Unlocking MSME Potential in the Lighting Sector

Potential, Challenges & opportunities

Dr Sandeep GargIGEN-BEE Program19th Nov, 2014

• Drive for energy conservation• Energy efficient appliances• Alternative forms of energy

Concerns of Government

LEDs have many advantagesLight Emitting Diode (LED)Advantages of LEDs

Long lasting and low maintenanceEnergy efficientDynamic (digitally) color control Small (design flexibility)Directed light (= increased

efficiency)Robust and vibration proofTurn on instantlyNo IR and UV radiation in the beamCool beam of lightLow voltageNo mercury

Conventional lighting sources

• Incandescent

• Halogen

• Fluorescent

• Gas-discharge

1970 1980 1990 2000 2010 2020 20300

20

40

60

80

100

120

140

160

180

200

White light efficacy: Growing rapidly beyond conventional sources

Projections from US DOE 3/09

LED

Effica

cy (L

umen

s/W

att)

PS Metal HalideT-5 Lamp

T-8 lamp

T-12 EST-12 fluorescent

LED - Cool White

LED - Warm White

OLEDs

* Efficacy at Light source level, Level 0

Governments as early LED adopters

Through LED deployment, Cities, States and Central Governments can:

• Achieve energy efficiency and carbon reductions• Improve citizen safety in public spaces • Save public money• Support job creation in LED industries• Accelerate scaling up process to achieve LED price

reduction • Deliver aesthetic revitalization of urban areas • Improve resilience to volatility in energy prices • Build a wider branding: the ‘high-tech, clean city’

Significant savings potential across segments

• Street Lights (Potential of up to 50% savings) – Street Lights with Fluorescent lamps: 2.5 Crore– Street Lights with HID, Gas Discharge lamps: 22.5 Lakh

• Down Lights (Potential of up to 80% savings)– Estimated Retail outlets with GLS/CFL points: 50 Lakh – Estimated points, with average 6 DLs per outlet: 3.0 Crore

• Home users (Retrofit LED lamps)– Government procurement under RGGVY per annum: 3.5 Crore– Other Government DSM and CDM schemes: > 10.0 Crore

Estimation of Total Space Lighting Demand

• CalculationsTotal Demand42.676 GWResidential33 GW

Commercial10 GW

Sector Public commercial

Private commercial Residential

Floor space in sq.m 215800000 614200000 9668788370

LPD in W/sq.m 9.07 12.3 3.43

Space lighting demand in GW 1.957 7.554 33.164

Space Lighting Demand = Floor Space × LPD

Source: MoP/Shakti /PWC Study

National lumen demandForecast for next Two Decades

• Lumen-hour demand in India is estimated to increase by approximately 82% in residential buildings and 72% in commercial buildings over the next two decades

2011 (base year)

2016 2021 2026 20310

1000

2000

3000

4000

5000

6000

7000

ResidentialCommercial

Ter

alum

en-h

ours

Source: MoP/Shakti /PWC Study

Penetration Based SavingsShare of LED in Future Lighting Market

20112012

20132014

20152016

20172018

20192020

20212022

20232024

20252026

20272028

20292030

20310%

20%40%60%80%

100%

Share of LEDs in the overall lighting market

Commercial Scenario 1 Commercial Scenario 2 Residential Scenario 1Residential Scenario 2

It can be observed that LED market would capture a substantial portion of the commercial lighting faster than it can capture the residential market. This is inline with the payback curves and the general understanding of the market. Acceptability of newer technologies with a longer payback period is more in commercial consumers than in residential consumers

Source: MoP/Shakti /PWC Study

Determination of Savings PotentialPresent Savings Potential

• Formula

• Estimation of Market Share

•

WlmLEDofEfficacy

hrtlmDemandlightingTotalWlmEfficacy

hrtlmmarketLightingofSharePotentialSavingsEnergy

iesTechnoalConvention //log

Demand Lumens Total

Efficacy Consumptn Wattage- demandlightingaof Share Market

SectorEnergy saving potential in Giga watt hours

GHG emission reductions in Million tCO2

Residential buildings 22647.4 19.42

Commercial buildings 7195 6.17

Source: MoP/Shakti /PWC Study

Penetration of lighting technologies

• The penetration of various lighting technologies in the present day’s lighting scenario which will play a key role in the forecasting of lighting demand and the development of key policies for further growth of the lighting industry.

SourcesResidential: Load research study in Gujarat by IRG/USAID; Himachal surveyCommercial: Load research study in Gujarat by IRG/USAID

T12 tube light - magnetic

choke30%

T12 tube light - electronic

choke4%

T8 tube light - magnetic

choke11%T8 tube light - electronic

choke6%

T5 tubelight4%

Incandescent lamps25%

CFL20%

LED0%

Residential Buildings

T12 tube light -

magnetic choke25%

T12 tube light -

electronic choke

9%

T8 tube light -

magnetic choke

7%T8 tube light - electronic

choke11%

T5 tubelight6%

Incandes-cent lamps

4%

CFL38%

LED0%

Commercial Buildings

Source: MoP/Shakti /PWC Study

Key Drivers for Penetration of LEDs in India

12

• In the next two decades, market in India for interior illumination purposes is estimated to increase by • 82% in residential buildings • 72% in commercial buildings

• Today, the annual energy savings potential and GHG reductions are to the tune of• 29,842 Gwh• 25.59 million tCO2

• By 2031 more than 80% of the lighting market will be captured in both the building categories. The future market penetration in commercial buildings will be very aggressive as compared to the residential buildings.

• Demand aggregation as recommended by Government of India could be one of the key strategies to kick start

the market penetration in large scale and well be very economical for replacing all the conventional technologies for all categories of consumers.

• This could also motivate the key players in the industry to establish production/manufacturing facilities in the country.

. • The LED technology is still emerging and there is significant potential for growth in the efficacy, cost

effectiveness and life of the fixtures.

Source: MoP/Shakti /PWC Study

Source: Deptt of IT, Govt of India

Source: Deptt of IT, Govt of India

Source: Deptt of IT, Govt of India

Contribution of MSME in ESDM

• MSME/SME sector largely contribute to the electronics sector

• Largest employer of skilled labour globally in the electronics sector

• Potential of large scale women employment in this sector

• Potential of tilting balance of trade in India’s favour because of domestic manufacturing.

• Large technical pool and talent available in the Electronics sector.

• Potential of making A TRILLION CHIPs a reality.

Support required: Encourage LED adoption

• Lack of Funding for MSME in the organized sector.• Enforcing compliance to BIS - Products and application

– Establish monitoring mechanism– Policy direction on LED adoption in Government projects for

this sector– Insist on purchase from local manufacturer to encourage

establishing LED production in India as per DietY criteria• Policy directive for ensuring level playing field for MSME/SME

sector in the procurement criteria.• Government Guarantee to protect investment in large scale LED

upgrade PPP/ESCO performance contracts• Lack of support for Exports in this sector. A combination of PMA

and export contribution in this sector can help ….

Support required: Encourage LED adoption

• Training of Skilled Manpower for retrofitting of this technology

• Intervention of Ministry for supporting the efforts of the MSME/SME

• Creating a mechanism of skilled training in this sector by supporting associations financially and technically in clusters.

• Creating separate credit lines for MSME sector for undertaking projects upto 5 crores without Collateral security.

• Aggregation of funding for large projects through the Ministry or through NSIC.

Sandeep Garg, Ph.Demail : sandeepgarg05@gmail.com