Are you Ready to be India’s Energy Efficiency Star?

Energy demand and consumption in India has been increasing continuously owing to rising income, accelerated industrialization, urbanization and population growth.

The Energy demand has increased from 572 Mtoe in 2003-2004 to 842 Mtoe in 2016-2017. This is further expected to rise to 1560 Mtoe in 2026-2027.  Given this exponential rise in demand, it becomes imperative for India to not just add new capacity but also utilize the existing energy, that is more efficient, cleaner and economic manner.

New market owing to new action

Indian government is aware that “a unit of electricity saved is unit generated“. India is making all possible efforts to reduce energy intensity through various innovative actions and policy measures under the overall ambit of Energy Conservation Act 2001 (read the Act here) . This demand side management has opened up huge market for all stakeholders in the segment including but not limited to energy auditors and managers, for example, analysis firms and consultants, The Energy Service Companies (ESCO), super-efficient equipment manufacturers,  architects, energy conservation experts etc.

The Bureau of energy efficiency (BEE) is the designated nodal agency in India to take care of various initiatives for energy efficiency and is responsible for policy development in this area. Further, each state has its own state designated agency to develop, promote, implement and monitor carious energy efficiency schemes. Each state has its own state energy conservation fund with budgetary outlays by federal government and matching contribution by most state governments.

Areas where Indian Government has been focusing to bring about reduction in energy intensity:

1. National Mission on enhanced energy efficiency

The government has introduced energy efficiency standards for 478 industries who need to meet or exceed the baseline criteria. This is achieved through a regulatory instrument known as Perform Achieve and Trade (PAT) to reduce specific energy consumption in such designated energy intensive industries though an associated market based mechanism which incentives excess energy saving through issuance of energy saving certificate. These energy saving certificates can be traded in exchange with those who fail to achieve mandatory specific energy consumption.
Energy audit for these industries has been made mandatory PAT. These units consume about 165 million toe annually and account for almost 45% of commercial fuels consumed annually in India. These Industries primarily include thermal power, iron & steel, cement, aluminum, fertilizer, paper & pulp, textile and chlor alkali. More details of the scheme can be read here.

2. Energy conservation in Buildings

Energy Conservation Building Code mandates minimum energy standards for new commercial buildings with a minimum connected load of 100 KW. Old buildings which are getting renovated and/or extended are also covered under this code.
While the federal government has set the blanket code, the states have accepted the code with modifications to suit the local ecosystem. Currently being a voluntary exercise for states, 22 out of 29 states are under various stages of implementation of this code. However the code shall be mandatory across country from 2017 onwards. Various aspects of building that are covered in this energy conservation scheme and include:

  • Building envelope (walls, roofs, windows)
  • Lighting (indoor and outdoor)
  • Heating Ventilation and Air Conditioning (HVAC) system
  • Solar Hot Water Heating
  • Electrical systems

It is also expected that almost 40 % reduction in energy consumption in existing buildings in India is possible through retrofitting of end use such as lighting, cooling, heating, refrigeration etc.
This has opened up huge opportunities for ESCOs, who serve as energy service companies for creating a turnaround in energy intensity of existing buildings.

Further, in order to promote energy efficiency and conservation in buildings, a voluntary star rated building program has been initiated wherein buildings are star ranked on the basis of the actual performance of a building in terms of its specific energy usage in kwh/square m/year.
Such star rated program is gaining more and more popularity with more and more real estate companies adopting this voluntary scheme.

While BEE may not be able to achieve its ambitious target of 75 % of new commercial building to be conservation code compliant for the control period 2012 – 2017, there is no denial that the program has made huge progress and shall be driving force and a flagship program in energy conservation initiatives for India.

3. Standards and Labelling

The scheme was initiated to encourage consumers to look at the life time cost of the product by providing with information on energy efficiency of various appliances. Currently minimum energy performance standards have been set for 21 appliances (4 mandatory and 17 voluntary) including:

mandatory appliances – Room Air Conditioners, Tubular Fluorescent Tube Lights, Frost Free Refrigerators, Distribution Transformers and
voluntary appliances – Induction Motors, Direct Cool Refrigerator, Electric storage type geyser, Ceiling fans, Color TVs, Agricultural pump sets, LPG stoves, Washing machine, Laptops, Ballast, Floor standing ACs, Office automation products, Diesel Generating sets & Diesel pump sets, LED lamps.

Star rating system – efficiency

These equipment have a star rating between 1 to 5 with 5 star rated equipment being the most efficient. Over the years it has been observed that more and more consumers are procuring products between star 3 to star 4, given the upfront cost and running cost i.e. cost of electricity. This has led to following consequences:

  1. One Star products are now being removed from market for lack of buyers and diminishing market size.
  2. While Government is providing upfront subsidy for number of appliances, a market has emerged for ESCO, financers and manufacturers to provide five star appliances on pay per use basis leading to win-win situation for both consumers and suppliers.

4. Demand Side Management

While Demand side management is being promoted through voluntary load shedding, time of day tariffs and encouragement to set up solar hand pumps and lights, a number of initiatives have been taken both at municipal and agricultural level.

  • Agricultural DSM
    Primarily includes enhancing the efficiency of agricultural pumps through a mix of subsidy and regulatory driven mechanism. Currently a number of pilot and demonstration projects are being done with the help of state government and distribution companies.
  • Municipal DSM
    Urban Local bodies have been identified as a huge source of energy consumption with areas of energy saving coming primarily from drinking water pumping, street light, and building and sewage pumps.
    Government is promoting use of energy efficient filtration plants, star rated booster pumps at distribution level, Intake water pumps from rivers to water wells, motors, energy efficient lights, fans, ACs and other equipment.
    Further replacement of street lights, which account for almost 40 % of energy consumption of a urban local body, with LED lights is being undertaken under efficient lighting programs.

This has opened up huge opportunities for Technology providers, implementing partners, financers, manufacturers, operators of energy efficient water pumps, LED lights etc.
Indian government is keenly looking at technologies which can help in reducing energy consumption of municipal bodies and urban local bodies and is open for demonstration and pilot projects.

The basic objective of the project was to improve the overall energy efficiency of the ULBs, which could lead to substantial savings in the electricity consumption, thereby resulting in cost reduction/savings for the ULBs.
Details of progress made under the Municipality Demand Side Management (Mu-DSM) scheme of BEE.

5. Efficient Lighting Program

A National Program for LED-based Home and Street Lighting has been initiated by Indian Government in January 15’. This scheme expects to replace 770 million conventional bulbs and 35 million street lights with LED alternatives. It is expected that this would lead to a reduction in peak demand by 21 GW and a life time saving of 60 billion NOK approximately.

The progress of the program has been very encouraging with 47 million units installed under domestic efficient lighting program and 55.1 million units under street lighting national program. It is expected that almost 1.6 GW of peak load demand has already been avoided through this program till now. While the initial plan was to cover 100 cities by 2017 and remaining cities by 2019, it is most likely that the targets will be achieved beforehand given the accelerated pace of development.

Driving down the cost

In order to drive down the cost, Energy efficiency services limited (EESL) along with distribution companies is acting as central procurer with huge procurement volumes driving down the cost. Further a pay per use model is being implemented so that consumers pay a very small upfront cost and remaining capex is being recovered in small installments as part of monthly electricity bills.

The program is also expected to have huge climate impact and is expected to help in mitigating the CO2 emission by 85 million tonnes annually

There exist a strong demand for financers, manufacturers, traders and bulk suppliers. Currently Indigenous manufacturing of LED is limited to assembly with chips and other essential parts imported from other nations. As per budget 2015 – 2016, the government has slashed the Import Excise duty from 12 % to 6 % on all inputs for use in manufacture of LED driver and MCPCB for LED lights and Fixtures & LED Lamps

Opportunities exist to either manufacture the entire product under Government of India’s Make in India initiative or to act as supplier of chips for the manufacture of LED light fixture.

The overall size of energy efficiency market is estimated to be 12 billion USD. Most estimates suggest that till date only 5 – 7 % of the market has been explored, primary in lighting and SME segment, and there exist huge business opportunities especially in implementation of large scale projects. Indian Government is committed to bring about this transformation and we at Innovation Norway will be happy to assist Norwegian companies operating areas of energy efficiency understand this huge market and specific opportunities within


For more specific information and a successful Integration in Indian Market, contact:
Avanish Verma
Market Advisor, Innovation Norway in New Delhi


Leave a Reply

Your email address will not be published.