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Models for ESCO based DSM Investments

Presentation to CEO Forum on DSM

Date: 13th December, 2013

Venue: Delhi

Energy Efficiency Services Limited

EESL Business - Objectives


• Create market access in public and private facilities –handholding, information dissemination, capacity building

• Develop projects for various sectors addressing specific barriers and challenges

• Design innovative risk mitigation measures to address technical, financial and regulatory risks

• Provide and secure funding at reasonable rates for project implementation

• Develop model templates necessary for project implementation by including the above

• Disseminate best practices to stakeholders so that replication can occur

ESCO Business Models


• Shared Savings or Guaranteed Savings

First project at Nashik Municipal Corporation approved by Board (EESL

Investment Rs. 40 crores)– financial closure achieved (loan from Union

Bank of India) – implementation to start on soon

EESL methodology developed following the success of Nashik

Puducherry street light project to commence (Investment Rs. 25 crs) in

January

Mohali and Ludhiana agreements finalised (Total investment – Rs. 100

crores) – DPR preparation to start in December

5 MCs in West Bengal to sign up by December (Total investment – Rs. 400

crores)

5 MCs in Andhra Pradesh to be initiated early next year (Total investment –

Rs. 100 crores)

Municipal Street Light


EESL Street Lighting Methodology

• MoU to be signed between Municipalities & EESLMoU

• Detailed walk through energy audit for data validation of existing DPR and Joint VerificationDPR/ Re Validation Of DPR

•To assess actual energy savings and determination of annuity payments and finalising technical specifications

Technology Demonstration

• Agreement to be signed between Municipalities & EESL for implementation.Agreement

• The Payment security mechanism to be finalized.Payment Mechanism

• EESL will implement the project based on own resourcesImplementation

• Deemed saving approach usedM & V

Overall cost (energy and O&M) savings to Municipalities

Street Light – costs savings


Repair & Maintenance Cost Savings

S.No. Municipality

Present

Electricity Cost

INR in Lacs

Present O & M

Cost INR in

Lacs

Total (Before

LED

Retrofit)INR

in Lacs

Annuity

(Inclusive

of O &M)

INR in

Lacs

Electricity

Cost with

LED INR in

Lacs

Total

(After

Project)

INR in

Lacs

Monetray

Savings

annualy

INR in Lacs

1Kolkata Municipal

Corporation8,754 1,944 10,697 7,405 2,398 9,802 895

2Sangali Municipal

Corporation 596 58 654 432 190 623 32

3Solapur Municipal

Corporation 693 110 803 543 218 762 41

4Nagpur Municipal

Corporation2,053 300 2,353 1,585 590 2,175 177

5

Ludhiana

Municipal

Corporation

3,235 240 3,475 2,273 982 3,255 220

6

Faridababd

Municipal

Corporation

767 37 804 519 253 773 31

7Jabalpur Municpal

Corporation371 63 434 295 107 403 32

8Trichur Municipal

Corporation417 26 443 288 123 411 32

9

Hyderabad

Municipal

Corporation

13,205 163 13,368 8,484 4,001 12,484 883

10Bikaner Municipal

Corporation322 19 341 221 102 323 18

First phase of Hubli AgDSM project covering 600 pumps to be completed

by December – 35% savings sustained

Second phase covering 10,000 pumps in HESCOM to be taken up in

December

Replacement of 1500 pumps in Mysore initiated – PGCIL appointed as

implementing partner

BESCOM signed agreement to replace 1 lakh pumps – DPR for first phase

covering 15,000 pumps under preparation

Proposal to replace 3000 pumps in Haryana approved by Government

Feasibility for promoting solar pumps evaluated – possible in Haryana as

there is a government subsidy of 40% in addition to MNRE subsidy of 30%

Agriculture Pumping


EESL Ag DSM Methodology

• MoU to be signed between DISCOM & EESLMoU

• Detailed energy audit for existing pumpsDPR/ Re Validation Of DPR

•To assess actual energy savings and finalisingtechnical specificationsTechnology Selection

• Agreement to be signed between DISCOM & EESL for implementation.Agreement

• The Payment security mechanism to be finalized -ESCROWPayment Mechanism



Subsidy savings to States

Innovative programme for replacement of incandescent with LEDs at Rs.

25 each developed – BLY architecture followed

Leverages energy savings for cost recovery

In-principle approval of JERC obtained for first project in Puducherry

Sample survey completed in Puducherry – 7.5 lakh incandescent to be

replaced

Three models for cost recovery evolved

(a) Standards Offer Programme – long term contract with DISCOM to ‘buy’ energy

savings from EESL (Puducherry, West Bengal)

(b) Subsidy reduction of State Governments (Bihar and Jharkhand)

(c) Using DSM regulations

Household Lighting - DSM based efficient Lighting Project (DELP)


EESL DELP Methodology

• MoU/ Letter of intent between DISCOM & EESLMoU/ Letter of Intent

• Sample survey to ascertain population of ICLs and usage patternSample Survey

•To assess actual energy savings and finalisingtechnical specifications of LED lampsTechnology Selection

• Petition to be finalised for cost recovery for submission to ERCDSM-SOP Petition

• The Payment security mechanism to be finalized.Payment Mechanism



Overall cost (energy) savings to DISCOMs

EESL included as the main implementing agency for World Bank

Chiller EE programme by MOEF

Grants to EE chillers to be routed through EESL

EESL to aggregate projects and implement them on ESCO mode

Almost 300 chillers being targeted over 2 years – total subsidy to be

disbursed USD 4.5 million (Rs. 27 crores)

Project redesign being finalised with World Bank and MOEF

Tata Power supporting aggregation of projects in Mumbai and Delhi

For other locations, a Project Management Consultant will be hired

after the redesign is formally approved

Chiller EE


Chiller EE Methodology


Yes

Consumer communication

Preliminary data collection

Feasibility and Potential assessment

Interested in EESL Project Financing

Third party energy audit

Develop Detail Project Report (DPR)

Bidding, vendor selection and negotiation

Letter of intent by consumer

Third party energy audit and bid document development

Contract agreement between EESL and Consumer

Order placement

Annuity payment starts as per terms of contract

Delivery, installation & commissioning

Scrapping of old chiller

Receive 20% subsidy payment

Transfer of asset to consumer at end of annuity period

Order, Installation, Commissioning by Customer

Scrapping of Old Chiller as per WB Conditions

Receive 20% Subsidy payment

Pre and Post Energy Measurement by Tata Power

No

EESL’s proposal to leading utilities in Mumbai on energy efficient HVAC program


Op

po

rtu

nit

ySo

luti

on

EESL’s Impact

Identifying, designing and implementing intervention using its own funds

Government norms of procurement, followed for sourcing the goods and services by open, competitive bidding

Technical performance risk is passed on to the equipment to ensure the achievement of expected outcome

Facility Owner trained on best practices and technical know-how

Close coordination with regulatory to ensure a comprehensive solution and outcome

Replacement of 50,000 fans Replacement of 10,000 Unitary ACs Replacement of 20 large HVACs Retro-commissioning of 20 large HVAC

systems The energy savings from the program is expected to be 18.6 MU

Comprehensive Administration and Investment Based Service

Design techno-economic projects Finalize technical specifications,

monetize energy savings and develop simple monitoring and verification protocols

Devise risk mitigation measures for the facility owners

Implementation of the project using third party financing on ESCO mode.

Validating results, documentation and authentication of energy savings

Himachal Pradesh

State Electricity

Board

DakshinHaryana BijliVitran Nigam

Ltd.

Madhya Pradesh Power

Corporation Limited

Orissa Electricity Regulatory

Commission

Punjab State Electricity Regulatory

Commission

Northern Power

Distribution Company of

AP Ltd.

UttarakhandPower

Corporation Ltd

Facilitating DSM Action Plan-EESL Initiative


EESL Value Addition

ESCO mode large scale

Implementation

Upfront investments

Monetizing through energy

savings

No cost to DISCOMs

DSM Action Plan Formulation

• Identification of DSM potential

•Development of individual DSM programs

•Cost benefit analysis,

•M&V protocols

•Regulatory Mechanism

•Detailing institutional requirements

Large Scale Implementation of Action Plan

Thank You


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