National Mission for Enhanced Energy Efficiency NATIONAL MISSION

National Mission for Enhanced Energy Efficiency

NATIONAL MISSION ON ENHANCED ENERGY EFFICIENCY (NMEEE) Ø The National Action Plan on Climate Change was released by Honorable Prime Minister of India in June 2008 Ø The Action Plan Outlines 8 Missions including National Mission on Enhanced Energy Efficiency (NMEEE)

Mission Goals Ø Market-based approaches to unlock energy efficiency opportunities, estimated to be about Rs. 74, 000 Crores Ø By 2014 -15: • Annual fuel savings in excess of 23 million toe • Cumulative avoided electricity capacity addition of 19, 000 MW • CO 2 emission mitigation of 98 million tons per year

NMEEE – Four New Initiatives Para 4. 2 of the National Action Plan on Climate Change mandates: Ø A market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded. (Perform Achieve and Trade) Ø Accelerating the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable. (Market Transformation for Energy Efficiency) Ø Creation of mechanisms that would help finance demand side management programmes in all sectors by capturing future energy savings. (Energy Efficiency Financing Platform) Ø Developing fiscal instruments to promote energy efficiency (Framework for Energy Efficient Economic Development)

Mission Document Preparation Process Ø Broadbased steering committee, with representation from various Ministries, CII, FICCI, NGOs, and academia • Two working groups prepared detailed approach papers • Consolidated approach paper put on BEE website for comments • NGO (Prayas Energy) organized public discussion on approach paper in Mumbai • Comments taken into account by subcommittees while finalizing mission document • Working group reports synthesized into draft Mission Document Ø Review by Ministries; discussion in PMO; Document finalized after incorporating comments

Perform, Achieve & Trade (PAT) Mechanism (The market based mechanism through cost effectiveness approach for improving energy efficiency in energy intensive sectors) Methodology: Ø Specific Energy Consumption (SEC) reduction targets for the 685 energy-intensive units which are designated consumers under the Energy Conservation Act • Targets would be % reduction of current SEC • Percentage reduction requirement based on: - Sectoral targets to achieve the national goal - Current SEC as a ratio of the best in the sector / groups within a sector - Unit specific diversities (Next Slide) • Target setting for the power generation and fertilizer sectors through the existing tariffsetting processes • SEC measurement and verification by BEE through designated verifiers Sector No. of Identified DCs Aluminum 11 Cement 92 Chlor-Alkali 21 Fertilizer 22 Pulp & Paper 70 Power 154 Iron & Steel 110 Textiles 197 Railways 8

PAT : Large Energy Usage Bandwidth The energy usage pattern varies widely in industries of a particular sector due to various diversities like -Scale of Production (Installed Capacities) -Use of Raw Material - Process Technology - Vintage of Technology - O & M Practices - Type of Product Output etc. a) a) a) Factors of Diversity Raw Material Input Quality of Raw Material / Fuel Process & Technology Final Product output Vintage Capacity Utililization Most Affected Sectors Pulp & Paper, Fertilizer, Power Plant, Textile All sectors Aluminium, Iron & steel, Chlor-Alkali, Paper Textile, Iron & Steel, Aluminium All Sectors All sectors

Approach for Setting Targets Depends upon the Objective of the Scheme Ø Total Saving Objective = 10 m. MTOE SN Sector Energy Consumption (m. MTOE) 1 Power (Thermal) 2 Share of Consumption (%) Apportioned Reduction Target as a No. of Energy % of Total Energy identified DCs reduction Consumption (m. MTOE) (%) 160. 30 66. 64% 6. 66 154 4. 15 Iron & Steel 36. 08 15. 00% 1. 50 110 4. 16 3 Cement 14. 47 6. 02% 0. 60 92 4. 15 4 Fertilizers 11. 95 4. 97% 0. 50 22 4. 18 5 Railways (Approximated) 9. 00 3. 74% 0. 37 8 4. 11 6 Textile (Approximated) 4. 50 1. 87% 0. 19 197 4. 22 7 Aluminium 2. 42 1. 01% 0. 10 11 4. 13 8 Paper & pulp 1. 38 0. 57% 0. 06 70 4. 13 9 Chlor-Alkali 0. 43 0. 18% 0. 02 21 4. 19 Total 240. 53 100. 00% About 60% of total energy consumption of India 10. 00 685 4. 16

PAT - Setting Energy Consumption Norms Ø Not feasible to define a single norm/standard unless there is significant homogeneity amongst units in a sector Ø Energy efficiency improvement targets would have to be almost “unit specific” Ø Bands of differential targets to be created within each sector Ø Each DC mandated to reduce its SEC by a fixed percentage, based on its current SEC within the sectoral bandwidth

PAT - Energy Savings Certificates will incentivize actions Ø Energy Savings Certificates (ESCerts) issued to units where energy-efficiency improvements is in excess of targets Ø EScerts can be traded and used for compliance purposes Ø Trading can be carried out bilaterally or on special platforms created on the power exchanges Ø ESCerts will be maintained in the DEMAT form and each ESCert will be equivalent to 1 Metric Tonne of Oil Equivalent (MTOE)

PAT – Stakeholders for Energy Savings Certificates Ø The regulator in consultation with all the participants, agencies and central government is the body responsible for promotion of the ESCerts market mechanism Ø The key agencies/ stakeholders in the trading mechanism for ESCerts will include • • • Scheme regulator and administrator Central Registry Designated Energy Auditors State Designated Agencies Designated Consumers Power Exchanges Ø PAT mechanism would require amendments to the Energy Conservation Act • Designated consumers to be able to show compliance through procurement of ESCerts • Financial penalty for non compliance to be linked to quantum of non compliance

PAT – current status Ø Historical data of last five years on production and energy consumption by various energy sources are being collected from 685 DCs Ø Baseline SEC of each DC will be established by December 2010 Ø The studies for fixing of targets in all 9 industrial sectors are underway and will be completed by March 2011 Ø Baseline Energy Audit of each DC initiated Ø The protocols for trading, monitoring and verification will be set up by March 2011 Ø Amendments to EC Act passed by both houses of Parliment

Market Transformation for Energy Efficiency (MTEE) Ø Leveraging international funds for promoting energy efficiency • Project preparation to utilise bi-lateral/multilateral funds for energy efficiency Ø Implementing a National Energy-Efficiency CDM Roadmap • Public sector leadership and involvement for aggregation of projects • Programmes of Activity for Household lighting, Municipal DSM (Mu DSM), Agriculture DSM (Ag DSM), SME sector, Commercial Buildings sector and Distribution Transformers. • Preparation of new CDM Methodologies

MTEEE – current status Ø The Programme of Activities (Po. A) to leverage CDM for agriculture and municipal sectors under development Ø The Bachat Lamp Yojana registered at UNFCCC on the 29 th April 2010. Two Crore CFL’s have already been distributed and 13 TPA’s have been signed between BEE investors and DISCOMs Ø CDM Road map is under development and to be issued shortly Ø New Program – Super efficient equipment programme

Energy Efficiency Financing Platform (EEFP) Ø Ensuring availability of finance at reasonable rates for energy efficiency project implementation- Expansion of EEFP to include other FIs and public and private sector banks Ø Create demand for energy efficiency products, goods and services- awareness, public policy, facilitation/ stimulation by preparation of bankable projects and markets Ø Promotion of ESCOs – accreditation by CRISIL/ ICRA Ø Credible monitoring and verification protocols to capture energy savings Ø Capacity building of banks and FIs

EEFP – current status Ø Energy Efficiency Services Ltd. (EESL) has been created as a corporate entity to provide market leadership Ø 70 ESCOs have been rated Ø Investment-grade energy audits being prepared for government buildings, municipalities, and SMEs Ø PTC India Ltd has commenced financing of ESCO based projects at Rashtrapati Bhavan, ESIC hospitals, AIIMS, and municipalities Ø SIDBI has initiated exercise for financing projects in SMEs

Framework for Energy-Efficient Economic Development (FEED) Ø Providing comfort to lenders by provision of • Risk guarantee for performance contract Partial Risk Guarantee Fund (PRGF) • Venture Capital Fund for Energy Efficiency (VCFEE) • Initial seed capital from Government budget-can be expanded by contributions from other agencies as well. • Fund can be managed by the financial intermediaries Ø Incentives to Central Public Sector Undertakings (CPSUs) to take up energy efficiency • Policy guidance to CPSUs to take up energy efficiency projectspecial parameter (to be called Energy Efficiency Performance Index (EEPI) on the line of KPI) may be added to the Mo. U guidelines from 2010 -11 • Promoting Energy Efficient Public Procurement

Framework for Energy-Efficient Economic Development (FEED) (2) Ø Support and Assistance to Electricity Regulatory Commissions for stimulating Utility driven Demand Side Management (DSM) • Develop a mechanism to incentivise utilities for DSM including Time of Day tariffs, load management directives, etc. • Develop guidelines for evaluating DSM options and integrating DSM options with supply side options. • DSM plan, design, preparation, period, load research, consumer surveys, cost-benefit assessment, technology assessments, etc. • Evolve suitable monitoring and verification protocols for DSM programmes. Ø Tax/ Duty Exemptions for Promotion of Energy Efficiency • Graded excise duty for STAR labelled equipments in favour of higher efficiencies • Income and Corporate tax incentives for ESCOs/ Venture Capital funds, etc. in energy efficiency • Providing infrastructure status to ESCO business

FEED – current status Ø Guidelines for procurement of energy efficient appliances and services by public authorities under consideration of Government Ø To enhance energy efficiency measures at utility level, BEE is working with the DSM Working Group of the Forum of Regulators (FOR) to overcome regulatory barriers and enable utilities to undertake DSM. Draft report has been prepared and is to be discussed by FOR

Overall investment in NMEEE and the Expected Impact S. No Initiative Investment Estimated (Rs. crores) Fuel Saving (Million tons of oil equivalent) GHG Emissions saving (million tons) Avoided Capacity (MW) 1 PAT 30, 603 9. 78 26. 21 5623 2 DSM 44, 000 13. 22 72. 75 14335 Total 74, 603 23. 00 98. 96 19, 958

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