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Background

The Prime Minister’s Council on Climate Change, Government of India, launched the National Action Plan on Climate Change (NAPCC) on 30 June, 2008. NAPCC is a multipronged approach with eight underlined missions focusing on energy efficiency, renewable energy, natural resources and sustainability.

NAPCC recognizes energy efficiency as an important lever to address the issue of climate change. The National Mission for Enhanced Energy Efficiency (NMEEE) is aimed to promote the market for energy efficiency by fostering innovative policies and effective market instruments. The mission has its roots in the Energy Conservation Act, which was enacted in 2001 to adopt principles of efficiency and conservation in the use of energy resources. The Energy Conservation Act led to the creation of a statutory body, the Bureau of Energy Efficiency (BEE), with dedicated powers and responsibilities to promote energy efficiency and conservation in different sectors of the economy. NMEEE furthers the objective of the Energy Conservation Act by focusing on enhanced energy efficiency measures with four specific initiatives under its overall ambit. The Ministry of Power, Government of India, through Bureau of Energy Efficiency (BEE), looks over the progress of the NMEEE mission. 

Initiatives planned under NMEEE

NMEEE includes four specific energy efficiency initiatives under its umbrella. These enhanced energy efficiency measures are aimed at facilitating large energy intensive industries to reduce their energy footprint and catalyze investments in the energy efficiency sector.

• Perform Achieve and Trade (PAT): Assigning energy reduction targets to large energy intensive industries and distributing Energy Saving Certificates (ESCerts) on achievement of the targets. These ESCerts can then be traded.
• Market Transformation for Energy Efficiency (MTEE): Promoting adoption of energy efficient equipments and appliances through innovative business models.
• Energy Efficiency Financing Platform (EEFP): Increasing the confidence of financial institutions and investors to support energy efficiency initiatives.
• Framework for Energy Efficiency Economic Development (FEEED): Promoting energy efficiency initiatives by hedging against investment risks.

The below schematic summarizes the objectives of these enhanced energy efficiency initiatives.

A snapshot of the four initiatives under the NMEEE.

Perform Achieve and Trade (PAT)

Industry consumes about 40-45% of the total final energy consumption in India, making it the largest sector in terms of contribution to the energy and environment footprint of the country. Perform Achieve and Trade (PAT) scheme under the NMEEE mission is a regulatory instrument, which provides an innovative market based mechanism to reduce the energy footprint of the industry sector. Energy intensive industries are selected and assigned targets for reduction in specific energy consumption with a provision of obtaining energy saving certificates which can be traded.

Energy Conservation Act, 2001 provides power to the Central Government to specify any industry as a “Designated Consumer” based on its energy consumption or potential of energy efficiency. PAT Scheme makes it mandatory for these designated consumers to participate in the program and achieve the desired targets for specific energy reduction within the period of three years. At the end of three years, the energy savings achieved by the industries are verified by a team of Accredited Energy Auditors who are appointed by the Bureau of Energy Efficiency. Once the energy savings are verified, Energy Savings Certificates (ESCerts) are issued to the designated consumers by the Ministry of Power, Govt. of India. These ESCerts are then eligible for trading at the two Power Exchanges vis-a-vis Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL) or can also be sold to the designated consumers who are not able to meet their energy savings targets.

PAT Scheme also lays down the provision of penalty for those designated consumers who are unable to meet the desired targets after implementation of measures and purchase of ESCerts.

PAT Status and Achievements

PAT Cycle I - The first phase of the PAT Cycle was executed from 2012-13 to 2014-15. In this phase, 478 number of Designated Consumers (DCs) were selected for reduction of their specific energy consumption. These DCs covered the eight most energy intensive sectors which included Aluminium, Cement, Chlor- Alkali, Fertilizer, Iron & Steel, Paper & Pulp, Thermal Power Plant and Textile. The targets rolled out under the first phase were equivalent to 6.68 million tonne of oil equivalent (toe) whereas the actual savings were reported as 8.67 mtoe which amount to INR 9,500 crores of monetary value. Apart from the energy savings, PAT Cycle - I resulted in 31 million tonnes of CO2 emission reductions and yielded investments of INR 24,500 crores in energy efficiency.

PAT Cycle II - The second phase of the PAT Cycle was rolled out for the period from 2016-17 to 2018-19. The phase was expanded to include new designated consumers from the earlier eight sectors and three new sectors- Railway, Refineries and Distribution Companies (DISCOMs), taking the total to 621 DCs. The second phase of PAT has an estimated target savings of 8.87 mtoe.   

PAT Cycle III - The third phase will be rolled out for the period from 2017-18 - 2019-20 and aims to reduce the energy consumption in 116 new designated consumers. The estimated target savings for the third phase is of the order of 1.06 mtoe by 2019-20.

Market Transformation for Energy Efficiency (MTEE)

The objective of this initiative is to enhance the adoption of energy efficient equipment and appliances by developing innovative business models that improves their affordability. The initiative focuses on coordination among multiple stakeholders to ensure the development of technologies that leapfrog the existing low efficiency and quality standards and deliver enhanced energy savings and emission reductions. Two programs that were developed under this scheme include:

• Bachat Lamp Yojana (BLY): The Bachat Lamp Yojana scheme was launched in 2009 to promote the adoption of Compact Fluorescent Lights (CFLs) in place of the incandescent lamps. This was achieved by offering the CFLs at the same cost as the incandescents to consumers. The scheme, since its inception in 2009, has undergone continuous advancements and modifications. In 2015, the incumbent government rebranded the Energy Efficiency Lighting Program to Domestic Efficient Lighting Program. On May 1, 2015, Prime Minister Narendra Modi launched the Unnat Jyoti by Affordable LEDs for All (UJALA)  program, replacing the Bachat Lamp Yojana scheme, to promote the use of more efficient LED lighting for households.
• Super Efficient Equipment Program (SEEP): The Super Efficient Equipment Program aims to improve the energy efficiency of domestic sector by promoting the development of super efficient appliances. Under this program, the manufacturers are incentivized by the government to incorporate the technology advancements and elevate the efficiency standards of the equipment. BEE launched the program in the XII five year plan with a focus on ceiling fans, considering its wide use and impact on domestic energy consumption. 

Energy Efficiency Financing Platform (EEFP)

The Energy Efficiency Financing Platform (EEFP) initiative of the NMEEE mission is intended towards catalysing the finances for energy efficiency sector by addressing the barriers and challenges in market development and project implementation. It provides a platform for financial institutions, investors and project developers to engage in knowledge exchange on energy related aspects and thus increase their confidence in supporting energy conservation and efficiency projects.

Under this initiative, the Bureau of Energy Efficiency has signed MoUs with M/s. PTC India Ltd, M/s. SIDBI, HSBC Bank, Tata Capital and IFCI Ltd to promote financing for energy efficiency projects. An MoU has also been signed with the Indian Banks Association for conducting training programs for scheduled commercial banks to develop a better understanding on energy efficiency financing  and thus expedite the projects. 

Framework for Energy Efficient Economic Development (FEEED)

The Framework for Energy Efficient Economic Development (FEEED) initiative of the NMEEE mission addresses the concerns of risk averse banks and investors through innovative fiscal instruments. Under this initiative, BEE institutionalized two types of funds in order to protect the confidence of banks and investors in energy efficiency projects and to avoid the stalling of projects due to lack of funds.

• Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE): This fund is intended to support the banks and investors offering loans for implementation of energy efficiency projects. The fund guarantees a risk cover of 50% loan amount or INR 10 crore per project, whichever is less.
• Venture Capital Fund for Energy Efficiency (VCFEE): This fund is intended towards promoting equity financing in the energy efficiency sector and thus reducing the impact of non-availability of debt financing to small size companies and projects. The fund provides last mile equity support for successful implementation of energy efficiency projects. This is equivalent to INR 2 crore or 15% of total equity whichever is less.