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India’s NextGen building infrastructure: efficient and cheaper

Buildings directly and indirectly accounts for nearly 50% of the GHG emissions. In India where construction is set to continue growing in the foreseeable future, there is an opportunity gap for entrepreneurs.

If one adds direct GHG emissions from building construction and indirect emissions from cement maufacturing, transportation, recurring power consumption and waste disposal, almost 50% of the GHG emissions are related to either our place of shelter or our place of work.

Most materials, construction technology and designs used are outdated, causing the buildings to be expensive. If one uses newer ‘green-approaches’, the capital cost of construction is around 6-8 per cent currently, but the pay-back from efficiency is two to three years causing the construction to be cheaper by about 27%-33% over the life of the project (assuming a capital discount rate of 10% and a 20 year period).

It is almost a no-brainer then?
Well, not exactly and that is where the opportunity lies.

It makes sense for industrial houses which can invest upfront to be able to see the payback and return. Consequently, one has seen some commercial constructions go green and become LEED certified.  The Leadership in Energy and Environmental Design (LEED-INDIA) Green Building Rating System is a nationally and internationally accepted benchmark for the design, construction and operation of high performance green buildings. This is a program run by CII’s Indian Green Building Council (IGBC) and it has about 400 registered buildings amounting to more than 275 million square feet. Most of these are commercial buildings.

Individual home buyers are cost conscious and residential developers have yet to find a way to lure buyers away from simply looking EMIs but factor the gains from effiency too. It was only earlier this year that Biodiversity Conservation India Limited (BCIL), received the first LEED Platinum rating for its residential apartment project, BCIL TZed homes.

There exists a need for developers willing to market ‘lifestyle homes’ that are 25% cheaper over the duration of ownership.

As this opportunity emerges, so is the need for new investors. Amongst the more progressive ones that appear to be testing waters is real-estate developer Milestone Capital which launched Milestone Ecofirst Advisory Services (MEAS).

In parallel, a requirement is newer technology and building processes. In the previous quarter, the companies developing new technogies for the building sector had a strong investment quarter, raising $110m (See Cleantech’s press release). One of the more interesting companies is Serious Materials  that develops materials such as high-performance insulated windows and glass, sound-proof drywalls and other efficient alternatives. This does not address the requirements of India’s construction industry which is more brick and mortar oriented. Another opportunity exists here.

Government as a key catalyst and investor
The Indian Government and Public Sector Undertakings are amongst the largest investors/ developers with an outlay of $492 billion (around Rs 24.60 lakh crore) during the current XI plan. Keeping that aside, is what is on the Government’s to-do list i.e. mandatory building codes. The Delhi government has already introduced Energy Conservation Building Code (ECBC) for all new government buildings. Now the MoEF is exhorting all the other states to follow suit.

That should get things moving quickly!... perhaps Green becomes the new Vastu!

Author: sustainabilityoutlook