Business Opportunities Due to PAT

Introduction
PAT notification was issued on 30th March 2012 and it has opened new business opportunities and provided thrust on few existing ones. Identifying energy saving measures, implementing energy saving measures and measuring & verifying energy savings etc. are the business opportunities created by introduction of PAT. Since PAT has provision for penalty for not reducing specific energy consumption, most of the DCs would be driven to look for professional advice to reduce their specific energy consumption.

Overview of PAT Scheme

PAT is one of the four initiatives of National Mission for Enhanced Energy Efficiency of the Ministry of Power and is managed by Bureau of Energy Efficiency (BEE). It is A market based mecha-

nism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded1
The foundation of PAT scheme lies in the Energy Conservation Act 2001 (EC Act) and its amendment of 2010. In addition to establishing BEE, the EC Act also has provision for designated consumers, energy audit, energy auditors, energy certificates and penalty for DCs for non-compliance with rules set-up by BEE.

Methodology
PAT scheme has four phases; target setting phase, target achieving phase, measurement & verification phase and trading phase. The target setting phase has been completed by BEE for the eight energy intensive sectors. The first cycle for target achieving is from 2012 to 2015 followed by trading phase and finally trading of ESCerts. Each DC is given individual target for specific energy consumption (SEC) to be achieved by end of 2015. The SEC targets are given to DC by taking into account the industry average, the technology of the unit, deviation of current SEC from industry average etc. SEC and energy consumption and generation have to be submitted to BEE after proper certification and verification by accredited energy auditors. If DC has not achieved the SEC target, then it must pay penalty or buy ESCerts from the market to compensate for the shortfall. If the SEC achieves more than the target SEC, it can claim the ESCerts and then sell in the market. Each ESCert is equal to one million tonne of oil equivalent. In addition to submitting the SEC and energy consumption and generation as per the PAT requirement, as per EC Act 2001 each DC must annually submit energy consumption and generation, duly certified by accredited energy auditors. Therefore, energy audit is an annual exercise for which DC must establish proper measurement and verification system which is reliable and transparent and reduces the effort for this exercise.

PAT Booklet of Ministry of Power, July 2012

Figure 1 represents a high level flowchart of the PAT mechanism.

Target assigned by BEE to DC

Identify Energy Saving Measures

Prioritize and Implement Energy Saving Measures

Develop and Implement Processes for Measuring Energy Consumption and Generation

Get the verification done by Verification Agency

Target Achieved

NO

Buy ESCerts from exchange OR pay fine

YES Submit report toNO BEE

Check verification by Accredited Agency YES BEE Accepts Claim DC Claim YES YES correct NO

DCs obligation complete

NO DC to pay fine to BEE

Business Opportunities
The PAT notification mandates that DCs should measure, monitor and improve SEC. Consequently DC would require to design, develop, implement and enforce procedures for data collection of energy consumption and production. The major business opportunities that have come-up are: a) IT solutions and services b) Advisory Services for PAT related obligation of designation consumers including internal energy audits c) Energy audits for verification and check-verification In addition to performing these services as standalone activity, it is also possible to bundle these services to the prospective clients for maximizing the revenue per client in the following manner: 1. Activities (a), and (b).can be bundled and client may be approached for providing endto-end solution for consultancy to implementation for completing the obligation under PAT scheme 2. Activity(c) cannot be bundled with any (a) and (b) due to conflict of interest. Verification and check verification cannot be performed by the same agency for a DC. A. IT Solutions and Services Efficiency calculation, diagnosis and optimization of major energy intensive equipment With the introduction of PAT, DCs have to look at means to reduce SEC for which the online systems for performance calculation, monitoring and optimization system are one of the solutions. Advanced process control can be used for reducing SEC. Considering that many new units, where design change or other mechanism will not be viable option to reduce SEC; will be declared designated consumers in the subsequent PAT cycles, demand for such online systems will increase. Tools used for generating the reports necessary as per Energy Conservation Act and PAT Reporting will be crucial for monitoring the SEC. The energy related data is usually in different silos like fuel system, production, and waste disposal etc.; collating data for reporting is a non-trivial task. Further, PAT rules regarding preparation of quarterly and yearly maintenance of performance of plant and production process will further drive the requirement of IT solutions for this purpose. B. Advisory Services for PAT related obligation of designation consumers In addition to identify, prioritize and implement energy saving measures; PAT requires DC to establish transparent, independent and credible system for measurement & verification for energy related data. It is highly likely that many DCs will look for advice from industry domain consultant for activities related to energy saving measures and information system consultants to establish system for managing the energy related data. The possible activities that consultant may be required to do are: training on best practices for data collection and reporting

establish procedures to measure and estimate energy efficiency of energy intensive equipment develop system for data collection and reporting for the purpose of energy audit create the performance assessment report to be prepared as per PAT establish procedure for internal energy audits and to identify areas of improvement for energy conservation fulfilling the obligations to implement energy conservation methods as per the energy audit report

C. Conduct verification and check-verification Similar to financial audits, energy audits and verification for PAT are the now statutory requirement. This has created a market for verification and check-verification agencies. This market is likely to grow in the subsequent cycles as number of DC is likely to increase. Since the DC is liable for reward or penalty based on the SEC and also the verification report, it is likely to pay high price for getting the verification done in proper and scientific manner.