Friday, 15 January 2016

Article - Astha Ummat

Tackling Information Asymmetry in the Adoption of Energy Efficiency in the Indian Buildings Sector - The Case of NITI Aayog

Astha Ummat
Young Professional, NITI Aayog 

Residential and commercial sectors account for 29% of the total electricity consumption in India, and this share is rising at a rate of 8% annually. A significant part of this consumption share goes into meeting the energy demand from heating, cooling and lighting. The Indian commercial sector exhibits a massive savings potential on the demand side, through energy efficiency interventions. As per a recent estimate, there is going to be a rapid growth in buildings in India, and the present building space will comprise only 30% of the likely covered area in 2030. Hence, buildings will continue to be a major energy guzzler in the Indian context.

In order to leverage the opportunity of ‘locking in’ energy savings in India’s buildings, there is a need for tackling various gaps including the problem of information asymmetry, through the propagation of project experiences and best practices and the issue of transactional barriers. While new buildings are more amenable towards adopting efficient technologies, it is the existing stock of buildings, which offer a challenge to the economy. It is little appreciated that energy efficiency is also a money saver in a short period, and the Energy Services Company (ESCO) model even obviates the need for a building owner to spend money, which is sometimes a vital concern for a Government.

The Government at various levels from New Delhi to Panchyat levels, is also a major energy consumer in its offices, hospitals, railway stations, Public Sector Undertakings, and staff colonies. Energy efficiency measures in these existing facilities can save enormous quantities of energy and catalyse a new set of entrepreneurs. NITI Aayog (erstwhile Planning Commission of India) has recently set a national precedent by initiating two types of energy efficiency interventions. The aim of the exercise was to address the barrier of information asymmetry, by showcasing NITI Aayog as a demonstration project for energy efficiency interventions and map the way forward in terms of an easier and widespread adoption of energy efficiency measures in the buildings sector, with Government and Public sector buildings taking the lead.

The process of introducing energy efficiency in NITI Aayog started in June 2012. In close consultation with the Central Public Works Department and the Bureau of Energy Efficiency (BEE), NITI Aayog facilitated the applicability of energy efficiency retrofits in order to move towards securing a BEE 5 star rating for its office and, assessed the feasibility and subsequently deployed Solar PV panels on the roof top at NITI Aayog.

NITI Aayog undertook this exercise as a proof-of-concept for adopting energy efficiency measures in buildings, particularly those of the Government. Undertaking this exercise helped scale the wall of the barriers for easy adoption of energy efficiency interventions in government buildings.
The exercise was carried out in two phases. Following the completion of Phase I of the retrofits which targeted 60% of the building load, and the deployment of a 78.24 KWp Solar Photovoltaic System on the roof top of the office building, NITI Aayog was awarded the 5 star energy efficiency rating by the Bureau of Energy Efficiency in February 2015. It has also, with the help of the rooftop solar PV panels, started generating its own electricity, which contributes to the use of electricity in the building.

Energy efficiency retrofits were carried out for air conditioners, ceiling fans, lights and pump sets, wherein the relatively inefficient appliances were completely replaced by their energy efficient counterparts. Energy savers for air conditioners were also deployed, and the existing capacitor system was augmented to improve the power factor of the building. In terms of quantitative gains, NITI Aayog, in the first year of adoption of these interventions was successful in saving 19% of the previous year’s energy consumption, and 20 lakh INR in its electricity bill (a 13% reduction from the previous year). Taking into account, the capital investments and the projected savings, NITI Aayog is expected to recover its investment in the next 3 years, after which all savings in the electricity bill would be savings accrued in the institution. A cloud-based Energy Management and Information System (EMIS) is being used to monitor the buildings energy consumption in a transparent manner.  This provides a strong case for adoption of energy efficiency interventions in other Government buildings.

To promote and ease the replicability of this exercise in other Government buildings, NITI Aayog has relentlessly pursued the acting agencies (Central Public Works Department, Ministry of Urban Development etc.) for facilitating policy interventions in light of the challenges that it faced in terms of transactional barriers to adapt the ESCO model. NITI Aayog was successful in getting directives for taking up the ESCO model in its own building for the next phase of energy interventions. This opens up the path for conversion of a large stock of Government buildings to energy efficient star rated consumers, resulting in large electricity and money savings.

This pilot serves as a classic example for policy influence from one government department to another. It also highlights the role that Governments can play in building an ecosystem for advancing energy efficiency, and tackling the barriers associated with it.

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