Energy Efficiency Market In India · 4243 kWh 3808 kWh h ng Annual Monetized Saving (Rs. 1632)...
Transcript of Energy Efficiency Market In India · 4243 kWh 3808 kWh h ng Annual Monetized Saving (Rs. 1632)...
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Energy Efficiency Market In IndiaPRGFEE & Successful ESCO Model
Ashish JindalInternational EE Expert, EESL
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Energy Efficiency Services Limited (EESL) – Who We Are
▪ A public Energy Service Company (ESCO) under Ministry
of Power, Govt. of India
▪ Established in the year 2009
▪ 100% share holding with Public Sector Enterprises
▪ Board of Directors represented by Ministry of Power and
Bureau of Energy Efficiency (BEE)
• NTPC Limited (India’s Largest Power Generating
Company | Market Cap as on 1st March 2016 – US $15.5
billion)
• Rural Electrification Corporation Limited (Market Cap
as on 1st March 2016 – US $2.4 billion)
• Power Finance Corporation Limited (Market Cap as on
1st March 2016 – US $3.1 billion
• Power Grid Corporation of India Limited (India’s Largest
Power Transmission Company | Market Cap as on 1st
March 2016 – US $10.7 billion
EESL is a joint venture company of four Public Sector Enterprises of Ministry of Power, Govt. of India
▪ Largest ESCO in the world
▪ Backed by Government of India and Promoters with net
worth of over $32 billion
▪ Implementing largest Energy Efficiency Portfolio in the
world
▪ One of the fastest growing companies in India – 10 fold
growth in one year
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Energy Efficiency Market in India
Estimated to be over 22.81 billion $ (Source : EESL’s Business Plan 2016-2021)
Policy interventions and Support by Multilateral/Bilateral organizations resulted emergence of domestic and international ESCOs
Major constraints of ESCO• Limited Access to Finance • Limited Capacity in Public Sector• Government Procurement Regulations• Perceived Technology Bias• Lack of Simplified M&V Protocols• Payment Security Mechanism
Need of a Super ESCO• Undertake Risk
• Demonstrate Energy Efficiency ESCO
models
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Barriers in energy efficiency space
• Lack of awareness of energy efficiency projects
• Lack of baseline data in energy efficiency
• Lack of ESCO credibility
• Lack of awareness about energy performance contracting
• Financing of energy efficiency projects • Lack of technical knowledge in FIs for evaluation of EE projects
• EE projects do not involve traditional assets such as land or buildings
• EE projects often involve new or innovative technologies
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Institutional Structure of PRGFEE
Objective of PRGFEE
Features of PRGFEE
PRGFEE Application Process
PRGFEE Guarantee Claim Process
PFI Empanelment process
Benefits to ESCOs and PFI
Contents:
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➢ To promote Energy Efficiency project financing in India
➢ Shall act as a Risk sharing mechanism to provide Participating Financial Institutions(PFIs)
with a partial coverage of risk involved in extending loans for Energy Efficiency projects.
➢ To directly support financing of Energy Efficiency(EE) projects by:
• Addressing the credit risks and barriers to structuring the transactions
• Engaging FIs and building their capacity to finance EE projects on a commercially
sustainable basis.
• PRGFEE to provide risk cover up to 50% of debt in an Energy Efficiency project.
➢PRGFEE Corpus Amount to be placed in a guarantee reserve account and paid out to
empanelled participating Financial Institutions (“PFIs”) in the event of loss or default in
Energy Efficiency projects.
Objectives of PRGFEE:
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BEE has appointed the
Consortium of RECPDCL-REC-EESL
as the Implementing
Agency for PRGFEE
Institutional Structure of PRGFEE:
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• Amount sanction by GoI : Rs.312 Crore, over a period of 3 years
• Guarantee Duration period : Maximum of 5 years per project.
• Maximum Guarantee coverage : Up to 50% of the sanctioned loan amount to a maximum of Rs.10 Crore per project,
whichever is less.
• Application fee : 0.1% of the maximum amount to be Guaranteed at the time of application.
• One-time Guarantee Fee : 1% of the amount guaranteed if borrower is a Male entrepreneur &
0.5% if borrower is a Women entrepreneur, payable after approval and beforesigning of Guarantee Agreement .
• Minimum Loan Amount Eligible : Rs.5 Lakhs
• Incentives for PFI : Guarantee fee shall be reimbursed to PFI on successful completion of project&
Expenses incurred by PFI for carrying out Techno-Economic Viability study of EEprojects shall be reimbursed after successful completion for first 80 projects.
Features of PRGFEE:
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Process / Procedure for Enrolment
ESCO
• Develop detailed project report for EE projects
• Sign an agreement with client for implementation of the EE project
• Apply for loan to financial institution
PFI
• Technical and Financial evaluation of DPR
• Due diligence and Risk assessment of ESCO
• Apply for guarantee (prior to disbursement of payment)
PRGFEE
• Review of application
• Technical and financial evaluation of DPR
• Approval of Supervisory Committee
• Signing of agreement
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• Financial Institutions has to be Empanelled with BEE to participate in PRGFEE .
• Projects implemented by BEE Empanelled Energy Service Companies(ESCOs) or a JV of ESCOs with at least 50%share capital of BEE Empanelled ESCO or Deemed to be Empanelled ESCO, will be covered under PRGFEE.
• Guarantee coverage to be provided before disbursement of loan by PFI to ESCO.
• 70% of the eligible loan amount should be towards implementation of EE project or
50% towards EE and 50% towards RE and other costs.
Sectors in the Mandate of PRGFEE:
❖ Government buildings
❖ Private buildings having commercial or multi-storey residential accommodations
❖ Municipalities
❖ Small & Medium Enterprises
❖ Industry
Features of PRGFEE…..
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✓ Partial risk coverage for EE Loans.
✓ Only empaneled ESCOs, reassures competence of ESCO.
✓ Projects appraised by experts from energy efficiency, legal, risk advisory and financial field.
✓ Standardized evaluation process and structured transaction.
✓ Build confidence in tapping a huge potential in EE sector.
✓ Contributing towards climate change mitigation.
Benefit- PFIs
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✓ Ease of financing for implementation of EE projects.
✓ Opportunity to take up a bigger size EE Projects.
✓ A common platform to approach PFIs for EE projects financing.
✓ Combined effort can sensitize utility owners on EE implementation, thus generating more business.
Benefit- ESCOs
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Impact of our Business Model
• UJALA - over 300 million LED bulbs, 1.5 million energy efficient fans, 4.5 million LED tube lights
distributed
• SLNP - over 4.5 million LED street lights retrofitted
• BEEP - retrofitting work in 4,000 Govt Buildings under progress
• MEEP in 20 states for water & sewage pump replacement AgDSM – 1.1 million pumps under
replacement including 20,000 solar pumps
• 20 MW solar roof top for buildings in New Delhi
• 50 lakh Smart Meter Programme
• E-mobility with 10,000 Electric Vehicles for use of government.
• International operations 1
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EESL – International
Canada
• Expression of Interest in Battery storage project
• Identification of partners initiated
Other Locations
• SE Asia – Vietnam and Cambodia – lighting/ Building projects
• South Asia – agreement for supply of 20 m LED in Nepal – 10 m in Sri Lanka in pipeline
• UJALA in Indonesia being discussed
• Proposal for supporting Saudi Arabia in pipeline
• Tri-generation
UK
• UJALA launched by Minister of Power in UK – target 100 million in 3 years
• Building EE project started in Indian High Commission
• Pipeline of projects worth investments of Pound 100m identified
• Process for selection of partners started
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Program Design Characteristics
• Program Administrator: EESL• Target Group : PAT Industries, SMEs
• Application: Motors in 1.1 kW to 22 kW driving Pumps, Fans/Blowers and Air Compressors
• Financial Model : ESCO (on deemed saving approach) and PMC (10% of the Project Cost)
• Project Duration : 3 years• Procurement : Open bidding process as per defined
technical specifications • Warranty : 3 years• Supply & Installation : Supply is by EESL,
Installation by industries• Post Installation Verification : On sample basis by
EESL• Value Addition : Motor Price Reduction, Motor
Load Survey, extended warranty, Best-Practice Guidebook, ½-day training on O&M of Motors
• Confirmed Demand so far : 70,000
Motor Size (kW) of IE-3
Specification
Target Numbers for
Replacement
1.1 15,000
1.5 15,000
2.2 15,000
3.7 15,000
5.5 15,000
7.5 15,000
11.0 10,000
15.0 10,000
22.0 10,000
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Program Design Characteristics
Particulars Conventional Model EESL ModelMotor Type IE1 or Less
(Sub-Standard Efficiency)
IE3
(High Efficiency Class)
Typical Efficiency 7% higher
Pricing Retail/Supply Price by Supplier At least 30% reduction from
retail/supply price
Procurement Process By Client By open bidding
Price reduction Mechanism No Bulk Procurement
Investment By Client By EESL
Repayment --------- Through instalments from monetized
energy saving
Warranty 18 months 36 months
Installation By Client By Client
Other Value added Services ---------- Motor Load Survey
Technical Training
National Dash Board
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Repayment through Monetized Energy Saving
4243 kWh 3808 kWh
43
5 k
Wh
Sa
vin
g
Annual Monetized
Saving (Rs. 1632)
Annual
Repayment to
EESL (Rs 1447)
Annual Retain of
Saving by Client
(Rs.185)
88%
12 %
Project Period : 3 Years
Project Cost :
Material Cost + PMC + ROI Warranty : 36 Months
A
B
A
B
Repayment to EESL through
Equal Quarterly Instalments
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Operating Model of the Program
Company 1
Company 2
Company n
Participating Vendors
Tenders floated for Procurement
Supply of Motors
Distribution by Suppliers under supervision of
EESL
Supply
Implementation by Industry
Payment
3-Year Warranty (EESL Call Centres or Directly to Supplier)
EESL Outreach Agency
Outreach Program Planning Consumer Outreach Program
1
2
3
4
5
6
7
8
9
2
Only PMC
Upfront Payment
Equated Quarterly Instalments
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Financial Model (A Case)
S.No Particulars UNIT Values1 Estimated Annual Energy Savings kWh 778052 Fixed Tariff, Rs. per kWh Rs. Per KWh 83 Estimated Annual Cost Savings Rs. Per year 6224404 Investment for 50 motors (INR) Rs. 100000
05 EESL PMC fee (12%) Rs. 1200006 Estimated Capital Cost of the project (S.no. 4+
S.no. 5)
Rs. 112000
07 Total Estimated Repayment to be made by client
to EESL after considering interest on Debt and
RoE
Rs. 125372
8
8 Contract Period Years 39 Payout to EESL annually (6/8) Rs. 417909
10 EESL Share (9/3) % 67%11 EESL Quarterly repayment Rs. 104477
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Case Situation
• Number of Motors: 50 nos.
• Baseline Efficiency Class: IE-1
• Baseline Parameters: 5.5 kW , efficiency 84.7%, loading 70%, 313 days/annum, 20 hours/day
• New Parameters: Efficiency class IE-3, 5.5 kW , efficiency 89.6%, loading 70%, 313
days/annum, 20 hours/day
• Baseline Annual Energy consumption: 14, 22,727 kWh (=50X(5.5/0.847)X0.7X313X20)
• New Annual Energy consumption: 13, 44,922 kWh (=50X(5.5/0.896)X0.7X313X20)
• Annual Energy Saving: 77805 kWh (=14, 22,727-13, 44,922) = 5.46 %
• Cost of per motor = INR 20, 000 with 50 nos.
• PMC Fee to EESL = 12% of (INR 20,000 * 50) = INR 1.2 lakhs
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Pricing after 1st Bidding
S.No. Rating (kW)Typical Market
Price/ Motor (Rs)
EESL Price
/Motor (Rs.)
1 1.1 7625 5159
2 1.5 8388 6250
3 2.2 11002 7466
4 3.7 14051 9463
5 5.5 19584 13143
6 7.5 23018 15538
7 11 47045 25070
8 15 49223 30574
9 22 64688 39859
CG
ABB
Siemens
BBL
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Program Status
▪Board Approval Obtained : Investment of Rs. 220 Cr
▪Bidding of 120,000 motors completed: CG, Siemens, BBL are selected vendors
▪ Pilot Studies for establishing Deemed Saving : Done [5-17% Saving obtained]
▪ IT Module for complete Program Management : Done
▪ Program Launch : March 2018 at New Delhi
▪Confirmed Clients : M&M, Tata Motors, Shree Cement, Nahar Group, Surat Textile Cluster etc.
▪ Legal & Financial Vetting of Agreement Document: Done
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Building Energy Efficiency Program (BEEP)
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Issues and Opportunities in Buildings
Improper O&M
Practice
Under-utilization of
equipment
In-efficient system or
equipmentWastage
Loss of Energy
Purchase more from
gridGenerate more at site
More Fossil Fuel Consumption
High GHG Emission
National Prospective
Building Prospective
More Energy Cost
Less Competitive
Controllable(Management,
Technology & Practice)
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Proposed Business Models
•Model 1: If 100% investment is made by customer,
•Model 2: If 100% Investment by EESL (Preferred Model)
PMC
Walkthrough Survey
Facilitation in procurement
Warranty
Project Monitoring
ESCO
Investment
Walkthrough Survey
Facilitation in procurement
Warranty (Extended)
Project Monitoring
One-time Fees to
EESL
Project Cost
= Upfront Investment
+ PMC + Interest on
Debt & Equity
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Successful ESCO Project by EESL : A Case
Project : Energy Efficiency Retrofit Program in a High-Rising Building
Energy Audit
(Walk Through)
Preparation of
Scheme
Signing of MoU
with Client
Identification of
Intervention
Implementation
Warranty Support &
Payment Recovery
Lighting (LEDs)
Air Conditioning (5-Star ACs)
Deemed Saving Approach
HEAD UNIT Values
Estimated Energy Savings KVAh 123638
Fixed Tariff, Rs. per kVAh $ Per KVAh 0.125
Estimated Annual Cost Savings $ Per year 15465
AMC getting free for Client on Air Conditioning
($ 12.3/AC/Annum)Per year 332.30
Total Cost Savings $ Per year 15796
Investment, Rs. $ 35888
EESL PMC fee $ 4306
Estimated Capital Cost of the project $ 40194
Equity Portion (20% of capital cost) $ 8039
Return on Equity (23.7%) $ 5894
Debt portion (80% Cost of capital) $ 32156
Debt Interest (11%) $. 10078
Total Estimated Repayment to EESL $ 56167
Contract Period Years 5
Payout to EESL annually $ 11233
EESL Share % 71%EESL Quarterly repayment $ 2808
No. of repayments Quarterly 20
28% Reduction in Energy
Consumption
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BEEP Approach & Methodology
Inventory
Collection
Sign Agreement
Finding Opportunities in
Lighting, AC, Water
Pumping, DG Sets etc.
Estimate
Baseline
Prepare
Scheme
Walk-Through
Survey
Procurement of
MaterialPrice Discovery
100% upfront
investment by
EESL
Open Co
mpetitive Bidding
ImplementationQuarterly
Repayment to
EESL
Deemed Saving = (Baseline Watt – New Watt) x No. of
Inventory x Run Hour per day X Days per Year
1-3 months 2-6 months After
Implementation
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Impact in Electricity Bill in Few Buildings after Implementation
Saving
12 % - 75%
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Solar Projects
• Solarization of Agricultural Feeders
• 200 MW solar projects on open/unused spare lands of MSEDCL substations with a tariff of Rs 3/unit for 25 years
• Capacity: 0.5 MW to 2 MW
• MERC approved the draft PPA on 9th Jan 2017
• Rooftop Solar PV projects
• Entered in to and MoU with NDMC for implementation of Solar rooftop projects
• At Schools, Colleges, Govt buildings, institutions, Embassies etc. under CAPEX and RESCO modes
• Tariff: Rs. 3.87/unit with 3% YoY escalation.
• Grid connected Solar PV based Agricultural pump sets
• Higher DC side capacity of Solar PV enabling sale of excess power
• The energy exported by Mini grid projects will be paid at a price agreed in PPA by the DISCOM/State Govt. for 25 years
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MEEP Background
• EESL signed a Memorandum of Understanding
with Ministry of Urban Development (Govt. of India)
on 28th September 2016
Objective
• EESL to facilitate engagement between ULBs and
State governments in the areas of Energy
Efficiency
Scope
• Develop overall strategy for taking up Energy
Efficiency projects
• EESL to take up implementation of Energy Efficient
projects
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E-Mobility
• Successful tender completed for procurement of 10,000 e-cars
• Successful tender of 250 chargers (180 AC and 70 DC chargers) Completed
• Charger for 1800 AC and 200 DC chargers floated for building infrastructure in other states
• Planning and execution of program in all states in process
• Impact of replacing the entire government fleet of 500 thousand ICE cars with electric
vehicles:
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Smart Meter National Programme
• Smart Meter National programme aims to replace all 250 million conventional meters with
smart meters in India
• Procurement of 5 million smart meters and System Integrator completed
• Strategy: Attract utilities in the programme to aggregate demand
• Business Model: No Upfront investment; Improved billing efficiency; Repayments part of
enhanced revenue
• The replacement of 250 million meters will result in:
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