Building Energy Efficiency in India An Overview BEE

Energy Conservation Act, 2001 Reduction of energy consumption using efficiency and conservation measures. Reduce the need to create new capacity thereby saving resources and green house gas emissions. Secure environmentally benign and sustainable growth Stimulate market transformation in favour of energy efficient products and appliances. Created Bureau of Energy Efficiency (BEE) as the nodal agency at the center and State Designated Agencies (SDAs) at the state level to implement the Act.

Sectorial Energy Consumption

Energy Consumption in the Commercial and Residential Buildings Commercial buildings 33 billion units Residential buildings 116 billion units

Electricity Use in the Commercial Sector is increasing !

ENERGY CONSERVATION BUILDING CODE [ECBC]- New Commercial Buildings Bureau of Energy Efficiency Government of India

Addressing Climate Zones Variations 1.Five climate zones 2.Composite (Delhi) 3.Hot Dry (Ahmadabad) 4.Hot Humid (Kolkata), 5.Moderate (Bangalore) 6.Cold (Shillong)

Existing Buildings- Road Map ESCO promotion- branding and rating of ESCOs Creating a pool of trained manpower- certification programme for energy auditors Partial Risk Guarantee fund being created Innovative financial instruments being evolved Standardised performance contract documents released Securitisation of performance contracts Strong focus on Government buildings- almost 500 large buildings being targeted

Implementation Strategy Partnership with PTC Scope: Flexible, overarching framework with collaborative activities and partnerships in the field of Demand Side Management (DSM) Areas of Cooperation: energy efficiency improvements in existing government buildings, financing as well as implementing other DSM initiatives in lighting, pumping and industrial sectors energy efficiency measures in PSSs, industrial complexes, SEBs/ Utilities, power plants, etc.

Market of EE in Buildings SNMarket TypeInvestment Potentia l, bn Rs Energy Savings (KWh) Energy Savings (MW) Pay Back Period* (Years) 1Industrial Generic Energy Efficiency Process Energy Efficiency billion billion billion Commercial Government Owned Offices Hospitals Private Owned Hotels billion 0.76 billion 0.87 billion 0.18 billion Municipal billion Totals billion

Financing Barriers for ESCOs The number of ESCOs is limited. Absence of strong balance sheet to secure funding.-Non- recourse finance is also not easily available given a high risk perception associated with this activity. Most banks require collateral of at least 100% of the loan value, which in light of the above, is difficult for ESCOs to provide. Lack of capacity of Indian banks to consider energy efficiency projects. Commitment Risk as a result of information asymmetry between the ESCOs and banks. Little or no experience in lending to ESCOs and thus are not familiar with the energy performance contracting model. Some banks are interested in the performance contracting model offered by ESCOs, but in most cases ESCOs do not sufficient assets to provide comfort to the bank. Focus on a minimum first cost and hence only rudimentary levels of energy efficiency are currently considered by building owners.

Partial Risk Guarantee Fund Act as a first loss, subordinated recovery guarantee and will be placed in a guarantee reserve account and will be paid out to participating banks in the event of a loss or default. Amount paid out will be equal to the amount of outstanding principal times the guarantee percentage, and will not cover accrued interest or other fees owed to the bank The lending banks will also pursue recovery procedures in the event of default, and will pay to PGFE any monies recovered after first satisfying its own receivables PRGF will act as guarantor and will enter into agreements with commercial banks who will originate transactions Guarantee percentage: Upto 50% of principal Maximum guarantee term: 5 years; Maximum single transaction guarantee limit: To be decided by the PGFE Committee Guarantee fee pricing: one-time up-front fees based on guarantee liability – range of 0.5% to 1.0% Recovery: PGFE subordinate to lending bank;

 8 Government buildings (including President House, PMO, Shram Shakti Bhawan) have been audited. Implementation of energy conservation measures in 4 buildings completed and remaining are on their way. Energy Efficiency Programme in Buildings MonthEstimated savings, kWhAcutal Savings achieved, kWh August, September, October, November,  Impressive Energy savings achieved in Rashtrapati Bhawan  17 additional Central Government buildings undertaken for second phase through ESCO mode.  Energy Audit study in 15 Government buildings completed