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Govt, EESL, World Bank sign $300 million pact to boost energy efficiency programme
The USD 220 million loan, from the International Bank for Reconstruction and Development (IBRD) to Energy Efficiency Services Ltd, has a 5-year grace period, and a maturity of 19 years.
"The Government of India, the EESL, and the World Bank today signed a USD 220 million Loan Agreement and a USD 80 million Guarantee Agreement for the India Energy Efficiency Scale-Up Program," the joint statement by World Bank and EESL said.
The investments under the programme are expected to avoid lifetime greenhouse gas emissions of 170 million tons of CO2, and contribute to avoiding an estimated 10 GW of additional generation capacity.
This would be over 50 per cent of the National Mission for Enhanced Energy Efficiency target of 19.6 GW indicated in India's Nationally Determined Contributions (NDCs) under the Paris Accord.
"The programme will help tackle the financing, awareness, technical and capacity barriers faced by new energy efficiency programs and support the UJALA and SLNP programs of the Government of India," said Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, said in the statement.
"This is one of the several steps being taken by the Government of India to meet its climate change commitments to reduce carbon intensity by 33-35 percent by 2030," he added.
The key components of the operation include: creating sustainable markets for LED lights and energy efficient ceiling fans; facilitating well-structured and scalable investments in public street lighting; developing sustainable business models for emerging market segments such as super-efficient air conditioning and agricultural water pumping systems; and strengthening the institutional capacity of EESL.
Under the Program, EESL will deploy 219 million LED bulbs and tube lights, 5.8 million ceiling fans, and 7.2 million street lights, which will be supplied by private sector manufacturers and suppliers.
Saurabh Kumar, Managing Director, EESL said in the statement, "This program provides us a valuable opportunity...while providing necessary impetus for replicating and magnifying our success across India with other energy efficiency technologies and programmes, and with other ESCOs and stakeholders across the spectrum."
As an integral part of the operation, the first-ever IBRD guarantee in India will help the EESL access new markets for commercial financing in line with the Bank's approach of maximizing finance for development. The guarantee is expected to leverage some USD 200 million in additional financing, to help EESL with its growing portfolio and future investment needs.
"India's energy efficiency market, estimated to be over $12 billion per year, continues to face implementation barriers, particularly in the residential and public sectors, which have some of the largest untapped potential for energy efficiency improvements.
"Building upon its experience of UJALA and SLNP, EESL is now expanding its initiatives to other energy efficiency measures," said Ashok Sarkar, Senior Energy Specialist and World Bank's Task Team Leader for the programme.