The UK is readying to import its lock, stock and barrel. A few countries are closely studying it with the intent of imbibing it. But, it is in India that the world's most ambitious LED distribution programme is redefining the way electricity is efficiently consumed and an ecosystem for cost-effective lighting products created.
Towards the beginning of 2015, India initiated the world's largest light-emitting diode (LED) distribution programme with targets that could only be termed overtly aggressive. To be implemented by the energy service company (ESCO), Energy Efficiency Services (EESL), in conjunction with electric distribution utilities, a total of 770 million LED lights are to be distributed by March 2019. This is projected to result in an annual energy saving of 105 billion kWh and reduction in peak load by 20,000 MW. It is also likely to reduce CO2 emission by nearly 80 million tonne (MT).
A conventional light bulb converts only 5 per cent of the electrical input to light. On the other hand, the energy-efficient LED bulb consumes only one-tenth of the energy used by ordinary bulbs to provide similar or better lighting. To help consumers overcome the high cost of LED, the government started the Domestic Efficiency Lighting Programme (DELP) on bill financing scheme under the flagship Unnat Jyoti by Affordable LEDs for All (UJALA) programme, the acronym simply implying 'light' in Hindi.
The main objective of the UJALA programme is to promote efficient lighting, create awareness about efficient equipment that reduces electricity bills and preserves the environment. The programme replaced the Bachat Lamp Yojana, which was launched to distribute the compact fluorescent lamps (CFLs) to households. Concerns over the presence of mercury in CFL lamps were among the primary reasons behind the shift to LED.
By the end of June 2018, over 300 million LED lights were distributed through special counters in cities. Moreover, EESL's Street Light National Programme (SNLP) was instrumental in retrofitting over 6.1 million conventional street lights with LEDs in 941 municipalities across India. This has led to average energy saving of 4,097 million units annually and reduction of 2.82 MT CO2 per year. 'Besides the return on investment (ROI), our business model has reflected human impact, with well-lit and safe streets enabling businesses to stay open longer and providing better driving conditions,' surmises Saurabh Kumar, Managing Director, EESL.
Kumar, who has been at the helm of affairs at EESL since 2013, has been leading the programme from day one as the head of the company jointly owned by the state-owned NTPC, Power Finance Corporation (PFC), Rural Electrification Corp. (REC) and Power Grid Corp. of India.
Electricity consumers across all 29 states and seven union territories with a metered connection from their respective electric distribution company can get the LED bulbs at about 40 per cent of the market price. They also have the option of paying for the LEDs in equated monthly installments. Under the programme, 20W LED tube lights and India's Bureau of Energy Efficiency (BEE) five-star rated energy efficient fans are distributed. The prices were further rationalised following the implementation of the Good and Services Tax (GST) in July 2017. The 20W LED tube lights are 50 per cent more energy efficient than conventional 40W tube lights and are available for Rs 220. The energy efficient fans are considered 30 per cent more energy efficient than conventional models and are priced at Rs 1,200 per unit.
Three years down the line what had made UJALA into a textbook case? So much so that the plans are now afoot to export the concept to even the UK. 'It is important to understand that the government is the biggest marketer in India. Therefore, if it has taken up an initiative of this magnitude, the kind of awareness that is generated among all stakeholders is bound to be very high. We find a lot of demand getting generated due to the effort,' opines Vivek Yadav, Senior Vice President, Havells India Ltd. He adds that such government initiatives are not only helping expand the market for certain lighting and electrical products but also challenging domestic manufacturers to innovate and enhance their product lines.
Creating demand through incentives
Upon being quizzed about the success of the programme, Kumar declares, 'The upfront cost is borne by EESL and the monetised savings over time are used to recover the cost of investment. This leads to a reduction of initial cost of adoption of transformative solutions.' This is mainly accomplished through innovative risk allocation of procurement, installation, service and maintenance, and aggregation of demand by including incentives for all stakeholders. Tenders are floated for large procurements to leverage economies of scale and benefits passed on to consumers to stimulate more demand.
The LED industry is projected to grow exponentially on the back of these initiatives. According to projections shared by the Electric Lamp and Component Manufacturers Association (ELCOMA) India, the leading body of lighting manufacturers in the country, it is expected to account for 60 per cent of the country's overall lighting industry by 2020. For his part, EESL's Kumar often likes to term UJALA as the Make in India programme's biggest success story as it has helped catalyse domestic manufacturing by creating favorable market conditions for the development of new and allied industries. The Indian LED market has grown nearly 10 times over the past five years, while annual domestic production has increased from approximately 3 million LED bulbs in 2013 to 62 million in 2015.
'UJALA has created an ecosystem for high-quality products even while enabling LED manufacturers to build a business that will potentially be able to compete internationally as it will also help meet the growing demand for affordable LEDs globally,' he asserts.
Rakesh Zutshi, President, ELCOMA India & Managing Director, Halonix Technologies, agrees with Kumar's assessment. He says, 'The LED lighting market in India is projected to register a CAGR of over 30 per cent during the period 2016-21. In view of this, we expect the LED segment to grow between 40-45 per cent over the next two years.' In Zutshi's view, the over Rs 100 billion lighting market represents a colossal growth opportunity for the players in the LED segment and could help the country become the hub of superior and affordable LED products.
Points out Sumit Padmakar Joshi, Vice Chairman & Managing Director, Philips Lighting India: 'Consumers in India are increasingly becoming more aware of their responsibility towards the environment and are switching over to energy efficient lighting. They are looking forward to smarter and energy-efficient homes, offices, retail outlets, and thereby fuelling demand for LED lighting.' In the past few years alone, Philips has witnessed a significant rise in demand for LED lighting products on account of the increased awareness about environment protection among consumers.
'High energy savings, longer life, lower energy costs, modular designs and ease of use are some of the potential drivers that will boost the adoption of LED lighting in the coming years,' avers Zutshi.
In fact, UJALA's success has motivated municipal bodies to also look for out-of-the-box solutions. In Delhi for instance, the North Delhi Municipal Corporation (NDMC) has given a contract to the Indian electricals and lighting major Havells to replace 2,10,000 sodium light fixtures with LED at their own cost. 'We would get a payback in terms of energy that is saved over a period of seven years,' informs Anil Bhasin, Executive Vice President, Havells India, while explaining the contours of the overall deal to POWER TODAY.
Redefining stakeholder relationships
The success of the UJALA programme has also resulted in a paradigm shift in the relationship between distributors of electricity and consumers as it has helped the former manage their loads better and they, in turn, have been helping to propagate the benefits of energy efficiency to consumers. For instance, in the 2017-18 fiscal, Tata Power aided distribution of over 110,000 LED bulbs to its Mumbai-based consumers. 'Lighting systems consume around 17 per cent of the total energy generated in the country. Thus, it is time to abandon the antiquated technologies and embrace new ones, emphasises Praveer Sinha, CEO & Managing Director, Tata Power Co. In addition to having launched several demand-side management (DSM) programmes for promoting efficient use of energy, India's largest integrated power company is actively encouraging consumers to switch over to LED lighting products.
Products innovations that are commensurate with the worldwide trend towards digitalisation are expected to provide a fillip to the expansion of LED lighting. Or as Philips' Joshi states, 'This evolution indicates a tectonic shift in technology from electrical to electronics. In turn, this may represent a significant growth opportunity for companies offering electronic hardware or components and solutions used in LED lighting, with functionalities across homes, public and professional lighting.'
The players in LED lighting are gearing up to handle the foreseeable growth in LED penetration. As one of the leading global players in the Indian market, Philips spends 5 per cent of its sales revenue on R&D on developing new solutions in lighting technology. 'In India, we have our research and innovation centres in Noida and Bengaluru to deliver local innovations for the Indian market and also develop software solutions for the world.' The company recently inaugurated a Remote Operations Center in Bengaluru to manage its connected lighting installations across the world, remotely from the city that is often billed as India's answer to the Silicon Valley. It has also announced the launch of Light Fidelity (LiFi)-enabled luminaires from its existing office lighting portfolio. LiFi is a technology in which high-quality LED lighting provides a broadband internet connection using light waves.
At a time when digitalisation is driving much of innovation and disruption, the Indian companies too are in the process of gradually upping their R&D spends. Halonix has a modern laboratory approved by the National Accreditation Board for Testing and Calibration Laboratories (NABL) within its manufacturing facility in Haridwar for testing and development of products. Havells has indicated plans to boost its spend on R&D from the present 1 per cent of the total sales revenue to 4 per cent over the next few years.
And this unparalleled transformation in the Indian lighting universe has been wrought without provisioning for any kind of subsidy.
"By the end of June 2018, over 300 million LED lights were distributed through special counters in cities. This has led to average energy saving of 4,097 million units annually and reduction of 2.82 MT CO2 per year."
"EESL's Street Light National Programme was instrumental in retrofitting over 6.1 million conventional street lights with LEDs in 941 municipalities across India."
- Manish Pant
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