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Saurabh Kumar, Managing Director, Energy Efficiency Services Limited (EESL)

15 Feb 2014

You cannot touch it, you cannot feel it, yet it goes a long way in improving the way resources are utilized and distributed. We are talking of “efficiency” – that intangible which cannot be measured but if kept sight of, can lead to significant savings. In the field of energy, one such body which is working on improving the efficiency of our systems and appliances is Energy Efficiency Services Limited (EESL). Its Managing Director Saurabh Kumar speaks to Shakeb Ayaz about the thought that went into the setting up of this public sector company and how it is working on changing the mindset of people about the need to invest in energyefficient products and systems. Excerpts

What was the motive behind setting up of Energy Efficiency Services Limited (EESL)?

It was set up as a lead implementing arm by the government under the ministry of power in 2009. We are a public sector company – a joint venture of four public sector undertakings and are the implementing partner of the Bureau of Energy Efficiency (BEE) in the national mission for enhanced energy efficiency (NMEEE) in India. Our board has representatives of the four promoter companies besides representatives from ministry of power and BEE. The bureau is the policy and regulatory body while we use those policies and implement them in the public realm. Just as Central Electricity Regulatory Commission (CERC) is the regulatory body and Power Grid is the implementing agency, similarly we are the implementing body for BEE. That is our structure, domain and expertise.

What is the potential of the market?

There is an enormous opportunity to not only attract private investments but also to conserve huge amounts of energy. The national mission estimates that if all the `74,000 crore of the resources are tapped, the total added capacity will be 20,000 mw. That is a big number.

How much energy can we save from being energy efficient and what can be its mechanism?

We can save about 15 to 20 per cent of what we are producing right now – 120,000 billion units -- by adopting energy-efficient practices.

Is energy efficiency practiced only in the case of street lights or in big units like power plants or other power consuming units also?

The major potential is in the industrial sector which is 40 per cent of total commercial energy consumed. For that, BEE has come up with a regulatory framework called the Perform, Achieve and Trade mechanism. Apart from that, it is street lights, municipal pumping stations, municipal sewage pumps, agriculture sector, buildings and other distribution utilities.

Are you not looking at the industrial sector?

We are very much into the industrial sector. While the bureau has put up targets for the industry, we are helping it with technical inputs to help achieve those targets. Energy is a major input cost. If we save energy there is cost saving for the sector.

What are EESL’s major projects in India?

We are starting the first major public lighting project of the company which is replacement of about 70,000 street lights in Nasik Municipal Corporation. It will be completed by June 2014. That is the first project. We have similar projects in 15 other municipal corporations around the country – Calcutta Municipal Corporation, Chandigarh Municipal Corporation, Ludhiana, Mohali and in Gujarat, among others. We will change 8,50,000 street lights in the next two years. We will also be changing 1,50,000 agriculture pump sets free of cost in Karnataka, Haryana and Andhra Pradesh.

How does EESL work with other players of the market, both in public and private sector?

Essentially EESL is a service company. Our role is to go to the public sector, identify the opportunities for energy saving, efficiency and then design the project. To attract the private sector, we reduce the risks in investment.Then through the PPP route we select the private sector partner which implements the project on the ground. For example in Nasik, one of the leading energy manufacturers is our partner – 50 per cent equity partner. So, that is the way we are promoting private investment and we are trying to identify opportunities in the public sector and making sure that things get implemented on the ground.

What is your commercial and business model?

We are an energy service company. We first identify the opportunities of energy efficiency and saving in any facility – could be a building or municipal corporation – and then based on that we develop a techno-commercial project. For instance, if I invest in this energy efficient equipment, the overall cost saving could be easily monetized. Part of it is paid out in a period of five to seven years which will service the investment of anybody who is investing. This is our business model. But there are risks involved, If you notice, energy saving cannot be monitored physically. It has to be measured through an agreed methodology. Both EESL and the owner should agree on the modality. That is a major reason it has not worked in India. We are trying to evolve a process where this methodology of determination becomes simple. It is easily understood by both the facility owner and the energy service company so that it becomes a normal business practice. That is our aim and in the municipal sector we have come out with an annuity based approach. It is based on specifications and an agreed saving which is demonstrated through a project. EESL and the municipality agree on the annuity agreement and then the investments happens. This is our main business model.

What are the major challenges that you face while doing a project?

There are two major challenges. First, the level of awareness at the municipal level and at the state government level is very low. This is a very new kind of business that we are trying to propagate and therefore convincing these people is difficult. There are new set of documents, as I said energy saving cannot be metered and it has to be on an agreed methodology. These contracts are very new to the government, even Central government for that matter. Therefore our aim is to standardize these models through BEE. Some best practices of energy saving and standard templates need to be adopted so that they don’t have to do their due diligence which is one of the basic problems. Second, even in private sector there are very few people who understand this project. We need more people on the ground at the state level who can help the facility owner and the municipality to design such projects. We are working with BEE to enhance their capacities and capabilities so that these things start happening on their own.

Who are the major collaborators in the private sector with which EESL works?

In the lights sector there are all the major companies such as Philips, Osram, MIC and Havels among others. We are also in touch with Elkoma which is electrical manufacturers association and also Ledma which is solid state lighting association. So we are trying to work with all the verticals of industry, be it conventional lighting or the LED lighting, particularly who are very good in efficient lighting mechanism.

Do you also involve in R&D of the energy efficiency project and develop technology for the same?

The R&D work is done by the Bureau of Energy Efficiency and industry. We are not averse to it, we would like to do it but so far we have not begun in that direction. This is something which is high on our agenda. In the coming years we would like to focus more on the R&D part so that we come out with products which are very good for the sector and are energy efficient.

Do you work in collaboration with ministry of urban development, state government and other agencies? It is a complex interplay of various ministries and agencies.

Yes. There has to be a shared government vision as it involves an interplay of various governments and agencies. That shared vision has come from the national mission for enhanced energy efficiency which the government of India has approved. Ministry of power, Bureau of Energy Efficiency, EESL, ministry of urban development and many other ministries are part of that. We work as part of the whole set up. It is not difficult to coordinate because energy efficiency is high on the agenda of many ministries, including the ministry of urban development. The ministry has issued advisory to all the states that they should now convert to intelligent power saving LED lighting. So, it is a question of putting all the people together in one room which is our intention and mission for saving power. We put all the major key players from the industry, from the government, from the financial sector on one platform and discuss what are the reasons for failures up till now and come out with the methodology to address the problem.