National Mission for Enhanced Energy Efficiency

NATIONAL MISSION ON ENHANCED ENERGY EFFICIENCY (NMEEE)

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

Mission Goals

Market-based approaches to unlock energy efficiency opportunities, estimated to be about Rs. 74,000 Crores
By 2014-15:
Annual fuel savings in excess of 23 million toe
Cumulative avoided electricity capacity addition of 19,000 MW CO2 emission mitigation of 98 million tons per year

NMEEE Four New Initiatives

Para 4.2 of the National Action Plan on Climate Change mandates: 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)

Accelerating the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable. (Market Transformation for Energy Efficiency)
Creation of mechanisms that would help finance demand side management programmes in all sectors by capturing future energy savings. (Energy Efficiency Financing Platform) Developing fiscal instruments to promote energy efficiency (Framework for Energy Efficient Economic Development)

Mission Document Preparation Process

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

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:
Specific Energy Consumption (SEC) reduction targets for the 685 energyintensive 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 Aluminum Cement Chlor-Alkali Fertilizer Pulp & Paper Power Iron & Steel Textiles Railways

No. of Identified DCs 11 92 21 22 70 154 110 197 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) 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

Total Saving Objective = 10 mMTOE

SN Sector Energy Consumption (mMTOE) 1 Power (Thermal) 160.30 Share of Consumption (%) 66.64% Apportioned Energy reduction (mMTOE) 6.66 No. of identified DCs Reduction Target as a % of Total Energy Consumption (%) 4.15

154

2
3 4 5 6 7 8 9 Total

Iron & Steel

Cement Fertilizers Railways (Approximated) Textile (Approximated) Aluminium Paper & pulp Chlor-Alkali

36.08
14.47 11.95 9.00 4.50 2.42 1.38 0.43 240.53

15.00%
6.02% 4.97% 3.74% 1.87% 1.01% 0.57% 0.18% 100.00%

1.50
0.60 0.50 0.37 0.19 0.10 0.06 0.02 10.00

110
92 22 8 197 11 70 21 685

4.16
4.15 4.18 4.11 4.22 4.13 4.13 4.19 4.16

About 60% of total energy consumption of India

PAT - Setting Energy Consumption Norms

Not feasible to define a single norm/standard unless there is significant homogeneity amongst units in a sector
Energy efficiency improvement targets would have to be almost unit specific Bands of differential targets to be created within each sector

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

Energy Savings Certificates (ESCerts) issued to units where energy-efficiency improvements is in excess of targets

EScerts can be traded and used for compliance purposes

Trading can be carried out bilaterally or on special platforms created on the power exchanges

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

The regulator in consultation with all the participants, agencies and central government is the body responsible for promotion of the ESCerts market mechanism

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

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

Historical data of last five years on production and energy consumption by various energy sources are being collected from 685 DCs Baseline SEC of each DC will be established by December 2010

The studies for fixing of targets in all 9 industrial sectors are underway and will be completed by March 2011
Baseline Energy Audit of each DC initiated The protocols for trading, monitoring and verification will be set up by March 2011 Amendments to EC Act passed by both houses of Parliment

Market Transformation for Energy Efficiency (MTEE)

Leveraging international funds for promoting energy efficiency

Project preparation to utilise bi-lateral/multilateral funds for energy efficiency

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

The Programme of Activities (PoA) to leverage CDM for agriculture and municipal sectors under development The Bachat Lamp Yojana registered at UNFCCC on the 29th April 2010. Two Crore CFLs have already been distributed and 13 TPAs have been signed between BEE investors and DISCOMs CDM Road map is under development and to be issued shortly New Program Super efficient equipment programme

Energy Efficiency Financing Platform (EEFP)

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
Create demand for energy efficiency products, goods and services- awareness, public policy, facilitation/ stimulation by preparation of bankable projects and markets Promotion of ESCOs accreditation by CRISIL/ ICRA Credible monitoring and verification protocols to capture energy savings Capacity building of banks and FIs

EEFP current status

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

Framework for Energy-Efficient Economic Development (FEED)

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

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 MoU guidelines from 2010-11 Promoting Energy Efficient Public Procurement

Framework for Energy-Efficient Economic Development (FEED) (2)

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.

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

Guidelines for procurement of energy efficient appliances and services by public authorities under consideration of Government 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 2

PAT DSM

30,603 44,000

9.78 13.22

26.21 72.75

5623 14335

Total

74,603

23.00

98.96

19,958

Thanks .