energy efficiency market in india · 4243 kwh 3808 kwh h ng annual monetized saving (rs. 1632)...

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Energy Efficiency Market In IndiaPRGFEE & Successful ESCO Model

Ashish JindalInternational EE Expert, EESL


Energy Efficiency Services Limited (EESL) – Who We Are

▪ A public Energy Service Company (ESCO) under Ministry

of Power, Govt. of India

▪ Established in the year 2009

▪ 100% share holding with Public Sector Enterprises

▪ Board of Directors represented by Ministry of Power and

Bureau of Energy Efficiency (BEE)

• NTPC Limited (India’s Largest Power Generating

Company | Market Cap as on 1st March 2016 – US $15.5

billion)

• Rural Electrification Corporation Limited (Market Cap

as on 1st March 2016 – US $2.4 billion)

• Power Finance Corporation Limited (Market Cap as on

1st March 2016 – US $3.1 billion

• Power Grid Corporation of India Limited (India’s Largest

Power Transmission Company | Market Cap as on 1st

March 2016 – US $10.7 billion

EESL is a joint venture company of four Public Sector Enterprises of Ministry of Power, Govt. of India

▪ Largest ESCO in the world

▪ Backed by Government of India and Promoters with net

worth of over $32 billion

▪ Implementing largest Energy Efficiency Portfolio in the

world

▪ One of the fastest growing companies in India – 10 fold

growth in one year


Energy Efficiency Market in India

Estimated to be over 22.81 billion $ (Source : EESL’s Business Plan 2016-2021)

Policy interventions and Support by Multilateral/Bilateral organizations resulted emergence of domestic and international ESCOs

Major constraints of ESCO• Limited Access to Finance • Limited Capacity in Public Sector• Government Procurement Regulations• Perceived Technology Bias• Lack of Simplified M&V Protocols• Payment Security Mechanism

Need of a Super ESCO• Undertake Risk

• Demonstrate Energy Efficiency ESCO

models


Barriers in energy efficiency space

• Lack of awareness of energy efficiency projects

• Lack of baseline data in energy efficiency

• Lack of ESCO credibility

• Lack of awareness about energy performance contracting

• Financing of energy efficiency projects • Lack of technical knowledge in FIs for evaluation of EE projects

• EE projects do not involve traditional assets such as land or buildings

• EE projects often involve new or innovative technologies


Institutional Structure of PRGFEE

Objective of PRGFEE

Features of PRGFEE

PRGFEE Application Process

PRGFEE Guarantee Claim Process

PFI Empanelment process

Benefits to ESCOs and PFI

Contents:


➢ To promote Energy Efficiency project financing in India

➢ Shall act as a Risk sharing mechanism to provide Participating Financial Institutions(PFIs)

with a partial coverage of risk involved in extending loans for Energy Efficiency projects.

➢ To directly support financing of Energy Efficiency(EE) projects by:

• Addressing the credit risks and barriers to structuring the transactions

• Engaging FIs and building their capacity to finance EE projects on a commercially

sustainable basis.

• PRGFEE to provide risk cover up to 50% of debt in an Energy Efficiency project.

➢PRGFEE Corpus Amount to be placed in a guarantee reserve account and paid out to

empanelled participating Financial Institutions (“PFIs”) in the event of loss or default in

Energy Efficiency projects.

Objectives of PRGFEE:


BEE has appointed the

Consortium of RECPDCL-REC-EESL

as the Implementing

Agency for PRGFEE

Institutional Structure of PRGFEE:


• Amount sanction by GoI : Rs.312 Crore, over a period of 3 years

• Guarantee Duration period : Maximum of 5 years per project.

• Maximum Guarantee coverage : Up to 50% of the sanctioned loan amount to a maximum of Rs.10 Crore per project,

whichever is less.

• Application fee : 0.1% of the maximum amount to be Guaranteed at the time of application.

• One-time Guarantee Fee : 1% of the amount guaranteed if borrower is a Male entrepreneur &

0.5% if borrower is a Women entrepreneur, payable after approval and beforesigning of Guarantee Agreement .

• Minimum Loan Amount Eligible : Rs.5 Lakhs

• Incentives for PFI : Guarantee fee shall be reimbursed to PFI on successful completion of project&

Expenses incurred by PFI for carrying out Techno-Economic Viability study of EEprojects shall be reimbursed after successful completion for first 80 projects.

Features of PRGFEE:


Process / Procedure for Enrolment

ESCO

• Develop detailed project report for EE projects

• Sign an agreement with client for implementation of the EE project

• Apply for loan to financial institution

PFI

• Technical and Financial evaluation of DPR

• Due diligence and Risk assessment of ESCO

• Apply for guarantee (prior to disbursement of payment)

PRGFEE

• Review of application

• Technical and financial evaluation of DPR

• Approval of Supervisory Committee

• Signing of agreement


Implementation rollout strategy


• Financial Institutions has to be Empanelled with BEE to participate in PRGFEE .

• Projects implemented by BEE Empanelled Energy Service Companies(ESCOs) or a JV of ESCOs with at least 50%share capital of BEE Empanelled ESCO or Deemed to be Empanelled ESCO, will be covered under PRGFEE.

• Guarantee coverage to be provided before disbursement of loan by PFI to ESCO.

• 70% of the eligible loan amount should be towards implementation of EE project or

50% towards EE and 50% towards RE and other costs.

Sectors in the Mandate of PRGFEE:

❖ Government buildings

❖ Private buildings having commercial or multi-storey residential accommodations

❖ Municipalities

❖ Small & Medium Enterprises

❖ Industry

Features of PRGFEE…..


PRGFEE Application Process


✓ Partial risk coverage for EE Loans.

✓ Only empaneled ESCOs, reassures competence of ESCO.

✓ Projects appraised by experts from energy efficiency, legal, risk advisory and financial field.

✓ Standardized evaluation process and structured transaction.

✓ Build confidence in tapping a huge potential in EE sector.

✓ Contributing towards climate change mitigation.

Benefit- PFIs


✓ Ease of financing for implementation of EE projects.

✓ Opportunity to take up a bigger size EE Projects.

✓ A common platform to approach PFIs for EE projects financing.

✓ Combined effort can sensitize utility owners on EE implementation, thus generating more business.

Benefit- ESCOs


Impact of our Business Model

• UJALA - over 300 million LED bulbs, 1.5 million energy efficient fans, 4.5 million LED tube lights

distributed

• SLNP - over 4.5 million LED street lights retrofitted

• BEEP - retrofitting work in 4,000 Govt Buildings under progress

• MEEP in 20 states for water & sewage pump replacement AgDSM – 1.1 million pumps under

replacement including 20,000 solar pumps

• 20 MW solar roof top for buildings in New Delhi

• 50 lakh Smart Meter Programme

• E-mobility with 10,000 Electric Vehicles for use of government.

• International operations 1

6


EESL – International

Canada

• Expression of Interest in Battery storage project

• Identification of partners initiated

Other Locations

• SE Asia – Vietnam and Cambodia – lighting/ Building projects

• South Asia – agreement for supply of 20 m LED in Nepal – 10 m in Sri Lanka in pipeline

• UJALA in Indonesia being discussed

• Proposal for supporting Saudi Arabia in pipeline

• Tri-generation

UK

• UJALA launched by Minister of Power in UK – target 100 million in 3 years

• Building EE project started in Indian High Commission

• Pipeline of projects worth investments of Pound 100m identified

• Process for selection of partners started

1

7


National Motor Replacement Program

Program Design Characteristics

• Program Administrator: EESL• Target Group : PAT Industries, SMEs

• Application: Motors in 1.1 kW to 22 kW driving Pumps, Fans/Blowers and Air Compressors

• Financial Model : ESCO (on deemed saving approach) and PMC (10% of the Project Cost)

• Project Duration : 3 years• Procurement : Open bidding process as per defined

technical specifications • Warranty : 3 years• Supply & Installation : Supply is by EESL,

Installation by industries• Post Installation Verification : On sample basis by

EESL• Value Addition : Motor Price Reduction, Motor

Load Survey, extended warranty, Best-Practice Guidebook, ½-day training on O&M of Motors

• Confirmed Demand so far : 70,000

Motor Size (kW) of IE-3

Specification

Target Numbers for

Replacement

1.1 15,000

1.5 15,000

2.2 15,000

3.7 15,000

5.5 15,000

7.5 15,000

11.0 10,000

15.0 10,000

22.0 10,000


Program Design Characteristics

Particulars Conventional Model EESL ModelMotor Type IE1 or Less

(Sub-Standard Efficiency)

IE3

(High Efficiency Class)

Typical Efficiency 7% higher

Pricing Retail/Supply Price by Supplier At least 30% reduction from

retail/supply price

Procurement Process By Client By open bidding

Price reduction Mechanism No Bulk Procurement

Investment By Client By EESL

Repayment --------- Through instalments from monetized

energy saving

Warranty 18 months 36 months

Installation By Client By Client

Other Value added Services ---------- Motor Load Survey

Technical Training

National Dash Board


Repayment through Monetized Energy Saving

4243 kWh 3808 kWh

43

5 k

Wh

Sa

vin

g

Annual Monetized

Saving (Rs. 1632)

Annual

Repayment to

EESL (Rs 1447)

Annual Retain of

Saving by Client

(Rs.185)

88%

12 %

Project Period : 3 Years

Project Cost :

Material Cost + PMC + ROI Warranty : 36 Months

A

B

A

B

Repayment to EESL through

Equal Quarterly Instalments

21

Operating Model of the Program

Company 1

Company 2

Company n

Participating Vendors

Tenders floated for Procurement

Supply of Motors

Distribution by Suppliers under supervision of

EESL

Supply

Implementation by Industry

Payment

3-Year Warranty (EESL Call Centres or Directly to Supplier)

EESL Outreach Agency

Outreach Program Planning Consumer Outreach Program

1

2

3

4

5

6

7

8

9

2

Only PMC

Upfront Payment

Equated Quarterly Instalments

http://www.google.co.in/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=Q4N06q-E2ThA1M&tbnid=0OtsV0ONinZ0RM:&ved=0CAUQjRw&url=http://www.in.undp.org/&ei=uGv7U8PSA8ueugS16YDYBw&bvm=bv.73612305,d.c2E&psig=AFQjCNF8yIz69LFU5Aw80cm5ckJnEWiFVA&ust=1409072434914214


Program Benefits to Customers


Financial Model (A Case)

S.No Particulars UNIT Values1 Estimated Annual Energy Savings kWh 778052 Fixed Tariff, Rs. per kWh Rs. Per KWh 83 Estimated Annual Cost Savings Rs. Per year 6224404 Investment for 50 motors (INR) Rs. 100000

05 EESL PMC fee (12%) Rs. 1200006 Estimated Capital Cost of the project (S.no. 4+

S.no. 5)

Rs. 112000

07 Total Estimated Repayment to be made by client

to EESL after considering interest on Debt and

RoE

Rs. 125372

8

8 Contract Period Years 39 Payout to EESL annually (6/8) Rs. 417909

10 EESL Share (9/3) % 67%11 EESL Quarterly repayment Rs. 104477


Case Situation

• Number of Motors: 50 nos.

• Baseline Efficiency Class: IE-1

• Baseline Parameters: 5.5 kW , efficiency 84.7%, loading 70%, 313 days/annum, 20 hours/day

• New Parameters: Efficiency class IE-3, 5.5 kW , efficiency 89.6%, loading 70%, 313

days/annum, 20 hours/day

• Baseline Annual Energy consumption: 14, 22,727 kWh (=50X(5.5/0.847)X0.7X313X20)

• New Annual Energy consumption: 13, 44,922 kWh (=50X(5.5/0.896)X0.7X313X20)

• Annual Energy Saving: 77805 kWh (=14, 22,727-13, 44,922) = 5.46 %

• Cost of per motor = INR 20, 000 with 50 nos.

• PMC Fee to EESL = 12% of (INR 20,000 * 50) = INR 1.2 lakhs


Pricing after 1st Bidding

S.No. Rating (kW)Typical Market

Price/ Motor (Rs)

EESL Price

/Motor (Rs.)

1 1.1 7625 5159

2 1.5 8388 6250

3 2.2 11002 7466

4 3.7 14051 9463

5 5.5 19584 13143

6 7.5 23018 15538

7 11 47045 25070

8 15 49223 30574

9 22 64688 39859

CG

ABB

Siemens

BBL


Program Status

▪Board Approval Obtained : Investment of Rs. 220 Cr

▪Bidding of 120,000 motors completed: CG, Siemens, BBL are selected vendors

▪ Pilot Studies for establishing Deemed Saving : Done [5-17% Saving obtained]

▪ IT Module for complete Program Management : Done

▪ Program Launch : March 2018 at New Delhi

▪Confirmed Clients : M&M, Tata Motors, Shree Cement, Nahar Group, Surat Textile Cluster etc.

▪ Legal & Financial Vetting of Agreement Document: Done


Building Energy Efficiency Program (BEEP)

https://www.google.co.in/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjmieDhvunXAhUMNY8KHfAKBAsQjRwIBw&url=http%3A%2F%2Fwww.hindustantimes.com%2Findia-news%2Frss-affiliates-blame-niti-aayog-for-anti-farmer-policies%2Fstory-V6nCLkp1tBrw6LEZVi7VrK.html&psig=AOvVaw3ho0Vr_19xxc1hlzyv9cUp&ust=1512240948834577


Issues and Opportunities in Buildings

Improper O&M

Practice

Under-utilization of

equipment

In-efficient system or

equipmentWastage

Loss of Energy

Purchase more from

gridGenerate more at site

More Fossil Fuel Consumption

High GHG Emission

National Prospective

Building Prospective

More Energy Cost

Less Competitive

Controllable(Management,

Technology & Practice)


Proposed Business Models

•Model 1: If 100% investment is made by customer,

•Model 2: If 100% Investment by EESL (Preferred Model)

PMC

Walkthrough Survey

Facilitation in procurement

Warranty

Project Monitoring

ESCO

Investment

Walkthrough Survey

Facilitation in procurement

Warranty (Extended)

Project Monitoring

One-time Fees to

EESL

Project Cost

= Upfront Investment

+ PMC + Interest on

Debt & Equity


Successful ESCO Project by EESL : A Case

Project : Energy Efficiency Retrofit Program in a High-Rising Building

Energy Audit

(Walk Through)

Preparation of

Scheme

Signing of MoU

with Client

Identification of

Intervention

Implementation

Warranty Support &

Payment Recovery

Lighting (LEDs)

Air Conditioning (5-Star ACs)

Deemed Saving Approach

HEAD UNIT Values

Estimated Energy Savings KVAh 123638

Fixed Tariff, Rs. per kVAh $ Per KVAh 0.125

Estimated Annual Cost Savings $ Per year 15465

AMC getting free for Client on Air Conditioning

($ 12.3/AC/Annum)Per year 332.30

Total Cost Savings $ Per year 15796

Investment, Rs. $ 35888

EESL PMC fee $ 4306

Estimated Capital Cost of the project $ 40194

Equity Portion (20% of capital cost) $ 8039

Return on Equity (23.7%) $ 5894

Debt portion (80% Cost of capital) $ 32156

Debt Interest (11%) $. 10078

Total Estimated Repayment to EESL $ 56167

Contract Period Years 5

Payout to EESL annually $ 11233

EESL Share % 71%EESL Quarterly repayment $ 2808

No. of repayments Quarterly 20

28% Reduction in Energy

Consumption


BEEP Approach & Methodology

Inventory

Collection

Sign Agreement

Finding Opportunities in

Lighting, AC, Water

Pumping, DG Sets etc.

Estimate

Baseline

Prepare

Scheme

Walk-Through

Survey

Procurement of

MaterialPrice Discovery

100% upfront

investment by

EESL

Open Co

mpetitive Bidding

ImplementationQuarterly

Repayment to

EESL

Deemed Saving = (Baseline Watt – New Watt) x No. of

Inventory x Run Hour per day X Days per Year

1-3 months 2-6 months After

Implementation


Impact in Electricity Bill in Few Buildings after Implementation

Saving

12 % - 75%


Solar Projects

• Solarization of Agricultural Feeders

• 200 MW solar projects on open/unused spare lands of MSEDCL substations with a tariff of Rs 3/unit for 25 years

• Capacity: 0.5 MW to 2 MW

• MERC approved the draft PPA on 9th Jan 2017

• Rooftop Solar PV projects

• Entered in to and MoU with NDMC for implementation of Solar rooftop projects

• At Schools, Colleges, Govt buildings, institutions, Embassies etc. under CAPEX and RESCO modes

• Tariff: Rs. 3.87/unit with 3% YoY escalation.

• Grid connected Solar PV based Agricultural pump sets

• Higher DC side capacity of Solar PV enabling sale of excess power

• The energy exported by Mini grid projects will be paid at a price agreed in PPA by the DISCOM/State Govt. for 25 years


MEEP Background

• EESL signed a Memorandum of Understanding

with Ministry of Urban Development (Govt. of India)

on 28th September 2016

Objective

• EESL to facilitate engagement between ULBs and

State governments in the areas of Energy

Efficiency

Scope

• Develop overall strategy for taking up Energy

Efficiency projects

• EESL to take up implementation of Energy Efficient

projects


E-Mobility

• Successful tender completed for procurement of 10,000 e-cars

• Successful tender of 250 chargers (180 AC and 70 DC chargers) Completed

• Charger for 1800 AC and 200 DC chargers floated for building infrastructure in other states

• Planning and execution of program in all states in process

• Impact of replacing the entire government fleet of 500 thousand ICE cars with electric

vehicles:

3

6


Smart Meter National Programme

• Smart Meter National programme aims to replace all 250 million conventional meters with

smart meters in India

• Procurement of 5 million smart meters and System Integrator completed

• Strategy: Attract utilities in the programme to aggregate demand

• Business Model: No Upfront investment; Improved billing efficiency; Repayments part of

enhanced revenue

• The replacement of 250 million meters will result in:

3

7


Contact Us:

Energy Efficiency Services Limited(A Joint Venture of PSUs of Ministry of Power, Govt. of India)

A-13, IWAI Building, 4th Floor, Sector - 1

Noida – 201301, Uttar Pradesh, India

Ashish Jindal

+91 9643776448

energy efficiency market in india · 4243 kwh 3808 kwh h ng annual monetized saving (rs. 1632)...

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