Editorial July 2019

Energy efficiency is one of the bright spots in the otherwise gloomy power sector scenario. According to the World Bank, this market is estimated to be over $12 billion every year.

At the central level, there have been significant initiatives to promote energy efficiency. Two of the biggest success stories have been the world’s largest LED programmes — Unnat Jyoti by Affordable LEDs for All (UJALA) and the Street Lighting National Programme (SLNP) — which have transformed not just the industry but also consumer behaviour, in their acceptance of energy efficient technologies.

Meanwhile, the DSM programme in the agriculture sector targets to replace conventional pumps with 5-Star rated smart pumps, given free of cost to farmers with fiveyear maintenance and on-site warranty. The programme has already made progress in four cities, yielding energy savings of up to 30 per cent.

Further, the Standards and Labelling (S&L) Programme, which started as a voluntary initiative, covers 21 equipment types, with 10 made mandatory. Moreover, the standards have, over time, become more stringent. The Perform, Achieve and Trade (PAT) programme has resulted in savings that were 30 per cent higher than the target in its first cycle and has encouraged some $3.8 billion worth of investments. The programme, which is currently in its third phase and with the fourth one being developed,
targets to cover more consumers and even more industries. Another key initiative is the deployment of e-vehicles by EESL, which will help fulfil the government’s electric vehicle mission.

While these achievements are noteworthy, the market still has significant untapped potential and faces growth constraints. For instance, experts note that the medium, small and micro enterprises (MSME) sector still remains largely inefficient and needs to be included in the energy efficiency programmes. While large industries such as cement, iron and steel, fertilisers, petrochemicals, textiles, pulp and paper, chloralkali and automobile have made efforts to improve their energy efficiency, the
MSME sector still remains energy inefficient.

Also, with the S&L programme, while the minimum energy performance standards of various appliances have seen a significant improvement over the years, there are challenges that are hindering full-scale implementation of the programme, a key one being the higher cost of more efficient technologies.

The success of energy efficiency programmes is, to a large extent, dependent on state government involvement. For instance, replacing some 90 million pumps under the motor replacement programme is a tall task ahead for the government given that the agriculture sector gets subsidised electricity and this would, therefore, add to the cost for the government. Lastly, the transition towards an energy efficient economy requires huge capital investments, which, at present, is moving at a slow pace due to
the risks perceived by investors of energy efficient projects.

Power Line’s Infocus section this month takes a closer look at the progress in the energy efficiency market.