EESL’s perspective on implementation of Bachat Lamp Yojana N.Mohan (Asst. Manager) & Pramod Kumar Singh (Technical Expert) 16 th March, 2011

Outline Focus areas of EESL Different business models likely to be adopted by EESL EESL’s strategy to identify project areas for BLY implementation EESL’s approach to maximize project returns in BLY projects EESL supports BLY to be showcased as utility driven program Mitigation measures to minimize perceived risks Outlook on CDM market beyond 2012 Suggested way ahead to underpin investment in BLY 2

BLY is one of the main focus areas of EESL 3 ESCO - Investment & Implementation of EE - Buildings - MuDSM in sewage & drinking water pumps - Agricultural Pumping System - Bachat Lamp Yojana ESCO - Investment & Implementation of EE - Buildings - MuDSM in sewage & drinking water pumps - Agricultural Pumping System - Bachat Lamp Yojana Monitoring & Implementing Govt. Schemes - S&L Programs - EM & EA Certification Examination - PAT Scheme - SEEP Monitoring & Implementing Govt. Schemes - S&L Programs - EM & EA Certification Examination - PAT Scheme - SEEP Consultancy Organization - CDM & EE Consultancy - Tendering support for EE projects - Annual Energy Saving Plans - EE in Industrial Sector - Demand Side Management Consultancy Organization - CDM & EE Consultancy - Tendering support for EE projects - Annual Energy Saving Plans - EE in Industrial Sector - Demand Side Management Resource Centre - Capacity Building of SDAs, Utilities & other stakeholders - Training under 3L Program - Operation of energy manager training website Resource Centre - Capacity Building of SDAs, Utilities & other stakeholders - Training under 3L Program - Operation of energy manager training website

Different investment models likely to be adopted by EESL in BLY 4 Model 1: Finding an investment and implementation partner through open competitive bidding Model 2: Finding an investment partner through competitive bidding and then finding a supplier and implementer on lowest cost basis Model 3: EESL partnering with state agencies (SDA/REDA/SPV etc.) in investment and implementation on mutually agreed shared benefits Model 1 adopted in 7 circles of Punjab allotted to EESL

EESL’s strategy to select project areas 5 Target utilities having higher potential of CER generation Select areas with low existing CFL penetration – Bring benefits of scale to the project Select areas having dense population – Ease in distribution / survey / collection / disposal at reduced cost Meticulous CDM project area (CPA) demarcation – Decide project size close to threshold criteria (60 GWh) to reduce fixed cost associated with documentation, survey etc.

EESL’s approach is to maximize project returns 6 Identification of project area having higher CER generation potential Negotiating terms with utilities for continuous support Making the arrangement/model/agreement bankable for convenient financing– e.g Escrow account in partnership, forward agreement for CERs offtake CFL of higher life time and superior quality to ensure longevity of performance Disposal as per CPCB/International guidelines for greater acceptability of CERs from buyers Low gestation period for early registration and CER generation Performance guarantee from bidders to screen non-serious players that otherwise could result in project delay

Extended support from utilities is pertinent for program success – Illustrative examples Awareness creation – better penetration, lesser misuse, eased distribution Support during mandatory surveys – baseline, Qpj, monitoring etc. Periodic spot checks through utility’s billing personnel Role in case of misuse – sending notice to households involved in misuse Role during disposal of ICL/CFL – collecting information from households regarding fused CFLs through billing personnel 7

Conducting detailed risk analysis and addressing it through proper planning Risk in buying inappropriate CFL mix – Two stage baseline survey first from utilities and second by EESL before implementation. Flexible tie up with CFL supplier to cater to deviation in lighting mix Risk in erroneous inclusion – Documents needed to prepare CPA DD are cross checked before submission and substantiated with proofs – e.g. latest tariff order of states for T&D loss, recent CEA baseline report for grid emission factor etc. Risk in high CFL failure – CFL specifications to tolerate power quality variation, selection of higher life time CFL Risk in CFL distribution process – Conducting pilot distribution, Prolonged awareness campaign, Final distribution through kiosks and/or household visits, Risk in leakage – Qpj survey immediately after CFL distribution, periodic spot checks by utility personnel, action against households in case of misuse with utility support Risk in non performance by different agencies – Partial investment by EESL, performance guarantee from agencies involved Risk in monitoring – Survey samples based on random households selection Risk in carbon market – Portfolio of CERs under bilateral and spot selling options 8

Can BLY survive amidst looming CDM uncertainty? Post 2012 the market may allow migration of pre 2012 registered CDM projects to other regional markets Other emerging schemes may have provision of international offsets making CERs fungible – Japanese Voluntary Emissions Trading Scheme BLY being a small scale CDM project, may have the advantage of less stringent MRV procedures whereas other projects may face tough MRV criteria beyond 2012 BLY being a social development project, may have higher degree of acceptability as compared to other projects 9

Suggested ways to take BLY forward  Participation through PoA – ease in monitoring & verification, less transaction time & cost as compared to standalone CDM Projects.  Registration before 2012 – high probability of CER off take  Partnership with EESL – to maximize project benefits and sharing investment risk  Extensive role of utilities – for greater program acceptance 10

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