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The energy efficient system in Rashtrapati Bhavan set up by Honeywell promises huge savings on energy consumption and costs associated with it

Rashtrapati Bhavan now has a robust energy efficient system covering its chiller plant, air-conditioning cum energy management system, a retrofit...

The energy efficient system in Rashtrapati Bhavan set up by Honeywell promises huge savings on energy consumption and costs associated with it

Rashtrapati Bhavan now has a robust energy efficient system covering its chiller plant, air-conditioning cum energy management system, a retrofit lighting and a redesigned pumping system in Mughal Garden. Set up by Honeywell, with expertise in the field of energy efficiency, it promises huge savings on energy consumption and costs associated with it.

This is just one of many examples of how the popular route of Escos or Energy Service Companies to going green is being increasingly encouraged. Specialised firms – Honeywell in the above case – act as third party executers and offer their services to clients who want sustainable solutions but not at their own expense.

These niche companies set up solar plants or energy efficient units in buildings or in micro and small enterprises and the client has the advantage of not investing and yet reaping the benefits of a sustainable project.

The CII-Godrej Green Building Council has partnered with the Small Industries Development Bank of India (SIDBI) to promote the concept of Escos in a market seen to have huge potential. “Though the concept is over two decades old, it is yet to gather pace with about 160 registered Escos in India as against 5000 in China,” says S Srinivas, Deputy Executive Director, CII-Godrej GBC.

Excellent opportunity

With the country projected to have a massive (over 100 billion sq.ft) of building cover by 2040, he says India offers excellent opportunity. The SIDBI has initiated a Partial Risk Sharing Facility for Energy Efficiency (PRSF). It inked a project pact, which was part of the $43 million Centre and World Bank innovative project.

To address this huge opportunity, SIDBI is seeking to identify gaps in the existing ecosystem and explore ways to bridge the gap by encouraging development of projects and funding them. Through what they term as ‘risk capital’, the bank finances energy efficiency projects and encourages small companies who have exhausted funds to take up such projects.

The sustainable finance scheme extends assistance to renewable energy projects — solar and wind, mini hydel projects, captive and non captive power units. The CII-GBC and SIDBI have planned a joint go to the market to encourage commercial buildings and small units to take advantage of the Esco model.

An Esco finances the project with own funds or funds borrowed from third parties and provides the performance assurance of the project. The cost of savings is shared as per the agreement between Esco and the client. Such an arrangement could be for installation of a solar unit or even retrofitting energy efficiency chillers, motors or heating and cooling systems.

In another model, the customer finances the project and Esco executes it taking care of its performance issues and assured returns. In case minimum savings are not achieved, Esco bridges that gap. And when it exceeds that, both share the profits.

According to C Shekhar Reddy, former national president CREDAI, “The innovative finance options will help buildings bring about savings through energy efficiency initiatives and projects. While a number of existing buildings have already taken to energy efficiency measures, there is a big opportunity for more savings in a sustainable manner.”

Efforts have been initiated to popularise the concept highlighting some case studies. Rastrapathi Bhavan, Dr Reddy’s Labs and TCS are among those who have followed the route to energy savings.

(This article was published on March 28, 2017)

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