July - September | 2016 | Vol :: 09 | No :: 03
ISSN 0974 - 0996
energy efficiency financing for industries innovative financial solutions SDA and MSME schemes role of energy auditors
July - September 2016
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innovative financial solutions to foster energy efficiency
Saurabh Kumar
ne significant roadblock in adoption of energy efficiency (EE) models has been the financial hurdles to the consumers. No one would simply use a costly lighting solution readily even if it promises to save power or make the environment greener. The already hesitant buyer of sensitive Indian market has more to do with direct short term benefits than the long term superiority of the product. In this scenario, it becomes insufficient to convince a consumer based on the simple premise of energy savings. The noble cause of energy efficiency requires to be linked with direct benefits to the consumer to reach our common goals. Going by the thumb rule, the cause of saving electricity was coupled with innovative financial models to make energy efficient products more affordable and feasible to the common man. EESL ensured that its energy efficiency commodities didn't fall short in popularity due to high pricing. Easy and simple financial schemes were laid before the users to opt and adopt the energy efficient commodities more openly. It is due to these schemes, that the energy efficient appliances became more popular in the open market. Going forward, similar financial
innovative financial solutions to foster energy efficiency
Currently, EESL runs about five energy efficiency schemes, which include UJALA, the LED bulb programme, AgDSM, the agricultural pump programme, Buildings Energy Efficiency Programme, Streetlights National Programme, Efficient Fan and Tubelight Programme. Under the ESCO model the utility purchases energy savings using pre-determined rate and hence EESL is able to recover its investment. In OBF model, EESL makes the entire investment for energy efficient product and the recovery is made directly from the consumer.
Brief on EESL's financial models Currently, EESL runs about five energy efficiency schemes, which include UJALA, the LED bulb programme, AgDSM, the agricultural pump programme, buildings energy efficiency programme, Streetlights National Programme, Efficient fan and Tubelight programme. In all the above mentioned schemes, EESL has devised various innovative financial models for extending its energy efficiency services. These include the ESCO model, the On Bill Financing (OBF) model, the state subsidy method, upfront mode of payment and state distribution methodology. Under the ESCO model the utility purchases energy savings using pre-determined rate and hence EESL is able to recover its investment. In OBF model, EESL makes the entire investment for energy efficient product and the recovery is made directly from the consumer. Here, the consumer may pay a token money upfront and bear the remaining cost through instalments added to their electricity bill. The upfront method requires the consumer to pay for the entire cost of the energy efficient product. Lastly, some states also choose to provide subsidies to domestic consumers and hence the initial cost for energy efficiency commodity is brought down for the end consumer. In subsidies, the balance amount is paid back by the state to EESL. EESL also executes some projects through the Project Management Consultancy (PMC) model, where a consultancy fee is
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schemes were also laid down for the industrial sector and work is being carried out for their application and effective execution.
July - September 2016
The government of India has paved the way for green economy by putting forth various financial schemes to implement energy efficiency measures and thereby ensuring minimum CO2 emissions. The sustainable and efficient use of resources is a key to meet the primary energy requirements in the country and to create balance in the environment. This article focuses on the financial schemes proposed and implemented by Energy Efficiency Services Limited (EESL) with prime focus on making energy efficient products more popular and cheap in the Indian market to increase their demand. Financing is one of the principal barriers to the rapid expansion of India's clean energy market needed to meet the ambitious national target of 175 GW of solar, wind, and other renewable energy by 2022, as well as the broader targets of the Paris Climate Agreement.
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EE finance schemes for SDAs and MSMEs State Designated Agencies (SDAs) for energy efficiency have been notified by the State Governments of Indiaby assigning additional responsibilities to the existing departments.The major responsibilities of SDAs include the coordination, regulation and enforcementof various provisions of the Energy Conservation (EC) Act in the State level. 33 SDAs have been notified under EC Act. These agencies differ from State to State and include Renewable Energy Development Agency (44%), Electrical Inspectorate (25%), Distribution Companies (12%), Power Departments (16%) and others (3%).
EE finance schemes for SDAs and MSMEs
n order to kick start the energy conservation activities at the state level with an emphasis on building institutional capacities of the SDAs, the Ministry of Power (MoP), Government of India, had approved the scheme of providing financial assistance to the State Designated Agencies for strengthening their institutional capacities and capabilities. During the XII plan, the MoP has approved a scheme of "Strengthening of SDAs on efficient use of energy and its conservation". The total
outlay of the scheme approved during the XII plan is Rs. 205.31 crores and comprises the following components:
1. Providing financial assistance to SDAs to strengthen their institutional capacity During the financial year 2012-13, an amount of Rs 25.23 crores was disbursed to 21 SDAs for implementation of the following projects:
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Praveen Dadhich
a quarterly magazine of the society of energy engineers and managers / India
energy efficiency project financingthe ESCO model
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energy efficiency project financing- the ESCO model
In simple context, energy efficiency projects help to lower energy consumption and considerably reduce overall energy expenses. Capital expenditure by the head organization is a prime requirement for the success of these initiatives. For any organization, energy expense is a challenge; while solutions are available to optimize the energy expense the greater challenge of funding still remains. This article summarizes the elaborate working of the ESCO model of funding in order to generate more awareness on its advantages over traditional models.
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raditionally, there were only two methods to fund energy efficiency projects-
1. Investing own capital which is always limited with any enterprise 2. Taking a loan from Financial Institutions (Fis)
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SIDBI is working with BEE in focused energy intensive clusters of MSMEs i.e. foundry cluster at Kolhapur, forging at Pune, limekilns at Tirunelveli, chemical at Ankleshwar and mixed at Faridabad. However, apart from these specific projects with Government support, the above mentioned two methods have not really come up in a big way and the reason behind that is assessed in this article. To combat all the barriers, a new-age model is becoming popular in India which already is very popular in Western countries and it is called ESCO (Energy Service Company)
EE projects have less impact on topline management and hence are of lesser priority for managements. Project finance is available only to large projects focusing on infrastructure or expansion. Even though several traditional models are relevant today, they are not taking off in the right manner due to barriers like lack of awareness, risk assessment and project development.
Barriers to the traditional models Management does not have enough incentive by way of policy framework and likes to invest projects focusing on growing the topline. Since EE projects reduce cost and improve bottom-line without having any topline impact, it becomes a lesser priority for management. Lack of awareness - Typically, bankers do not understand the language technicalities of EE project developers and therefore the benefits that arise do not add any weight. Similarly, energy developers do not focus on marketing aspects in Detailed Project Reports (DPRs) which would have motivated the bankers to take the risk. Risk Assessment - Bankers continue to do risk assessment based on project developer's financial assets involved in the same manner as they do in infrastructure projects. Project finance is available only to large projects focusing on infrastructure or expansion. Energy efficiency projects may not involve large size assets and most project developers are small size companies which cannot offer much collateral. Project Development - These projects are small in size in comparison to what bankers normally deal with and transaction cost turns out to be high for them. While traditional financing models are relevant even today, they are not taking off in a big way because of the explained barriers. BEE and its nodal agencies are working with FIs to create some customized products and hopefully we will have one soon.
In the ESCO model, the customer does not make any upfront investment as the entire investment in the project is the responsibility of the ESCO. The savings arising out of the project are shared between the customer and ESCO for a fixed tenure. After the contract period 100% savings and equipment belong to the customer. The customer also saves maintenance cost which is an added advantage.
The Silver Lining - ESCO Model As they say, constraint becomes the foundation for
July - September 2016
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PRGFEE: promoting energy efficiency financing in India
Somya Kant
PRGFEE: promoting energy efficiency financing in India a quarterly magazine of the society of energy engineers and managers / India
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July - September 2016
Owing to their technical proficiency, ESCOs have a major role to play when it comes to providing productive solutions to their clients who require to be energy efficient. However, they don't have a solid backup when it comes to financing energy efficiency projects for the clients which forces them to seek external funding sources. This article describes in detail about the PRGFEE programme developed by the BEE in order to bridge this gap and resolve issues regarding financing.
July - September 2016
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role of energy auditors in renewable purchase obligation
R K Jain
In general it is felt appropriate that SERC should prescribe the RPO targets for the respective states.
role of energy auditors in renewable purchase obligation
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he Electricity Act 2003 mandates the state electricity regulatory commission (SERC) to specify a percentage of total consumption of electricity in the area of the distribution licensee to be purchased from renewable sources. The tariff policy notified by the Central Government also provides in line with National Electricity Policy the need to fully exploit the feasible potential of renewable energy sources such as solar, wind and biomass.
All states have not implemented this statutory ruling with some having fixed the norms and some still studying the probable implications with respect to the licenses granted and the quantum of RE power in the state.
RPO
a quarterly magazine of the society of energy engineers and managers / India
Renewable Purchase Obligation (RPO) is mandated by the Central/State Regulatory Commissions and is applicable to distribution licensees in various sectors. The Regulatory Commission in each statedirects that a certain percentage of electricity that is generated through the above process should come from renewable sources. This article explains how the Electricity Act and National Action Plan on Climate Change (NAPCC) provide a roadmap for increasing the renewable energy in total generation. The REC mechanism seeks to address the mismatch between availability of renewable energy sources and the requirements of obligated entities to meet their RPO.
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The SERCs have specified the purchase obligations for entities from time to time in the form either purchase of Renewable Energy Certificates(REC) or self sourcing through captive generation, to promote investment in the renewable energy sector. All states have not implemented this statutory ruling with some having fixed the norms and some still studying the probable implications with respect to the licenses granted and the quantum of RE power in the state. In genera lit is felt appropriate that the state
key financing mechanisms for supporting industrial energy management projects in France ADEME
July - September 2016
Companies aiming to use their energy assets in a resourceful manner are advised to set up an Energy Management System so that efforts to effective energy consumption can be attained to the maximum. Key steps towards the successful achievement of this goal include conducting a detailed baseline audit of the energy use and clearly defining the energy policy, objectives and targets needed. A systematic implementation and monitoring of the plan also plays a crucial role. This article highlights the major initiatives that ADEME has undertaken in order to support financial needs for industries in various sectors.
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key financing mechanisms for supporting industrial energy management projects in France
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n France, any industry wishing to better structure its action on the uses of energy in its business is encouraged by ADEME to set up an Energy Management System (EnMS). The establishment of a EnMS allows the company to direct its efforts to reduce energy consumption by adopting a specific organization and by defining resources and tools that need to be mobilized. The implementation process of an Energy Management Program consists of 4 stages. Step 1: Base line study The key initial step involves conducting two diagnostics or audits: the energy use and the organization. Step 2: Development of the Energy Management Program: Definition of the energy policy, the objectives and targets; means of implementation and definition of the Energy Management program. Step 3: Implementation and monitoring of the Energy Management program Step 4: Getting the Energy Management System certified (this is an optional step)
July - September 2016
a quarterly magazine of the society of energy engineers and managers / India
28 In practice ADEME accompanies the company in its implementation process of an Energy Management System for which energy diagnosis is the key initial step. The assistance applies to the task entrusted by the company to a consultancy firm for: w Conducting an inventory with an energy audit and an organizational diagnosis. w Assisting in the implementation of the energy management program (action plan). w Assisting in the implementation and monitoring of the energy management program. w Supporting the development of certification, if the company decides to develop its EnMS according to the ISO 50001 standard.
Terms Assistance from 50 to 70% depending on the beneficiary which include large companies, medium businesses and small businesses.
For large companies, following the adoption of energy auditing obligation, no more assistance is provided for diagnostics or general energy audits, however ADEME support can be solicited for specific energy audits as well as feasibility studies. There are restrictions (especially for businesses with over 250 employees) as well as eco-conditionality criteria for the qualification of engineering and consultancy firms.
Regulatory zoom: energy audit For large companies the realization of an energy audit is mandatory every 4 years since December 2015. The scope of the audit must cover 80% of the company's energy bill (notwithstanding the fact that the rate was lowered to 65% until December 2015). The activities of this scope not covered by an ISO 50001 certified EMS must undergo an energy audit. Thus, if the whole perimeter of the activities is subject to a certified energy management system, the company is exempted from the energy audit obligation.
ADEME has implemented various modalities to support industries through the Heat Fund for assisting the production of renewable heat from biomass, geothermal, solar thermal as well as the recovery of industrial waste heat and development of heating networks. An important initiative taken in 2015 was the call for "Large solar thermal installations for hot water production" project in order to promote solar thermal energy through the construction of large facilities as well the regional projects aiming at the recovery of industrial waste heat.
July - September 2016
a quarterly magazine of the society of energy engineers and managers / India
smart struxure solutions for building management – a case study
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Objectives From the initial stage itself, the company was looking to build a smart and intelligent building by implementing a management system with monitoring and controlling all the low voltage systems including energy and lighting management from a Centralized Building Management System(BMS) control room. With Schneider Electric's Smart Struxure Solution, UST found their perfect partner that could help them monitor, measure and optimize their building performance throughout its life cycle.
smart struxure solutions for building management – a case study a quarterly magazine of the society of energy engineers and managers / India
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he UST Global facility is spread across a total land area of 36 acres and is built in a Special Economic Zone. The first building spans around 8,50,000 sq. ft. that can potentially accommodate 7,500 people and is operational at present.
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UST Global is a leading provider of end-to-end IT services and solutions for Global 1000 companies. Having been in the business for the past 15 years, the organization is operational in 23 countries. The Thiruvananthapuram Campus in Kerala serves as UST's India headquarters, and is one of its biggest facilities across the globe. With an intent of creating an intelligent and smart building, UST Global were looking for partners who could support them in their vision. Schneider gives priority to help clients achieve significant reduction in energy costs through systematic energy monitoring and real time control of all energy usage. This particular case study gives details on the successful implementation of a superior quality building management solution that manages and undertakes of a daily basis monitoring of network basics and physical parameters of the building.
energy and asset management: the perfect synergy towards facility management optimization Gabriel Hurtado Gonzalez
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July - September 2016
Energy management in facilities is entering a smarter new world of fundamental structural change, underpinned by the introduction of new technologies and ambitious energy saving targets. This new trend stems from the fact that professionals in this field are required to achieve energy efficiency in their projects without compromising on the reliability of their assets. This article takes a look at the facility optimization solutions from an assetcum-energy management perspective.
energy and asset management: the perfect synergy towards facility management optimization
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acility Managers are under constant pressure to improve both efficiency and reliability of the assets they manage, as well as finding savings across building operations. Meanwhile, energy management professionals are turning their heads towards wider strategies, and technologies behind those strategies, to achieve their performance targets.
Maintenance programmes enable firms to maintain achieved cost savings through continual monitoring of asset behaviour while also extending the operational life of equipment. Software analytics that use granular asset-level data contextualize all the captured use analytics within facilities to help teams review and iterate new strategies to maximize both business and facility operations in real time.
Asset management strategies Asset management programmes that use data-driven strategies enable the facility manager to: w Extend the useful life of critical assets: All equipment are manufactured with a predefined operational life expectancy. Maintenance programmes, (such as predictive or reactive maintenance) if not implemented can reduce the useful life of equipment. This can lead to increased costs of equipment replacement and unscheduled maintenance. Maintenance programmes enable firms to maintain achieved cost savings through continual monitoring of asset behaviour while also extending the operational life of equipment. w Predictive maintenance strategies: Reactive or predictive maintenance strategies rely on maintenance at predetermined intervals. Predictive maintenance programmes can result in a significant proportion of overall maintenance costs.
energy audit at NIFTEM – a case study
P P Mittal
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The National Institute of Food Technology and Entrepreneurship management was set up by the Government of India at an initial investment of Rs.500 crore to cater to the needs of various stakeholders. The following case study summarizes an energy audit conducted at the NIFTEM premises in Sonepat District of Haryana, India. The source of energy for the campus is electricity, LPG and HSD. Energy conservation solutions suggested to avoid wastage include installing BEE star rated fans, LED lights and setting up of roof top solar power plant.
energy audit at NIFTEM – a case study
100 acres. The institute intends to act as a Centre of Excellence and an apex world class centre of global standards in the area of food technology and management. It will cater to the needs of various stakeholders such as entrepreneurs, industries, exporters, policy makers, government and existing institutions. NIFTEM being an apex institution under Ministry of Food Processing Industries (MoFPI) have developed strong linkages with industries. NIFTEM aims to become a world class education hub in Food Technology and Management.
The campus is getting electrical power from Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) at 33 kV. Among the six transformers installed, two are standby. Four diesel generators are used as backup. LPG is used in labs and kitchen.
The campus is also having four captive diesel generators (1010 kVA ×2 and 500 kVA × 2). LPG is used in labs and kitchen. The power consumption of the campus peaks during June in summer and January in winter(as seen in Fig 1) respectively due to air condtioning and space or water heating.
ational Institute of Food Technology Entrepreneurship and Management (NIFTEM) was conceptualized by Government of India on persistent demand of the food industry to have an apex body as a"One Stop Solution Provider"to address the various problems of the sector. Ministry of Food Processing Industries, Government of India has set up this institute with an initial investment of Rs. 500 crore. The institute is spread over an area of
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The Electricity, LPG and HSD are sources of energy for the campus. The campus is getting electrical power supply from Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) at 33 kV. There are 6 transformers installed. The power is distributed through two step down (33 kV / 0.433 kV) transformers of 2000 kVA each and one 1250 kVA transformer remains standby. The fourth transformer of 1250 kVA (33 kV/11kV) supplies power to the hostels throughthe remaining two,each of 630 kVA (11kV/0.433kV), out of these one is stand-by.
Fig 1. Monthly electricity consumption at NIFTEM
energy efficient technology enabled green sand foundries Pravin R Joshi and Manish Kothari
July - September 2016
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The need to optimise energy, manpower and infrastructure resources is valid across the world. The MSME Technology Development Centre (earlier known as PPDC) of Government of India, Agra has the mandate to provide process and development support to MSME Foundry & Forging Industries in developing, and validating the modern low cost energy efficient technologies. The following case study showcases the combined effort of MSME and Rhino Technologies in successful implementation of two of the most impacting Energy Efficient Solutions, both being selected in the UNIDO-MSME program GCIP (Global Clean-tech Innovation Program) for the years 2015 and 2016 in the energy efficiency forum.
he MSMETDC, Agra provided assistance in setting up a Centre of Excellence for Smart Manufacturing to organise various skill development programmes for the benefit of students and working professionals. The necessary technical evaluation and support was given to help establish the technologyas well as promotion of the industry at various levels. The project requirements were studied and the project was carried out for the Small and Medium Size Green Sand Foundries in India. The new technology known as ECOFLEX sand plant has been recognised by the UNIDO managed Global Cleantech Innovation Program of 2015. It has shown the world the lean way of managing sand handling. Advantages include 30-50% reduction in energy, reduction in number of drives by nearly 40%, reduced civil work and shed height and easier accessibility MSMETDC Agra and Rhino Machines together studied the requirements, developed the project for the Small & Medium Sized Green Sand Foundries and successfully implemented across the country in all the major clusters.
Advantages of the ECOFLEX technology include 30-50% reduction in installed capacity, reduction in number of drives by nearly 40%, reduced civil work and shed height and easier accessibility.
The key features are making a lean study of the energy utilisation of the sand handling system, identifying the key process needs and wastes and redesigning the plant. By utilising belt conveyors instead of bucket elevators, the system reduced the need of dust collection power by more than 70%, as the generation of dust itself was reduced. Another significant feature is the ability to use recirculation of sand by exposing it to atmosphere for cooling, using additional machines, but only with a marginal increase in power for higher capacity machines. As such the incremental power need for a 10 t/h or 6 t/h belt conveyor is so minimal that the
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July - September 2016
a quarterly magazine of the society of energy engineers and managers / India
stay cool
even without air conditioning Aniruddha Chatterjee
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stay cool even without air conditioning
July - September 2016
The building sector in the country has shown tremendous development in the past decade and is expected to grow about five times from 2.1 million m2 in 2010 to about 10.4 million m2 in 2030.Today, India's energy consumption per unit area is found to be two to five times higher than that in developed countries. The challenge to reduce energy consumption is also accompanied by the pressure to reduce peak load and hence the most probable solution for reduction is to achieve energy efficiency in buildings. This article draws attention to the details and advantages of a new technology of installing Phase Change Materials during construction in place of air conditioning systems in order to achieve energy saving.
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July - September 2016
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ऊजा लेखा पर ा:
एक उ यम के लए एक आव यक कदम
ADEME
ऊजा
बंधन के मु दे छोटे और म यम उ यम
ऊजा
बंधन" का काय समह ू ऊजा लेखा पर
के लए मह वपण ू है । ATEE
पर कई
उपयोगी सफा रश
वा तव म उ चत ऊजा
के "उ यम म
ा
दान करता है , जो
बंधन काय के
काया वयन सु नि चत करने के लए एक
आव यक पहला कदम है । व भ न ऊजा खपत वाले
लए
े
का एक यापक अ ययन ऊजा बचत के
मता क पहचान करने और काय और
संभा वत नवेश का नधारण करने के लए
अनम ु त दे ता है ता क एक उ यम उ ह लागत भावी ढं ग से अपना सकते ह ।
यह व लेषण उपकरण के व नमाण और
उपयो गताओं ( काश, ताप, ठं डा, व टलेशन,
प रवहन) क ऊजा क खपत पर क त है । यह
और
लेखा पर
या क
ग त के लए। आप को ऊजा
ा म ज द शा मल होने से अ धक
लाभ होगा जो क
ऊजा
बंधन
(ईएमएस) के लए एक आधार
तथा ऊजा द ता को कंपनी
क
20% ऊजा क बचत च पयावरण और ऊजा बंधन एजसी (ADEME) के एक ताजा अ ययन म ऊजा क मांग के भावी िवकास पर काश डाला गया क 2030 तक औसत उ ोग म लगभग 20% का संभािवत ऊजा द ता लाभ होगा। अके ले संगठना मक उपाय से ही 10 से 25% के बीच बचत ह।ै भिव य म ऊजा क लागत म अप रहाय वृि
के साथ ऊजा बंधन इस कार एक
" ित पध संसाधन" उ म के िलए ितिनिध व करता है जो
दाता का चयन
णाल
दान करता है
बंधन के दल के
म रखेगा । अब बाजी तु हारे हाथ म है ...
अब से सही दोहन करने के िलए आव यक है । अ नवाय ऊजा आ डट ऊजा द ता पर यूरोपीय संघ के िनदश के तहत, ऊजा आिडट 5 दसंबर, 2015 से बड़ी कं पिनय के िलए अिनवाय बन गए ह । यह यान दया जाना चािहए एक मािणत ऊजा बंधन णाली आईएसओ 50001 मानक क आव यकता
को पूरा करने के
साथ इस नए दािय व को पूरा करने म भी मदद करता ह।ै
a quarterly magazine of the society of energy engineers and managers / India
के दायरा, आत ं रक संगठन, सेवा
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July - September 2016
ि टकोण कछ आव यक शत के साथ ु सफलतापवक लागू कया जा सकता है , अ ययन ू
SEEM NEMA
2016
SEEM National Energy Management Awards 2016
Inspiring Energy Efficiency Instituted in 2014, SEEM National Energy Management Awards recognize and support best efforts taken by various sectors for improving energy efficiency, thereby supporting India's journey towards climate change mitigation and sustainable development. SEEM National Executive Council invites applications for prestigious energy awards for 2016.
(Assessment Year 2016) Award Categories PLATINUM
GOLD
SILVER
BEST PERFORMANCE AWARD