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“Multiple layers of interventions required for scaling-up of Energy Efficiency in India”

In conversation with Sustainability Outlook, Mr. Ravichandran Purushothaman, President, Danfoss India shares his thoughts on the need for scaling up of Energy Efficiency in India- its challenges and potential way forward.

How can GDP growth be decoupled from resources, specifically energy use, at a macroeconomic level?

India wishes to grow at 7-8% and for such a growth we currently need about 500 MW of power every week. However, we haven’t looked at disrupting our energy footprint and we are continuing to rely heavily on conventional energy options-coal and oil. Denmark is a good example regarding how energy consumption can be delinked from GDP growth with the help of energy efficiency. Countries like Denmark and most of the Scandinavian countries have an energy footprint plan. These countries have targeted to reduce their energy consumption while achieving GDP growth. For that, atleast 20-25 years of long term planning is required. We at Danfoss believe that for India, even if as a country we cannot reach there easily, the cities can surely reach. It’s the cities which make more noise, even more than rural areas. So if we can target the cities; perhaps we can gradually achieve results at an all-India level. 

What are the key drivers for energy efficiency in India– both in urban centres as well as industries?

Cities contribute to almost 70% of India’s GDP and also account for the largest footprint of the energy envelope. Typically the urban cities like- Delhi observe significant peak loads in winter season. Our basic premise, at Danfoss India has been that India faces few distinct challenges in its cities like electricity not being uniformly available to all and quality of electricity also being an issue. Cities are consuming more energy, becoming bigger and will witness fast track development for next 20-30 years. So consequently, Danfoss’ focus and a conscious view has been that we need to get the cities right first.

When it comes to industrial energy efficiency, it’s as important as urban energy efficiency, i.e. it can’t be said that one is better than the other. On industrial side, there has been some enhanced focus on energy efficiency amongst the large industries due to the recent policy efforts such as the PAT scheme. But bigger challenge for industries is for the small and medium sized enterprises to get energy costs and energy efficiency right. Industries need business models, including financing models for pursuing energy efficiency. 

What are the challenges to scaling-up of energy efficiency in India?

Let me try and outline a few challenges which I believe are the major impediments for scaling up energy efficiency in India. First is the awareness of technology.  It’s not that

Individual mindset needs to be changed in our country for making a real difference in energy efficiency scaling process, at a macroeconomic level. Cities can be smarter if people living in the cities are smarter.

we don’t have options to solve the problem. But the awareness about which option is the right solution to solve which problem, is missing in the whole ecosystem. Second is the high cost of capital, business models and inability to finance energy efficiency. Third is inadequate capacity and a lack of ecosystem of skilled workforce. Even if we have the required capital and the technology, we cannot simply harness or deploy the energy efficiency interventions without having the people with the right knowledge or skills to implement and maintain. Another challenge is mindset of the citizens of the country. Even though awareness regarding importance of energy efficiency is gradually increasing, the matter of concern is -- how many of us have changed? A small example is regarding LED light bulbs which can be easily established in our homes. But how many are actually practicing it -  only a few households and individuals including me are doing it. Individual mindset needs to be changed in our country for making a real difference in energy efficiency at a macro level. The Government is of course taking steps, but the challenge remains that how many people adopt it. I believe that cities can be smarter if people living in the cities are smarter.

What are the potential interventions and innovations required to solve for some of these challenges?

Atleast for the next 4-5 years, we need two or three layers of interventions -- one layer of intervention is that a faster depreciation is required to be given for energy efficient technologies, within the industries. Second layer of intervention is that we need to look at creating a kind of national fund or a national bank specifically for energy efficiency; like NABARD in agriculture. Third layer of intervention is that we need to create robust business models and build capacity in the ecosystem. Lot of entrepreneurs need to brought in the field of energy efficiency. In fact, there is a need to look at energy efficiency as an industry.

Government has been playing an active role and should continue to do so to enhance energy efficiency market in India. Regulation is one area where government should continue to focus. The others include promoting labelling of energy efficient buildings, energy efficient industries  and constantly benchmarking them to make sustainable improvements.  Increased application of Net-zero building/energy-positive building infrastructure can really help accelerate the energy efficiency market in India. 

The issue is certainly not of technologies. The real issue is building a holistic platform, capacity-building, financing models, skill development and bringing all people together for advancing energy efficiency in India.  

On the question of which instruments/ innovations can solve energy efficiency issues in the Indian context -- the good news is that all kinds of products, technological interventions in energy efficiency domain are already in place - “scalability” is the real issue. In Indian context, this scalability is pretty complex. The issue is certainly not technologies. Technologies are available for both brown-field as well as green-field investments. The real issue is building a holistic platform, capacity-building, financing models, skill development and bringing all the people together for advancing energy efficiency in India.  Then the problem of energy efficiency scaling could be really cracked. 

What is your outlook for achieving energy efficiency in India?

The context for energy efficiency is present in India and a great deal of work has been done. Replication of successful models and technologies is required. More the technology is deployed, faster is the ramp-up process and better is energy efficiency scaling in India. If we want 500MW power every week to create economic growth in

At least 40 % of the new energy needs can come from energy efficiency for the next 20 years. 

India, we are not looking at energy efficiency as just an ordinary fuel. For example, the cost of putting up 1 MW of solar is about Rs. 6-7 crores, while that of 1 MW of coal is 5 crores. Gestation period of 1 MW of solar is 10-14 months and in case of coal it maybe even longer. However, in case of energy efficiency intervention the gestation period can be as less as a day. We at Danfoss have estimated that at least 40 % of the new energy needs can come from energy efficiency for the next 20 years. We need to use urban energy efficiency as the growth engine for the country.  

Author: SustainabilityOutlook