievement
Provision of annual reporting along with penalties in case of non- compliance
After period of 3 years, a complete gate-to-gate measurement to be undertaken for verifying SEC and plant capacity for each DC
BEE would appoint Designated Energy Auditors (DENAs) for M&V
DENAs would be organizations, which meet minimum capability norms
DENAs would be accredited and empanelled by BEE
BEE will initiate compliance checks on dip-check basis on both DC and Accredited Energy Auditor
In case of non-compliance State Designated Agencies to levy penalties on DC

16. Proposed Institutional Design Schematic
BEE
Market Regulator & Administrator
SDA
DENA
Designated Consumers (DCs)
Central Registry
Trading Exchange
Updated list of DCs and DENA
Any Baselines Improvement
Audited Result of DCs
Audit
Apply for ESCerts through PAT Assessment Document (PAD)
Issuance of EScerts
Updated Obligation of DCs: Deficit or Surplus
Updated ESCerts Account Info
Settlement Details
ESCerts Trading
Regular updates
Regular Checks & Levy Penalties in case of defaults
E-filing
Apply for Empanelment
PAD Information
Mop

17. Vast diversity in design and operating conditions of the Plants
Vintage of these plants varies widely i.e. From
yr.1967 to 1999 ( Years).
Size of single stream also varies widely i.e. From ammonia / urea from 600 /1000 MTPD to more than 1500 / 2600 MTPD.
Different feed stock is used i.e NG, naphtha, fuel oil.
Wide range of technologies are employed
Contd …….

18. Categorisation of operating urea plants
Vintage
No. of
Plants
1960’s
1970’s
1980’s
1990’s
Total 2 9 10 30
Feedstock
No. of Plants
Gas
Naphtha
Fuel Oil
Total 22 4 30
Size of Plants
UREA (MTPD)
No. of
Plants
≤1000
>1000 but ≤ 1500
>1500 but <2620
≥ 2620
Total
2 Plants not producing urea 5 3 10 28

19. Methodology of target setting for the Fertilizer Sector
A portion of feed energy which is fed at Plant battery limit is contained in urea product and goes out along with it. So, it is not considered as energy consumption in the Plant. The stoichiometric value of such energy works out to be 2.53 Gcal / MT Urea. This much energy has been reduced from the reported SEC (Gcal/ MT Urea) and then weighted average for the last 3 years has been worked out.

20. Grouping of DC and Assignment of Targets

21. Major Points Target: In % of Specific Energy Consumption
ESCerts: in toe with 1 metric toe = 1 ESCert
For ESCerts or Penalty:
(Baseline Production) x (% change in SEC)
Example
SEC in baseline: 10 toe/unit of production
Baseline Production: units
Target: 4% reduction in SEC
SEC at the end of : 9.6 toe/unit prod
For ESCerts or Penalty:
Reduction requirement: 4000 toe
Case1 (Achieved SEC = 9.8): toe (Penalty)
Case2 (Achieved SEC = 9.4): toe (ESCerts)

22. Market Design ESCerts are issued
When energy efficiency improvements surpass targets
With 1 mToE = 1 ESCert
Banking of ESCerts allowed during each cycle
1st cycle ESCerts to 2nd cycle
2nd cycle ESCerts to 3rd cycle

23. Advanced ESCerts Baseline, SEC(b) = 10 toe/t Target, SEC (t) = 7 toe/t
Achieved after year 1, SEC (a) = 8.5 toe/t
Production = 10000t
AFTER YEAR 1
ESCerts =[SEC(b) – (SEC (b)– SEC (t))/3) – SEC(a)] x 80% x prod
= ((10 – (10-7)/3) – 8.5)) x 0.8 x 10000
= (9-8.5) x 8000 = 4000 ESCerts
Revised Target = SEC(t) – (ESCerts/Prod)
= 7 – (4000/10000) = 6.6 toe/t

24. P = Wc x Pc + Wo x Po + Wg x Pg + We x Pe
Penalty Calculation
P = Wc x Pc + Wo x Po + Wg x Pg + We x Pe
Where-
P =Price of one metric ton of oil equivalent(1mtoe);
Pc=Price of F-grade coal declared by Ministry of Coal;
Po=Price of fuel oil as declared by Ministry of Petroleum & Natural Gas;
Pg=Price of gas as declared by Ministry of Petroleum & Natural Gas;
Pe=Price of electricity;
Wc= Weightage of coal;
Wo= Weightage of oil;
Wg= Weightage of gas;
We=Weightage of grid electricity
The value of per metric ton of oil equivalent of energy consumed is
Rupees for the year

25. Normalization factors

26. Normalization Area Input Primary Energy [Fuel]
Input Secondary Energy [Electricity]
Capacity Utilization or PLF
Technology &
Environment Standard
Raw Material and Product
Natural Disaster
PAT Normalization

27. Input Primary Energy [Fossil Fuel]
Fuel Linkage and Quality of Fuel
Use of Biomass
Non Availability of Fuel
Re-Cycling
By Product used as Fuel
Plant has to maintain the relevant documents to justify their cause

28. Input Secondary Energy [Ex: Electricity, Steam]
Purchased from Grid
Through Captive Power Generation
Through Waste Heat Recovery
Export to Grid
Renewable Energy

29. Capacity Utilization and PLF [Poor Performance]
Fluctuation due to Scheduling
Effect due to Market Demand
Non-availability of fuel or Raw Material

30. Raw Material & Product [Quality, Output Type]
Quality of Raw Material
Output Product Change
Production Semi-finished Product
Input Semi-finished Product

31. Environmental Standards and Natural Disaster [Gov policy]
Change in Standards
Change in Government policy
Natural disaster
Rioting or social unrest

32. Thank you