Sustainable Growth through Energy Efficiency A presentation by

Sustainable Growth through Energy Efficiency A presentation by: Debashish Majumdar Chairman & Managing Director, Indian Renewable Energy Development Agency Limited New Delhi, India REEEP Side Event, Bali, Indonesia December 08, 2007 1

Presentation Structure • Energy in India • IREDA –An Overview • Energy Efficiency in India • Energy Efficiency & CDM • Conclusion 2

Energy in India 3

Per Capita Energy Consumption Low per capita energy consumption (kgoe) 4

Power Sector at a Glance Total Installed Capacity : 1, 37, 000 MW • Thermal 88, 215 • Hydro 34, 390 • Renewable 10, 900 • Nuclear 4, 120 5

Indian Renewable Energy Scenario Sector Potential Wind 45000 MW Achievement (As on 30. 09. 2007) 7660 MW Small Hydro 15000 MW 2015 MW Biomass Power/ 16000 MW 560 MW Bagasse Cogeneration 3500 MW 692 MW Waste to Energy 2700 MW 55 MW Solar PV 20 MW/sq. km Renewables : Total installed capacity 3 MW 10, 985 MW 6

Energy Demand Projections Year GDP Growth Rate 7% 8% 2011 -12 652 677 2016 -17 802 861 2021 -22 979 1082 2026 -27 1235 1417 2031 -32 1529 1818 (in Mtoe) 7 Source: Energy Policy Report, Planning Commission, India

Electricity Demand Projections Year Total Electricity Required ( Billion k. Whr) 7% 2011 -12 2016 -17 2021 -22 2026 -27 2031 -32 Installed Capacity (MW) GDP Growth Rate 8% 7% 8% 1031 1097 206757 219992 1377 1524 276143 305623 1838 2118 368592 424744 2397 2866 480694 574748 3127 3880 627088 778095 Source: Energy Policy Report, Planning Commission, India 8

Energy Scenario in India • Power Installed Capacity • Energy Generation (p. a. ) • Supply Demand Gap : 1, 37, 000 MW : 607. 7 bn k. Wh : 12 % Peak : 8 % Average • Per Capita Power Consumption : 606 k. Wh/Year • Access to Electricity (Rural) : 44% households 9

IREDA : An Overview 10

The Beginning. . . Incorporated on March 11, 1987 as a Public Limited Government Company. Mission Be a pioneering, participant friendly and competitive institution for financing and promoting self-sustaining investment in energy generation from renewable sources, energy efficiency and environment technologies for sustainable development. 11

Sectors being financed ] Solar Energy ] Wind Energy ] Hydro Energy ] Biomass Cogeneration ] Biomass Power Generation ] Waste to Energy ] Energy Efficiency and Conservation ] Bio Fuels ] New & Emerging Technologies 12

IREDA Financing Norms Debt Instruments Schemes Project Financing Schemes Equipment Financing Manufacturing Loans Quantum of Assistance Upto 80% of Project Cost Upto 75% of Equipment Cost Rate of Interest 2. 5% to 11. 75% Moratorium Upto 3 Years Repayment Period Upto 12 Years 13

Highlights Of Cumulative Lending Operations (As on 01. 12. 2007 • Number of Projects Approved : 1830 • IREDA’s Loan Commitment : 2082 Million US$ • Loan Disbursements : 1146 Million US$ • Sanctioned Capacity : 3083 MW • Commissioned Capacity : 1605 MW 14

Impact of IREDA funded projects • Created awareness in the country. • Encouraged entry of private sector investments in RE sector. • Catalyzed market development by showcasing success stories - encouraging other lenders to support the sector. • Helped in creating manufacturing, design & engineering, operation and maintenance capabilities. • Encouraged several states to declare policies and incentives to encourage private investments in RE sector. • Assisted in policy shift from technology demonstration to commercialization making RE development demand driven. • Helped in creating direct and indirect employment generation, economic development and improving living conditions. 15

International Assistance § Government of Netherlands - 18 Million Dutch Guilders § Asian Development Bank - 100 Million US $ § The World Bank I LOC - 145 Million US $ § DANIDA - 15 Million US $ § Kf. W, Germany - 61. 35 Million Euro § World Bank IInd LOC - 135 Million US $ 16

International Recognition ' Second Prize in Water Globe Award Category of the Energy Award 2002 presented at Linz, Austria. ' World Climate Technology Award for the year 1999 by Climate Technology Initiative (CTI), Paris, France. 17

Energy Efficiency in India 18

Drivers Renewable Energy efficiency • Rising energy demand • Competitive Advantage • Energy security • Legislative Mandate • Access to energy • Bottom Line • Climate change • Rising Energy Costs 19

Energy Efficiency in India - Context § Energy essential for economic growth. § Commensurate input of energy § Energy security 20

Energy Efficiency – Spin Offs § Energy efficiency/conservation measures can reduce peak and average demand. § One unit saved avoids around 2. 5 to 3 times of fresh capacity addition. § Investment in energy efficiency/energy conservation is highly cost effective. § Can be achieved less than US$ 0. 25 million/MW § Avoids investment in fuel, mining, transportation etc. 21

Energy Efficiency - India Scenario § Industry is the major energy consumer utilizing about 50% of the total commercial energy use in India § The six key industries – namely aluminium, cement, fertilizers, pulp& paper, petrochemicals and steel - consume about 65% of the total energy use in India § Annual Savings Potential of US $ 1. 2 billion and an An Investment Potential of US $ 2. 4 billion. § In view of high energy intensity per unit of GDP of Indian economy there is a vast scope for energy saving potential § Notification of designated consumers under the Energy Conservation Act has given an impetus for adoption of energy efficient technologies 22

Energy Efficiency - India Scenario • Savings Potential – Supply side savings opportunity : 25000 MW – Demand side savings opportunity • Agricultural sector : 20% • Commercial sector : 20 -50 % • Industrial sector : 25 % • Energy Conservation Act 2001: Comprehensive legislation laying roadmap for improvement in energy efficiency in the country. – Mandatory energy audit for energy intensive industries; – Minimum energy performance standards for industries & for equipment & appliances; – Setting up of a Bureau of Energy Efficiency 23

EE Institutional Building • Bureau of Energy Efficiency (BEE) : Established in 2002 to provide a policy framework and direction to national energy conservation activities, with following thrust areas: – – – – – Indian Industry Programme for Energy Conservation Demand Side Management Standards and Labeling Programme Energy Efficiency in Buildings and Establishments Energy Conservation Building Codes Professional Certification and Accreditation Manuals and Codes Energy Efficiency Policy Research Programme School Education Delivery Mechanisms for Energy Efficiency Services 24

India IREDA Energy Efficiency Fund • IREDA diversified into financing energy efficiency projects in 1999, including support from multilateral agencies • Cost-effective technical solutions and sustainable investments models developed leading to a robust pipeline of EE projects 25

IREDA’s achievements in EE financing • Number of Projects Approved : 20 Projects • Capacity Addition : 119 MW • IREDA’s Loan Commitment : 68 Million US$ • Loan Disbursements : 35 Million US$ • Commissioned Capacity : 43 MW 26

IREDA’s Experience in EE financing • Energy (electrical) tariffs send imperfect price signals • EE not a focus within industry with inadequate awareness of EE opportunities • Limited R & D for energy efficient technologies • High prices of EE equipment • Public procurement policies • Capacity to appraise and finance EE projects • Weak credit profiles of ESCOs • Legal structures 27

EE Financing - IREDA’s Accomplishments • Case Study Models developed for Public Buildings, Hospitals, and SME Clusters in Cement, Paper & Pulp, Textiles and Hotels • Standardised Energy Audit formats and EE loan Formats • Developed Project monitoring and Verification Protocols • Developed and Implemented Capacity Building Programs for Bankers • Marketed EE Loan Schemes for Banks in SME Clusters • Developed and Published an Investors Manual for EE Projects • Disseminate Information through a Specialised Journal - BEE 28

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Policy Initiatives for Driving Efficiency • Requirements to Establish Minimum Efficiency - Building Codes - Appliance & Equipment Standards - Requirements for Utilities to Use Energy Efficiently • Incentives to Transform Markets - Tax Incentives - Rebates, Loan Guarantees • Public Education to Build Market Demand - Consumer Education and Awareness Campaigns - Labeling (Energy Star) - Utility DSM Programs • Research and Development to Continue Advances - RD&D Partnerships with Industry 30

Energy Efficient Buildings • The average energy use for typical commercial building is 200 k. Wh/sq. meter/year. • Mandatory enforcement of ECBC can reduce the energy use by 30 -40% to 120 -160 k. Wh/sq. meter/year. • Nationwide Mandatory enforcement of ECBC could yield significant savings 31

Impact of Energy Codes • Market Development for EE & RE products – – Building Insulation Energy Efficient Windows (Glass and Frames) High-Efficiency HVAC Equipment Solar-Thermal Hot Water Systems • Improved Design Practices – Lighting and Daylighting – Natural Ventilation/Free-Cooling Systems • Improved Performance • Improved Power Factor 32

Energy Efficiency & CDM 33

CDM Project Portfolio in India As on 04. 12. 2007 Category Energy Efficiency – Industry Number 118 EE-Household 2 EE-Own generation 83 EE-Services 3 EE-Supply 15 EE-total 221 Renewable Energy 514 Others 83 Grand Total 797 34

EE Technologies – Global Common • Climate Change & Energy Security: - Main drivers • Technology Development & Cost Reduction is central to any effort • Sharing of policy experience important • Need to devise an effective mechanism for possible technology transfer under Climate Change and other Mechanisms 35

EE Technologies – A Prerequisite for Sustainable Society • Climate change has to be considered as an integral element of sustainable development agenda. However, there is no single economic technical solution to reduce GHG emissions from the energy sector. • EE measures in the existing energy infrastructure would have to be taken up through policy initiatives. Long term national agenda would have to be dovetailed with energy security. • India EE become more relevant in view of high imports and low affordability. • Subsistence energy needs even for meeting MDGs would require EE measures in a big way 36

Conclusions • Energy is in short supply in India, and is expensive, especially for industry • Energy-guzzling production procedures further push up costs • With use of more energy efficient technologies, many businesses could cut their energy consumption by up to 20 % • Adoption of energy efficient technology is picking up the pace, particularly in the energy intensive industry of India • • Energy Conservation Building Code (ECBC) is essential to ensure building energy efficiency 37

Thank You ! 38