EESL – Using Innovative Business Models to Scale up EE investments Energy Efficiency Services Limited (A JV company of PSUs of Ministry of Power, Govt of India ) 20 th April, 2015, Bangkok

2 Rising demand for refrigerants AP Region  HFCs use growing at 8% per annum ( )-GHG emissions could be upto 19% of total GHG emissions in 2050 in BAU – from 1%  Annual emission could be 8.8Gt CO-eq by 2050  India – AC penetration about 4% - annual demand is about 3.5m

3 Barriers for no-ODS low-GWP Technologies  Low demand –though technology exists  High cost as compared to existing HVAC using HFCs of HCFC  Inadequate information about refrigerants – energy use awareness significant in several countries  Issues related to toxicity/ inflammability a concern Case Study – No-ODS HC Based AC -Commercially available in India 1.5 Ton -Energy efficiency more than 3.9 EER – best in class (5 STAR) -Cost Rs. 45,000 ($ 750) – about $ 100 more than other HFC based 5 STAR AC -EESL business model could help scale up demand for such ACs -Attract other manufacturers to invest in this technology

4 EESL – Replicable and Scalable Business Models -Third party investments in efficient equipments by EESL -Aggregating demand to bring economies of scale – drive down costs to make efficiency affordable - Risk mitigation – technical risk through back to back arrangement with suppliers. -Financial risk – BG, ESCROW and Revolving LCs – Approval by ERCs for bulb and agriculture programme (part of ARR) and state govt guarantee for Street Lights -Awareness and outreach in project areas -Ongoing investments in lighting EE of about $ 1.3 billion

5 EESL – Business Model - Addressing Barriers -First high cost barrier – providing LEDs at $ cents 1.3 -Monetise energy savings to pay for upfront investment ($ 5/ LED) -Aggregating demand – reduced prices of LEDs – from $ 6 to $ 1.3 No of incandescent bulbs replaced in AP 4.1 m Annual energy savings229 million KWh GHG emission reductions226,710 tCO 2 Reduction of installed load217 MW Actual capital investmentRs. 80 crore ($ 14m) Cost savings to DISCOM every year for reduced peak power Rs. 112 crore ($ 18.7m) Annual payments to EESLRs. 30 crore ($ 5m)

6 Moving towards market transformation LED prices reducing by aggregating demand Participating entities have increased

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