As the saying goes, the Stone Age did not end because we ran out of stones; we transitioned to better solutions. The same opportunity lies before us with energy efficiency and clean energy
— Steven Chu, American physicist, Nobel laureate and former US Secretary of State for Energy.
Energy Efficiency as a service is gaining traction with innovative models, many of them disruptive. But this could be the game changer at a time when climate change is pervasive and addressing it demands fast and ambitious action. The longer we wait, the more irreversible the damage and higher the cost of acting.
The India energy efficiency market — a space in which energy services companies (ESCOs) operate — is estimated at ₹1.5-lakh crore. And the energy-saving investment potential in India is estimated at ₹8,40,852 crore by the year 2031, under a moderate saving scenario with the industrial sector constituting the highest energy-saving investment potential.
As things stand, India has committed to the UN Framework Convention on Climate Change to reduce its carbon footprint by 30-35 per cent by 2030, with 2005 as the base year. India has followed a market development model of ESCOs through a market-based comprehensive network and shunned the path of subsidising energy efficiency taken by countries such as China. The total investment made by industry in achieving its targets of energy efficiency so far is estimated at ₹60,000 crore.
Limited access to finance
The growth of ESCOs has been slow as access to institutional finance is limited. But things are changing rapidly as innovation, automation and innovative services are gaining ground. Apart from heating and cooling, lighting and other segments, such as efficient drives, pumps and motors, are among the new areas.
BusinessLine interacted with some of the leading players in the sector to get an insight into how the sphere of energy efficiency is evolving, bringing about transformation, helping in savings and addressing the larger problem of greenhouse gases (GHG).
The Bureau of Energy Efficiency (BEE) is a nodal government agency under the Ministry of Power set up in March 2002 to develop strategies which will increase the conservation and efficient use of energy. The BEE, through its standards and labelling programme, has been empowering consumers to make informed choices on energy-efficient gadgets. Its Perform Achieve Trade (PAT) initiative has worked on reducing specific energy consumption in energy-intensive industries.
Working in tandem with BEE is Energy Efficiency Services Ltd (EESL), a government-owned ESCO, which is implementing the world’s largest non-subsidised energy efficiency portfolio across sectors such as lighting, buildings, e-mobility, smart metering and agriculture on a scale which no other organisation has been able to achieve. Says Saurabh Kumar, Managing Director of EESL: “Till date, the Bureau of Energy Efficiency and EESL programmes have cumulatively saved 20,000 MW. EESL is always striving towards unlocking the energy efficiency market in India.”
According to him, power consumption in India now stands at 1,160 b kWh, with total installed power capacity of 344.68 GW. This is expected to grow 2-3 times by 2030. “Going forward, our target is to save 500 b kWh of energy by 2030 and avoid capacity addition of 100 GW. This will result in reduction of 550 million of GHG emissions,” says Kumar. EESL has created a blueprint for the commercial growth of energy service companies in the energy efficiency space, he adds.
Indian industry is also aware of the urgency and need to conserve and save on energy use. According to Ravichandran Purushothaman, Chairman of the CII’s National Council for Energy Efficiency, the energy portfolio is evolving and, within three or four years, there will be a significant impact on revenues from electric vehicle services, generation and storage at home, and microgrid as a service.
Energy as a service
“Energy as a service and comfort as a service could be the game changers with business model innovation and become mainstream, addressing commercial and industrial clients and residential customers. Utility executives are testing and launching new business models,” explains Purushothaman.
Adds Meher Pudumjee, Chairperson, Thermax Ltd, an engineering company involved in energy and environment, “Of late, energy efficiency as a new growth model is gaining increasing attention and acceptance from various stakeholders. Indian industry has been one of the early adopters in fostering and promoting energy management practices and approaches and have demonstrated that this new paradigm augurs well for a healthy bottom-line for companies.”
She notes that innovative and futuristic technologies — such as edge computing, digitalisation, advanced coal technologies, low grade waste to energy and retrofitting — are being adopted and imbibed across sectors.
Governmental push
However, CII’s Purushothaman acknowledges that though much is being done, energy efficiency still requires a push from the government if it must be maximised. “Energy efficiency is unfortunately not a strategic focus area in many industrial sectors,” he observes. “To unleash its potential, a legislative framework is needed. Heavy energy users must be given the opportunity to adapt so that they remain competitive and can maintain their growth while implementing changes.”
Industry experts agree that the need of the hour is to take the message of energy efficiency to MSMEs, SMEs and other related sectors. “As we go ahead,” says Pudumjee, “we should focus more on developing and demonstrating more cost-effective, scalable technologies. Alternative technologies will have to be much more efficient to give the right payback. Appropriate financing mechanisms will also play a catalytic role in further accelerating the energy conservation movement in the country to the next level.”
Cement sector push
Many domestic cement companies have been global pioneers in energy efficiency. Says KN Rao, Director, Energy & Environment, ACC Ltd, a cement major: “The Indian cement industry has carved a niche in pioneering some of the most innovative and sustainable technologies and delivering environment friendly products and solutions. For instance, the sector has developed its own Low-Carbon Technology Roadmap — a country-level, sector-specific roadmap to mitigate climate change, which is a first of its kind globally.”
Under the roadmap, CO2 intensity reduction is achieved by increasing the utilisation of waste streams in cement kilns by 4 per cent, increasing fly ash utilisation by 4 per cent and slag utilisation by 17 per cent. The overall current best achieved specific energy consumption (SEC) is 63.9 kWh/MT in cement.
With the government focus on housing for all, urban infrastructure, metro projects, freight corridors, national highways and ports, the domestic cement industry is in for more exciting times and reinvention for sustainable cement production is its focus. The sector expects to further build on R&D breakthroughs happening in the areas of carbon capture, nano particles, product stewardship, renewable energy, circular economy and other related areas. It will continuously support the nation in its low carbon journey and with concerted efforts ultimately achieve the status of ‘green champions’, says ACC’s Rao.
According to Kiran Ananth, Principal Counsellor & Head, Energy Department, CII-Godrej GBC, pursuing the energy management path not only addresses ecological issues but also equips a company to become globally competitive and future ready. Energy management also encourages companies to adopt a multi-pronged approach and prompts them to regularly take a holistic view towards energy use.