Expanding the inventory

It all started with the LED bulb and a 100 Cities National Programme to promote it. But as the energy efficiency initiative by the Centre gathers pace, a host of products are being added to the inventory including the energy guzzling air conditioner, the humble fan and the farmer's water pump.

While the Bureau of Efficiency (BEE) has been busy attaching star-ratings to the products to inform consumers on what is best for their bills, Energy Efficiency Services Limited (EESL), a nodal agency of the Power Ministry, is charting out plans to help consumers replace old and stodgy products with smart, energy efficient ones.

“It has been exciting to see how new innovative ways are being worked out to broad base the energy efficiency moves,” says Saurabh Kumar, Managing Director of EESL, a company formed with equity participation of four power companies, NTPC, Power Grid Corporation of India, Rural Electrification Corporation Limited and Power Finance Corporation Limited. “As we go beyond pilot projects and expand the Ujala Scheme (the light replacement project), we are looking at new ways to cover more products which are energy intensive,” explains Kumar, the man driving the initiative on the ground.

There is a business case in all energy efficiency measures. Since the capital cost is higher, he says, “We have first initiated work on fans and water pumps and expect to follow this with ACs. Since the amount involved in replacement of ACs is much higher requiring about ₹40,000 per unit, it will be rolled out in a phased manner.” In the case of the agricultural pump scheme, the farmer and state power utilities do not pay any money upfront. The money invested by EESL is recovered over a period from the savings that come out of these efficient pump sets.It all boils down to managing demand side energy requirement efficiently and bringing down energy consumption by replacing old ones and setting up new efficient units. In the case of the LED bulb, EESL aggregates demand from various locations and initiates e-procurement of large quantities to get the benefit of price reduction.

Power consumers are sensitive to capital cost and upfront payment, when something like a fan, pump or an AC is involved. “It will take some time to make them understand how this works out to their advantage as they use. It is like the switch over of people from Incandescent bulbs to Compact Fluorescent Lamp (CFL) and now to LED bulbs,” he explains.

The case in point is the LED bulb project which was initiated in Puducherry about two years ago. Then a 7 watt LED bulb was priced at ₹310 when purchased in bulk as against the market price of about ₹600. It has now fallen to ₹55 in the recent bulk contracts placed for some of the states. This is the power of bulk purchases.

“Under the Ujala scheme, 14 States have thus far been covered with over 9 crore bulbs distributed. We expect to close this year with 15 crore. It is proposed to cover 77 crore in the next two years. Nine crore bulbs have reduced the energy demand by 2400 mw,” Kumar explains.

EESL runs on a sustainable profitable model by partnering with State governments and implementing projects. Apart from equity participation from the founding members, EESL raised funds from KFW, the German lending agency and AFD, the French institution, and is in the process of closing a $200 million deal with the Asian Development Bank and another credit line of $ 300 million from the World Bank.

“In addition, EESL raised about ₹2,000 crore through various banks and is in the process of finalising a ₹2,000 crore bond offer. We have partnered with India Infrastructure Finance Corporation Limited to work on the bond offer which we are planning to close within 3-6 months. This will enable EESL to further diversify. Last year EESL invested ₹ 3,000 crore and plans to deploy ₹ 7,000 crore this fiscal,” he says.

More in the kitty could well mean more clean energy schemes for the consumers, going forward.