1. Energy Efficiency: Scaling up Implementation with innovative business models Presentation to FOR 24 th June, 2016 Saurabh Kumar Managing Director Energy Efficiency Services Limited

2. Energy Efficiency: Scaling up Implementation

3. Progress so far LED Programme – coverage in 17 states/ UTs – more than 12.2 crore LEDs distributed benefitting over 3.5 crore households More than 10 lakh street lights replaced in over 110 ULBs – no capital costs for ULBs – payments through savings Energy efficient fans programme initiated in AP and UP – target 20 lakhs this year Agriculture pump projects in Karnataka, AP, Maharashtra – targeting 10 lakh pumps this year Government buildings EE through CPWD Turnover increased 10 times (> Rs. 720 crore) -Avoided capacity addition of over 3200 MW

4. EESL – Business Models Two different models – both on the principle of aggregation of demand and Pay As You Save (PAYS) - Repayments from energy and maintenance cost savings On Bill Financing Model- Interventions directly with consumers – LEDs, Fans, ACs, etc Consumers (for LED bulbs and Fans) pay EMIs through their electricity bill for 1-2 years ESCO Model- Dealing with institutions like Buildings, Agriculture, DISCOMs, Municipalities Implementation and investment by EESL in the whole facility Payments from savings in energy and maintenance cost Monitoring and verification – regularly on deemed energy savings

5. Market Aggregation - outcomes Share of LEDs in Indian lighting market increased from less than 1% to 15% in 1 year Retail prices reduced by 1/3 rd in last one year Average price last year ~$ 5- 7 – now between $ 1.5 - $ 4 High levels of awareness about LED products and their energy efficiency benefits Higher acceptability of ‘LED model’

6. Energy Efficiency Services Limited LED (UJALA), Fans and Tube Lights

7. Unnat Jyoti by Affordable LEDs for All (UJALA) LED Model 2-10 high quality 9 W LED bulbs to consumers – entire investment by EESL Cost of LED, including distribution, awareness costs, EESL return on investments, all taxes is between Rs. 75- Rs. 95 ($1.1 to $ 1.3) – outcomes of market aggregation On Bill Financing – PAYS through energy bill 3 year free replacement of LEDs against technical defects Online monitoring of programme through www.delp.inwww.delp.in Strong quality control – fault rate < 0.31%

8. UJALA – Implementation Model

9. UJALA – Awareness Strategy High intensity campaign – national and city level to engage stakeholders All media vehicles used – stress on digital media

10. UJALA – Awareness Strategy (2)

11. UJALA – Innovative Real Time Monitoring UJALATarget No of LED bulbs to be replaced 770 m Coverage Entire country Annual energy savings100 b KWh Estimated reduction of peak load 20,000 MW Reduction of bills of consumers Rs. 40000 cr Annual GHG emission reductions 79 mt CO2

12. UJALA – Other Benefits Encouraged Make In India – domestic manufacturing increased from about 100,000 per month to 30 m per month

13. Energy Efficient Fan Programme 2-50 BEE 5 STAR rated fans to consumers – 50 W fans as against 75-80W Consumers can pay Rs. 1100 upfront or pay Rs. 60 EMI in 2 years from electricity bills – Pay As You Save – LED strategy being used Benefit of reduced fan prices passed on to consumers – retail price of 5 STAR fan between Rs. 1700 - 1800 – EESL bulk price Rs. 764 2 year free replacement of fans against technical defects Programme started in AP and UP – to be expanded to Maharashtra, Rajasthan, Delhi, etc LED tubelights being taken up

14. Energy Efficiency Services Limited Air Conditioners

15. Cooling Demand Potential in India Environmental Energy Technologies Division 15 Compared to other regions, climate in India has higher cooling requirements Size of the bubble indicates population Cooling degree days indicate the overall space cooling requirement due to heat and humidity. Source: Lawrence Berkeley National Lab (LBNL), USA

16. India 2011 AC demand by 2030-2040 – China Experience Appliance Penetration in Urban China Although current penetration in India is low, room AC sales are growing at 10- 15% p.a. for the last several years Room AC prices have fallen by 60% in the last decade Current Room AC penetration is ~ 5%; could increase to more than 70% in the next 20 to 30 years Rising incomes made the AC sales in urban China jump rapidly; between 1995 and 2008, room AC penetration in urban China increased from 5% to over 100%. Src: Zhou et al (2012) Source: Lawrence Berkeley National Lab (LBNL), USA

17. Significant contribution of ACs to peak demand in India Environmental Energy Technologies Division 17 Preliminary estimates show that the additional demand from room ACs in India is equivalent to 200-300 large (500 MW) power plants by 2030 i.e. 100-150 GW and 10% of energy demand (~ 300 TWh) This implies Significant addition to the coal capacity, OR Shortages continue with diesel generators or inverters on the margin One AC 2 Ceiling Fans 2 Incandescent Bulbs 4 Tubelights One TV One Refrigerator Source: Lawrence Berkeley National Lab (LBNL), USA

18. AC Contribution to the Peak Demand Environmental Energy Technologies Division 18 Mumbai Delhi Space cooling demand makes the summer peak demand rise significantly in urban areas like Mumbai and Delhi Afternoon peak difference = ~40% (driven mainly by commercial AC demand) - Night peak difference = ~60% (driven mainly by residential AC demand) ~2200 MW (60%) ~1600 MW (40%) Load Curves on a Summer and Winter Day (Average) in Mumbai and Delhi ~850 MW (40%) ~700MW (25%) Source: Lawrence Berkeley National Lab (LBNL), USA

19. ACs (or space cooling in general) are already making the urban load peakier; this has three consequences for consumer tariffs: Power purchase costs increase due to expensive peak power purchase Generator fixed costs (p.u.) increase due to low PLFs Distribution costs increase (p.u.) due to lower load factor Consumer tariffs may increase due to peaky load In Delhi, average distribution cost has increased by 40% in the last 5 years In Delhi, average power purchase cost has increased by 50% in the last 5 years Data Src: PFC Report on Electricity Utilities Average Distribution Cost (All utilities - Delhi) Average Power Purchase Cost (All utilities - Delhi) Source: Lawrence Berkeley National Lab (LBNL), USA

20. International Experience - Similar Environmental Energy Technologies Division 20 California (US)New South Wales (Australia) In California, the difference between the summer (July) and Autumn (October) load is nearly 15GW (~30% of the peak load) In New South Wales, load during the hottest days is triple that of average days Source: Lawrence Berkeley National Lab (LBNL), USA

21. Current AC penetration levels in residential consumers Environmental Energy Technologies Division 21 Src: EESL Load Research

22. Despite efficiency improvement, AC prices continue to fall 22 India – AC Efficiency and Prices Japan – AC Efficiency and Prices In Japan, between 1995 and 2005, the AC efficiency increased by 90% and the prices fell down by 80% (inflation adjusted) In India, between 2006 and 2016, the AC efficiency increased by 20% and the prices fell down by 35% (inflation adjusted) Source: Lawrence Berkeley National Lab (LBNL), USA

23. Environmental Energy Technologies Division 23 Long Run Marginal Cost of Supply Cost Effective Potential (Utility) Energy = 105 TWh/yr Peak = 50 GW Compressor Eff Improvement ISEER = 3.3 Highest Eff Compressor and Heat Exchanger ISEER = 7.0 Utility based AC programs - cost effective Cost of Conserved Energy (CCE) - incremental cost of saving one unit of electricity; if CCE is lower than the Long Run Marginal Cost, efficiency improvement is cost-effective for the utility. CCE for efficiency improvement and the total energy saving potential; total cost-effective potential by 2030 is 105 TWh/yr. Source: Lawrence Berkeley National Lab (LBNL), USA

24. Market Aggregation – accelerate efficiency 29.09.2016 Source: EESL calculations 1.1 star AC with 3.1 ISEER taken as base case. 2.EESL estimates conservatively taking a 70% mark up on ‘Mfg cost’ discounting dealer margins. This costs is significantly lower than projected by ‘bottom up analysis’ due to ‘market aggregation’ and expected reduction in cost of efficient technology. 3.Payback time based on expected consumer savings over 1 star AC 4.Higher volumes could drive costs down – as in LEDs ISEER5.05.56.0 Expected price40,00045,00051,000 Simple Payback (Years) +10 % price2.93.23.5 No change2.32.63.0 -10% price1.82.02.5 -20% price1.21.61.8 EESL price trend expectation

25. Energy Efficiency Services Limited Ag DSM

26. 2 crore Grid Connected Agricultural Pumps Total consumption – 173 b KWh Total subsidy – Rs. 65,000 crore/ year 30% savings by replacement with BEE 5 STAR pumps 40 m t CO 2 Reduction per annum INR 21,861 crores Subsidy savings/annum 51 b KWh savings Ag DSM Potential

27. Ag DSM – Business Model of EESL  BEE 5 STAR rated smart pumps given free of cost to farmers with 5 year maintenance – annual savings of Rs. 3000 – 4000 to farmers – remote operations  Minimum 30% energy savings – reduction in connected load by 30%  Entire capital investment by EESL  Distribution of pumps, training of local service providers and enhanced awareness by EESL  Monetised reduction of state government subsidy used to pay for EESL investment over 5-10 years

28. Implementation Methodology Over the counter distribution – similar to UJALA of BEE 5 star rated and mobile operated Smart Control Panel Free 5 year on-site warranty Installation support by trained local technicians Distribution Agency to be selected having local connect - start-ups to be encouraged Start /Stop Motor by Mobile Phone Set/Monitor/Control Motor from Mobile In-built Electrical Protections Site Status / Alerts through SMS & Voice Call in Regional language – Data communication of Electrical parameters Saves Water Saves farmer’s time & fuel Panel & Motor anti-theft features

29. Thank You For more information contact skumar@eesl.co.in www.eesl.co.in WWW.EESL.CO.IN| 29