Interview with Saurabh Kumar: “EESL has played a vital role in the growth of the energy efficiency market”

“EESL has played a vital role in the growth of the energy efficiency market”

Energy Efficiency Services Limited’s (EESL) flagship initiatives such as the Unnat Jyoti by Affordable LEDs for All (UJALA) and the Street Lighting National Programme (SLNP) have transformed India’s energy efficiency landscape in recent years. It is now working towards replicating the success of these programmes in a host of other initiatives being taken such as smart metering and electric vehicle (EV) charging infrastructure. In a recent interview, Saurabh Kumar, managing director, EESL, talked about the company’s recent programmes and its plans for the future. Excerpts…

What is your perspective on the power sector’s performance during the past year?

India’s power sector is undergoing a major change. Enabled by conducive pro-business policies and manufacturing growth, energy demand is on a steady growth trajectory. The government has implemented various progressive initiatives to maximise power generation capacity and improve distribution. With over 130 million people having been connected to the power grid since 2013 and initiatives to deliver 24×7 power to all households by March 2019, India has made incredible strides in democratising energy access. A close look at the electricity index reveals that it has been growing considerably in the core sector. Per capita electricity consumption, which was a mere 16.3 units in 1947, increased to 1,122 units in 2016-17. On the distribution front, the Ujwal Discom Assurance Yojana (UDAY) has improved the ability of discoms to buy more power and consequently, serve more customers, adding further to the sector’s overall growth.

What has been the growth in India’s energy efficiency market in the past one to two years?

There is a growing market around India’s energy efficiency drive. The country is witnessing the emergence of a competitive power market, with an increased focus on access, efficiency, quality, affordability of supply and decarbonising of the sector. This, in turn, is giving rise to various innovative business models, which are bound to disrupt the conventional energy landscape. EESL’s flagship SLNP and UJALA programmes have played a vital role in the growth of the energy efficiency market in our country. Under the SLNP, EESL has installed over 9.7 million LED street lights. This has resulted in estimated energy savings of 6.52 billion kWh, with an avoided peak demand of 1,086 MW and an estimated greenhouse gas (GHG) emissions reduction of 4.49 million tonnes (mt) carbon dioxide (CO2) per year. Similarly, under the UJALA programme, EESL has distributed over 358.6 million LED bulbs across the country. This has led to  estimated energy savings of 46.58 billion kWh per year, and an avoided peak demand of 9,326 MW and an estimated GHG emissions reduction of 37.73 mt of CO2 per year.

What has been EESL’s experience in the smart metering space? What are the next steps planned for the segment?

As India makes rapid strides towards its vision of providing universal access to affordable power, it becomes important to eliminate the challenges faced by the discoms. To overcome roadblocks such as billing inefficiencies and unauthorised power consumption that contribute to discoms’ financial woes, the government is accelerating the adoption of smart meters. We are pleased to support the discoms in their pursuit of energy sustainability and accountability, with the adoption of future-ready technologies like smart meters.

Recently, we have successfully completed the installation of over 500,000 smart meters in Uttar Pradesh, Delhi, Haryana, Bihar and Andhra Pradesh under the Government of India’s Smart Meter National Programme (SMNP). With more than 400,000 smart meters, Uttar Pradesh has the highest number of smart meters installed. Uttar Pradesh Power Corporation Limited signed an MoU with EESL last year to roll out 4 million smart meters which would enable discoms to save Rs 80 billion over eight years. After deploying smart meters, the Kanpur Electricity Supply Company witnessed an 11.2 per cent increase in its average revenue per unit during the period January to April 2019 over the 2018 revenues. Similarly, Paschimanchal Vidyut Vitran Nigam Limited, a discom in Meerut, has witnessed a 21 per cent increase in its average monthly revenue. Smart meters also enhance consumer convenience and rationalise electricity consumption. The SMNP aims to retrofit 250 million conventional meters with smart variants, which will lead to an overall 80-100 per cent improvement in billing efficiency.

What is the expected impact of the super-efficient air conditioners scheme on utilities?

The super-efficient air conditioners (SEACs) programme was kick-started formally in February 2019, with the signing of an MoU between BSES Rajdhani and EESL. Further, MoUs with BSES Yamuna and Tata Power were signed in March 2019 and May 2019 respectively. These strategic partnerships were created to deploy a demand aggregation strategy, by using the consumer base and outreach facilities enabled by these utilities. This first-of-its-kind in India programme will create a roadmap for other municipalities and electric utilities to bring substantial benefits to the nation.

Under this programme, EESL has made super energy efficient ACs (ISEER 5.4) available to consumers at a cost of Rs 41,300, including goods and services tax (GST) and delivery charges, which is lower than the cost of 5-star ACs and comparable to that of 3-star ACs available in the market. These ACs are 20 per cent more energy efficient than the typical 5-star ACs (ISEER 4.5) and over 50 per cent more efficient than a typical 3-star AC (ISEER 3.5). This would lead to a reduction of 280 kWh and 410 kWh in annual electricity consumption, as compared to 5-star ACs and 3-star ACs respectively. Once all 50,000 ACs are sold, it will lead to a peak demand reduction of 180 MW. We have announced the expansion of the SEAC programme to six more cities. Besides Delhi-NCR, EESL will be selling SEACs in Mumbai, Bengaluru, Kolkata, Hyderabad, Chennai and Jaipur.

What is your perspective on the growth of the e-mobility segment in India so far?

India is at an opportune point in time when it can leapfrog technologies and directly adopt EVs, which are a zero-emission mode of transport. The policy landscape for e-mobility is evolving, which is bringing in more clarity and providing an impetus to the manufacturing industry while enabling access for consumers. Further, schemes like FAME II and the reduction in GST rates are giving a major push to the auto industry and encouraging it to explore EVs.

EESL’s EV programme has fostered a conducive ecosystem for EVs, encouraging more industry participation as well as consumer adoption. EESL is looking to electrify the 500,000 cars used by the government. We have already completed the procurement of 10,000 e-cars. The price discovered by EESL for EVs through the tendering process was 25 per cent lower than the retail price of similar cars in the market. Till date, 1,510 EVs have been deployed, or are at various stages of registration. EESL has signed agreements with various public sector undertakings, government departments, and the governments of Delhi, Haryana, Jharkhand, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Maharashtra, Telangana, the Andaman & Nicobar Islands, Gujarat, Odisha, Chhattisgarh and Kerala for deploying e-cars. We are also working towards strengthening charging infrastructure, with the objective to have at least 3,000 charging stations over the next two years. Till date, 60 public charging stations (PCSs) complying with DC-001 (15 kW) have been commissioned in the New Delhi Municipal Council (NDMC) area. EESL has also signed MoUs with various urban local bodies (ULBs) across the country for the development of PCSs in their respective areas. EVs are a promising technology with a bright future in the Indian market. They have a remarkable potential to support  the country’s growth by enhancing manufacturing, job creation and technical capabilities.

What were EESL’s key achievements during the past year? What have been some of the new initiatives taken by it recently?

Our LED programmes, UJALA and SLNP have transformed the market and consumer behaviour by increasing the adoption of energy efficient technologies. EESL’s innovative business model lowered the manufacturing cost of LED bulbs, thus benefiting consumers. Additionally, consumers benefited significantly from reduced bills due to the energy efficient LED bulbs, while discoms and ULBs availed of increased savings. As on date, EESL has distributed over 358.7 million LED bulbs, over 7.13 million LED tube lights, 2.29 million energy efficient fans and over 9.7 million LED street lights. We have installed and operationalised over 500,000 smart meters. We are replicating the revolution created by our LED programmes in areas such as charging infrastructure, SEACs, rural LED lighting and decentralised solar plants. We aim to deploy about 200,000 SEACs in the next year through innovative business models and are targeting focused cities and institutional consumers on a pan-Indian basis.

Taking forward the vision of the National Electric Mobility Programme (NEMP), we have commissioned 300 AC and 170 DC chargers across the country, with 60 public charging points currently operational in Delhi-NCR. In pursuit of increasing charging infrastructure penetration, we have also partnered with ULBs in Hyderabad, Noida, Ahmedabad, Jaipur and Chennai, and are in discussion with others. We have also recently partnered with Apollo Hospitals to set up PCSs across its network of hospitals in the country. Under the Gram Panchayat Streetlighting Programme, we have replaced more than 1.6 million conventional lights with LEDs in Andhra Pradesh and a similar programme has been undertaken in Jharkhand as well. We are also set to commence this programme in Telangana, Maharashtra and a few other states.

As part of the Decentralised Solar Power Plants Programme, Maharashtra State Electricity Distribution Company Limited (MSEDCL) has signed a power purchase agreement (PPA) with EESL for a cumulative capacity of about 200 MW, for which small solar power plants ranging from 0.5 MW to 2 MW will be developed in vacant or excess land within the premises of MSEDCL’s substations. About 55 small solar plants have been commissioned or test charged so far, translating into a capacity of around 43 MW.

What are EESL’s capex targets and fundraising plans going forward?

We have been growing at a rapid pace and the numbers showcase our remarkable ascent over the past few years. EESL’s financial results for fiscal year 2018-19 showed outstanding performance as compared to the previous fiscal. EESL registered a revenue of Rs 19.35 billion in financial year 2019, a 37 per cent increase over the previous fiscal, and a pre-tax earnings growth of 178 per cent to Rs 1.71 billion during the same fiscal. The company registered an annual turnover of Rs 24.35 billion in 2018-19, with EESL’s UK business added to our turnover, which reinforces our faith in the strategic direction of our international expansion plans. The performance of the company reflects the government’s commitment and consumers’ contribution to adopting energy efficiency measures to mitigate climate change. We aim to become a Rs 100 billion company in the next three years.

We have four promoter companies that have invested Rs 8.6 billion in the equity till date. We have tied up a debt of nearly $1.5 billion with various multilateral lending agencies including the World Bank, the Asian Development Bank and KfW. We have also borrowed Rs 10 billion (approximately) from the bond market. We are looking to raise more capital and have envisaged  a three-year window for an investment plan of nearly Rs 200 billion. We are therefore looking to raise more equity from promoters and can consider an initial public offering after a couple of years.

What is your outlook for the power sector in the next few years and for EESL’s role in it?

With a vision to reduce carbon emissions and enhance clean energy, India is undertaking the world’s largest energy efficiency programmes. The government has implemented various initiatives to maximise the power generation capacity and improve distribution. With the diversity and complexity of the end use of appliances and services, it is not one technology or business model alone that can be deployed. Instead, an environment of a sustained multilayered policy and technology innovation can spark a far-reaching transformation. It is encouraging to note that India has been steadily climbing up on the Global Innovation Index. We will focus significantly on four programmes for the next few years – the SMNP, trigeneration, decentralised solar plants, and the NEMP – while continuing our lighting projects. Under the SMNP, EESL has awarded a contract for the procurement of 10 million smart meters and system integrators and has floated another tender for 5 million smart meters. We are providing smart meters to utilities on a rental basis to replace conventional meters. Till date, EESL has signed MoUs for smart meters with Andhra Pradesh, Uttar Pradesh, Haryana, Bihar, Delhi (NDMC) and Telangana. The smart metering project work is in progress and over 500,000 smart meters have been installed in Andhra Pradesh, Uttar Pradesh, Haryana, Bihar and NDMC-Delhi. NDMC has become India’s first utility to have 100 per cent smart meter penetration, without making any upfront investment.

Trigeneration is a technology where heating, cooling and power are generated simultaneously. EESL offers an integrated turnkey solution, providing end-to-end service and maintenance. EESL guarantees performance with service-level agreements. As on date, projects are in progress at Mahindra & Mahindra, JJ and BJ Hospital (Maharashtra). MoUs to access natural gas, vital as a trigeneration input, have been signed with GAIL Gas Limited and various subsidiaries of GAIL such as Mahanagar Gas Limited, Maharashtra Natural Gas Limited, Indraprastha Gas Limited, Castrol, and India Gas Solutions. An MoU has also been signed with the Maharashtra government to implement trigeneration projects in the state.

We are also working towards providing reliable solar power supply to agricultural pump sets by setting up solar minigrids. EESL will finance, design, install, own and operate solar photovoltaic pumping on farms. For this, a PPA has been signed between EESL and MSEDCL for 200 MW of decentralised solar power projects with capacity ranging from 0.5 MW to 2 MW in vacant, unutilised or spare lands of MSEDCL in Maharashtra. Feasibility studies have been completed in all substations for the installation of decentralised solar power plants. Till date, solar power plants of 27.28 MWp cumulative capacity have been commissioned. We plan to replicate this programme in Andhra Pradesh, Uttar Pradesh and Jharkhand. There are 30 million agricultural pumps in the country with an average capacity of 5 kW. With 200 GW worth of decentralised solar projects, we can move the entire agricultural land away from conventional sources of electricity.

Under the first phase of the NEMP, EESL has completed procurement of 10,000 EVs and has issued letters of award.  Till date, 1,510 EVs have been deployed or are under registration. Considering that electric mobility is totally reliant on charging infrastructure, EESL has started the installation of PCSs to promote EVs. EESL has already signed MoUs with various ULBs such as the Ahmedabad Municipal Corporation, the Greater Hyderabad Municipal Corporation, the Commissioner and Director of Municipal Administration Telangana government, the Chennai Metro Rail Corporation, the Jaipur Metro Rail Corporation, NDMC, Noida Authority, Apollo Enterprises Limited, Maharashtra Rail Corporation Limited, the public works department of Maharashtra and CSC e-Governance Services India Limited for setting up public charging infrastructure across the country. Apart from these PCSs, EESL also installed a total of 470 captive chargers, of which 170 are DC-001 fast chargers and 300 are AC-001 chargers.