Two big and ambitious announcements in the last three months have given me real hope that energy efficiency in general, and ESCO in particular, will play a major role in achieving the commitments made by Hon'ble Prime Minister Shri Narendra Modi at COP 26 in Glasgow Should be done Two of them are part of the Panchamrut commitments: a) a 45% reduction in carbon intensity by 2030; b) a reduction of 1 billion tonnes of CO2e by 2030; And second and perhaps more important the target of saving 150 million tonnes by 2030 has been set by the Energy Minister Shri RK Singh.
Various studies, including a study conducted by the Alliance for an Energy-Efficient Economy in 2017, estimated that the energy services market in India is Rs 1 lakh crore or about 5-6% of the national energy savings target set by the energy minister. , This may seem like a low share for ESCO, but barring EESL (turnover of Rs 1800 crore for FY 2020-21), India has not had much success in making India a viable and dynamic ESCO market.
I have three recommendations that could kick-start the ESCO sector to capitalize on the significant tailwind generated as a result of the two announcements mentioned earlier:
After indicating its intention to create a vibrant energy services sector in the country, the government has been asked by the private sector – energy services, energy management and distribution companies and financial institutions and investment firms to support this government initiative in a public-private partnership model. . While the entire ESCO industry will benefit from the measures being taken by the government, it will be important to ensure that "energy services performance contracts" are signed and executed quickly. Energy savings must be validated through rigorous and cost-effective measurement and validation schemes developed using international best practices such as the International Performance Measurement and Verification Protocol as it is the basis for performance contracts around the world. Energy Saving Certificates can be issued to ESCOs similar to PAT EScerts which can be traded in future carbon markets.
Energy efficiency is the cheapest, fastest and cleanest form of creating a sustainable roadmap for the country and by recognizing this fuel first, it is time to make a strong and compelling business case by helping to build an energy services ecosystem that will capitalize on the business . Opportunities are to be tapped, which can create 20 lakh clean jobs as per AEEE's discussion with ESCO. Bold steps are now needed in the ESCO sector to achieve India's commitments to reduce carbon intensity.
1. The government should lead by example and build a pipeline of at least Rs 1,000 crore EE projects through state PSUs within the next 6 months. It will achieve three objectives in one go: a) the Government of India will show that it has already initiated action through the largest PSUs to develop a roadmap to reduce carbon intensity by 50% by 2030 Is; b) Since these PSUs are profitable and have high credit ratings, large companies and private sector investors will see this as a positive sign and an invitation to build a long-term business. This is the template followed in the two largest ESCO markets - the US and China where governments lead by example and send clear signals to the private sector that ESCO businesses are running into the multi-billion dollar; c) This will have a spillover effect due to which many private sector enterprises are adopting the ESCO model, which they have been very slow to adopt due to myriad reasons.
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