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Feature | November 2015

Energy efficiency needs to be incentivised so that consumers undertake it

Anil Sardana, Chief Executive Officer & Managing Director, Tata Power

How would energy efficiency help meet demand for power?

India ranks sixth in energy consumption in the world. But India´s generation capacity is far below what is required to sustain its energy demand. In this scenario, energy efficiency can play a significant role in optimising availability. It results in direct energy savings, which in return help conserve fuel resources and efficient fuel usage brings down emissions, thereby protecting the environment.

What is the potential growth for these applications in India?
The Ministry estimates the overall size of energy efficiency market to be Rs 74,000 crores. The market sentiment is evolving and people are more conscious about the energy efficiency and conservation. Consumers have realized that energy conservation is important and it also leads to substantial monetary savings. However, there is a need for incentivising it more so that consumers undertake energy management as an important aspect and does not really worry about the ROI.

What steps has Tata Power taken in this direction?
Tata Power has always been at the forefront of propagating energy efficiency and conservation in the country through stakeholder outreach programs like -´Be Green´ and -´Tata Power Club Enerji´.

We continue to carry forward by focusing on producing clean and green power, investing in and implementing eco-friendly technologies, reducing carbon footprint, joining global initiatives to combat climate change, scouting for clean power sources internationally, driving energy conservation and efficiency, creating sustainable livelihood for communities and creating green buildings and villages.

Kindly give examples of the technologies applicable to your power plants.
Tata Power is one of the earliest utilities in India to have embraced Demand Side Management (DSM) programs in a wide spread manner, more so due to its tremendous potential to save energy costs to the consumer. DSM programs, typically demand response is an integral part of smart grid solutions and thus is being adopted across the world over.

Tata Power is also a member of the Cleantech Forum, which helps it to keep abreast of the Research and Development (R&D) updates on clean technologies. Periodic visits to vendors and participation in conferences also assist in identifying and selecting companies for reviewing.

Different technologies in a variety of areas like CO2 absorption using algae, carbon capture reuse and storage, fuel cell (telecom tower application), gasification (biomass, coal), solar (PV, thin-film and concentrated thermal), micro-turbine wind energy generation, etc. are currently being evaluated.

Additionally, Tata Power is a key partner in this DELP program to promote energy efficient LED lamps and sensing a growing awareness amongst the consumers who have appreciated Tata Power for rolling out such initiatives.

Further, Tata Power´s Mithapur solar power plant at Gujarat uses the modular, proven, and widely deployed Crystalline Silicon Photo-Voltaic Technology to maximise power generation. The project helps in reducing an annual average of 37,696 tons of Carbon Dioxide, by producing 39,597 MWh per year (average) equivalent amount of clean energy.

In recognition of our commitment towards energy efficiency, the company´s DSM Programme, has also been awarded with the -´Innovative Energy Saving Service´ at the 15th National Award for Excellence in Energy Management 2014.

Is the government doing enough towards energy efficiency?
The government is undertaking a lot of initiatives under the aegis of Bureau of Energy Efficiency (BEE) that was set up as the statutory body to facilitate the implementation of the Energy Conservation Act. BEE is implementing a lot of energy efficiency programmes like the standards & labeling of equipment and appliances; energy conservation building codes for commercial buildings; and energy consumption norms for energy intensive industries. The labelling programme has been very successful. We also see the recent mindset of people changing. Consumers are more conscious of buying a star rated appliances and LED bulbs. The industry is also more focused on green buildings to reduce their resource consumption. Energy audit and energy management has also become an important aspect for the industry to check their energy consumption. Energy Services companies (ESCOs) are also gaining importance that can help in designing and implementation of energy savings projects.

How successful have frameworks like the PAT mechanism been?
The PAT scheme kicked off the energy efficiency movement in India. It has been a blessing in disguise for most of the Designated Consumers (DCs) as it has enabled the management implement several energy efficiency programs and reduce their energy bills. However, there was a lot of challenges faced by DCs with regard to PAT as the decision-making in India is still based on -´Investment and payback´ and not on -´life cycle costing approach´ leading to less efficient equipment.

Furthermore the recessionary trends puts lot of pressure on the top and bottom lines of the DCs. Low capacity utilisation, inconsistent quality and unreliable availability of coal leads are the major impediments for PAT cycle I under achievement. Lack of skilled labour leading to inefficient operations and thereby poor energy performance.

Due to the absence of price clarity for ESCerts, it was very difficult to justify any Energy Efficiency capex investments to the top management. The oversupply of ESCerts also affected the ROI for the investment in energy efficient projects by the DCs Regulatory. Regulators are still unclear about the framework and methodology for PAT. No guidelines or suggested measures has been put down by BEE for energy cost reduction. The industry stakeholders faced several gaps and suggest forward looking changes in India´s energy efficiency roadmap through the PAT scheme.

What are the challenges while executing these goals and policies in India?
The first challenge for executing energy efficiency goals in India is the mindset of the consumers. Energy efficiency and conservation is not something that can be taught, but these have to be imbibed as a habit amongst people.

Second challenge lies in the economic perspectives that means the Incremental cost of installing energy efficient equipments. As I had said, in India, the decision-making in India is still based on ROI and not on -´life cycle costing approach´. This has a major impact unless the policy is enforced by law.

Thirdly, the need for better market regulations will help drive the policies. We have seen schemes like REC not reaching the desired results. ES Certs as a tradable commodity, needs to break that fear.

Sensitisation of consumers is an important aspect here. Moreover incentivisation of energy efficiency initiatives can help get more consumers resort to energy efficiency.

What suggestions would you recommend be taken up to further aid this cause?
The schemes need more clarity to cover the risks associated with investments. Incentivisation, rather than enforcement can work better for promoting energy efficiency in India. New technology transfer may work, however, financing for such technology is a major cost that needs to be looked at. The government can also look at ESCO model for promoting such initiatives where the consumer risk is divided.

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