The Role of Governance, Policy, and Regulation in Facilitating Energy Efficiency

Shantanu Dixit
Prayas Energy Group, Pune, India shantanu@prayaspune.org Asia-Pacific Dialogue on Clean Energy Governance and Regulation 2011, Manila
Prayas Energy Group, ACEF 2011 1

Sharing plan
Lessons from utility DSM program implementation Using National Energy Efficiency Programs with Upstream Incentives to Accelerate Market Transformation for Super-Efficient Appliances in India

Prayas Energy Group, ACEF 2011

Utility CFL DSM Program in Maharashtra State ..1

After repeated demands by consumer groups and regulatory commission utility implemented CFL DSM program Program description

Utility selected manufactures willing to sale CFLs of defined specifications at prices discovered through bidding Manufacturers to sale CFLs directly to consumers Cost of lamp to be recovered by utility through monthly bills and passed on to manufacturers Utility support only through advertisement campaign and facilitating recovery of installments through bills
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Utility CFL DSM Program in Maharashtra State ..2

Program outcome
Nearly 380,000 CFLs sold in six months

Prayas review of the program

Estimated peak saving - 7 9 MW 50% CFLs failed in first six months!

Lesson - Utility scale DSM feasible but challenging

Ensuring quality of product Sustained interest by top management Adequate monitoring and verification Time and resource intensive

Need new approach for accelerated capture of EE resource

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Urgency for promoting super efficient appliances

Increasing stock of appliances due to booming sales caused by consistent high economic growth Super efficient appliances (SEA), 4070% more efficient than the current stock, are commercially available in international markets Large, permanent savings possible if urgent steps are taken to ensure new appliances are super-efficient

RAC: Room air-conditioners

Prayas Energy Group, ACEF 2011

Need to look beyond Standards and & Labeling

Scenario Over a Business as Usual scenario BEE proposed S&L Super Efficient Appliances Program (SEAP) SEAP over BEE proposed S&L Annual savings (Billion units) 2020 20.6 60.7 40.1 Avoided capacity in 2020 (MW) 7,023 21,620 14,597 Avoided cumulative emissions in 2010-2020(million tonnes of CO2) 77.1 212.8 135.7

If 60% of stock for only 4 appliances* in 2020 is super-efficient, we can save 60 billion units and avoid peak capacity of 20000 MW over the business as usual scenario.
*RACs, Refrigerators, TVs and Ceiling Fans. Source: Recent Prayas Energy Group study

3 times additional savings over BEE proposed S&L

Prayas Energy Group, ACEF 2011

Need for a Policy Push National Programs

Common barriers for Super efficient appliances
Uncertainty of demand and high investment on manufacturers side Lack of awareness and high first cost on the consumer side

Limitations to S&L approach (only stick) Policy push for market transformation to SEA
A national level upstream incentive program for manufacturers

Prayas Energy Group, ACEF 2011

National Program (NP) Compared with UtilityAdministered Program

Manufacturer
Decreasing Transaction Costs Point of Intervention
Manufacturer Rebate Program implemented by Utility

Manufacturer Manufacturer Rebate Program Rebate Program Implementedby implemented by Coordinating BEE & EESL
Committee

Wholesaler

Retailer

Customer

Customer Rebate Program implemented by Utility

Utility

State

Multi-state

National

Geographic Scope Decreasing Transaction Costs

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National Program Key features

Financial incentives (in the form of an award or per unit basis) for manufacturers
to overcome the barrier of high first cost of superefficient appliances make super efficient appliance competitive in the market

National level program

transcending boundaries of utilities Larger, consolidated market
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Super Efficient Equipment Program by BEE Overall process

Selection of equipment and setting of specs for super-efficiency (BEE)

GoI funds for manufacturer incentives (BEE) and initiation of process for state funding in later years (EESL)

Bidding to set incentive levels (EESL) Monitoring of sales (EESL); Results to SERCs

Creation of NP Fund (EESL)

Payments to manufacturers from NP Fund

Evaluation by 3rd party

BEE:Bureau of Energy Efficiency EESL:Energy Efficiency Services Ltd. SERC: State Electricity Regulatory Commission FoR: Forum of Regulators

Prayas Energy Group, ACEF 2011

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Benefits of National programs ..1

Overcome problems with utility programs
Reduce burden on state regulators and utilities.

Reduce subsidy requirement for super-efficient appliances (SEAs)

Giving incentives upstream avoids wholesale and retail mark-ups and taxes; Larger market size gives greater bargaining power to single entity negotiating on behalf of buyers

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Benefits of National programs ..2

Reduce transaction costs
interaction is with manufacturers versus millions of customers.

Monitoring and verification is made easier

Focus is only on shipments/sales data instead of surveying millions of customers

Facilitate introduction of SEAs better suited to Indian conditions.

Consolidation of large national market makes the production of appropriately designed appliances economically feasible.
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Thank you
Sources:
1. Daljit Singh and Girish Sant, Strategic Actions for Rapid Implementation of Energy Efficiency, Prayas Energy Group, Pune, India, June 2011. Available on: http://www.prayaspune.org/peg/publications/item/156.html 2. Daljit Singh, Ranjit Bharvirkar, Saurabh Kumar, Girish Sant and Amol Phadke, Using National Energy Efficiency Programs with Upstream Incentives to Accelerate Market Transformation for Super-Efficient Appliances in India, Presented at ECEEE Summer Study, in Belambra Presqu'le de Giens, France, June 2011. Available on: http://www.prayaspune.org/peg/publications/item/158.html 3. Aditya Chunekar, Kiran Kadav, Daljit Singh and Girish Sant, Potential Savings from Key SuperEfficient Electrical Appliances in India. Prayas Energy Group, Pune, India, June 2011. Available on: http://www.prayaspune.org/peg/publications/item/155.html

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