Unlocking MSME Potential in the Lighting Sector Potential, Challenges & opportunities Dr Sandeep Garg IGEN-BEE Program 19th Nov, 2014

Drive for energy conservation Energy efficient appliances Alternative forms of energy Concerns of Government

LEDs have many advantages Light Emitting Diode (LED) Advantages of LEDs Long lasting and low maintenance Energy efficient Dynamic (digitally) color control Small (design flexibility) Directed light (= increased efficiency) Robust and vibration proof Turn on instantly No IR and UV radiation in the beam Cool beam of light Low voltage No mercury Conventional lighting sources Incandescent Halogen Fluorescent Gas-discharge

* Efficacy at Light source level, Level 0

Governments as early LED adopters Through LED deployment, Cities, States and Central Governments can: Achieve energy efficiency and carbon reductions Improve citizen safety in public spaces Save public money Support job creation in LED industries Accelerate scaling up process to achieve LED price reduction Deliver aesthetic revitalization of urban areas Improve resilience to volatility in energy prices Build a wider branding: the ‘high-tech, clean city’

Significant savings potential across segments Street Lights (Potential of up to 50% savings) – Street Lights with Fluorescent lamps: 2.5 Crore – Street Lights with HID, Gas Discharge lamps: 22.5 Lakh Down Lights (Potential of up to 80% savings) – Estimated Retail outlets with GLS/CFL points: 50 Lakh – Estimated points, with average 6 DLs per outlet: 3.0 Crore Home users (Retrofit LED lamps) – Government procurement under RGGVY per annum: 3.5 Crore – Other Government DSM and CDM schemes: > 10.0 Crore

Estimation of Total Space Lighting Demand Calculations Total Demand GW Residential 33 GW Commercial 10 GW Sector Public commercial Private commercial Residential Floor space in sq.m LPD in W/sq.m Space lighting demand in GW Space Lighting Demand = Floor Space × LPD Source: MoP/Shakti /PWC Study

National lumen demand Forecast for next Two Decades Lumen-hour demand in India is estimated to increase by approximately 82% in residential buildings and 72% in commercial buildings over the next two decades Source: MoP/Shakti /PWC Study

Penetration Based Savings Share of LED in Future Lighting Market It can be observed that LED market would capture a substantial portion of the commercial lighting faster than it can capture the residential market. This is inline with the payback curves and the general understanding of the market. Acceptability of newer technologies with a longer payback period is more in commercial consumers than in residential consumers Source: MoP/Shakti /PWC Study

Determination of Savings Potential Present Savings Potential Formula Estimation of Market Share Sector Energy saving potential in Giga watt hours GHG emission reductions in Million tCO2 Residential buildings Commercial buildings Source: MoP/Shakti /PWC Study

Penetration of lighting technologies The penetration of various lighting technologies in the present day’s lighting scenario which will play a key role in the forecasting of lighting demand and the development of key policies for further growth of the lighting industry. Sources Residential: Load research study in Gujarat by IRG/USAID; Himachal survey Commercial: Load research study in Gujarat by IRG/USAID Source: MoP/Shakti /PWC Study

Key Drivers for Penetration of LEDs in India 12 In the next two decades, market in India for interior illumination purposes is estimated to increase by 82% in residential buildings 72% in commercial buildings Today, the annual energy savings potential and GHG reductions are to the tune of 29,842 Gwh million tCO2 By 2031 more than 80% of the lighting market will be captured in both the building categories. The future market penetration in commercial buildings will be very aggressive as compared to the residential buildings. Demand aggregation as recommended by Government of India could be one of the key strategies to kick start the market penetration in large scale and well be very economical for replacing all the conventional technologies for all categories of consumers. This could also motivate the key players in the industry to establish production/manufacturing facilities in the country.. The LED technology is still emerging and there is significant potential for growth in the efficacy, cost effectiveness and life of the fixtures. Source: MoP/Shakti /PWC Study

Source: Deptt of IT, Govt of India

Contribution of MSME in ESDM MSME/SME sector largely contribute to the electronics sector Largest employer of skilled labour globally in the electronics sector Potential of large scale women employment in this sector Potential of tilting balance of trade in India’s favour because of domestic manufacturing. Large technical pool and talent available in the Electronics sector. Potential of making A TRILLION CHIPs a reality.

Support required: Encourage LED adoption Lack of Funding for MSME in the organized sector. Enforcing compliance to BIS - Products and application – Establish monitoring mechanism – Policy direction on LED adoption in Government projects for this sector – Insist on purchase from local manufacturer to encourage establishing LED production in India as per DietY criteria Policy directive for ensuring level playing field for MSME/SME sector in the procurement criteria. Government Guarantee to protect investment in large scale LED upgrade PPP/ESCO performance contracts Lack of support for Exports in this sector. A combination of PMA and export contribution in this sector can help ….

Support required: Encourage LED adoption Training of Skilled Manpower for retrofitting of this technology Intervention of Ministry for supporting the efforts of the MSME/SME Creating a mechanism of skilled training in this sector by supporting associations financially and technically in clusters. Creating separate credit lines for MSME sector for undertaking projects upto 5 crores without Collateral security. Aggregation of funding for large projects through the Ministry or through NSIC.

Sandeep Garg, Ph.D