EESL success story

Interview with S.P.Garnaik, Chief General Manager (Technical) & Head (Operation) at Energy Efficiency Services – November 8th 2019 – EESL headquarters Delhi

Could you please introduce your company and its activities to our readers?

Energy Efficiency Services Limited is a joint venture of four National Public Sector Enterprises launched in 2009 under Ministry of Power of the Government of India to foster the adoption of highly efficient technologies in the energy sector. 

How did your success story started?

We basically started by transforming the LED bulb market in India in 2014, bringing the country from representing only 0.1% of the global LED market in 2013-2014 to 12% in 2015-2016. Thanks to our bulk acquisition model, we managed to drop down the price of LED bulbs by 92% in just a few years, from Rs 310 (€ 4) in January 2014 to under Rs 50 (€ 0.64) today. We have distributed to date over 353 million units of LED bulbs in India. With a simple calculation, you can estimate the energy savings to over 45,867 KWh and reduction in electricity bills to the tune of 2.3 Million Euro. We initially financed the acquisition thanks to some grants but then relied on the electricity savings to repay costs and loans. 

What about cooling, which is the focus of our research project?

We started with highly efficient fans in 2016 and we are now dealing with super efficient ACs. Today, most indian households are cooled by fans with only 5-7% of households having air conditioning. The average power consumption of fans installed and sold in the market today is between 75-80W, whereas energy efficient fans provide the same level of comfort at about 45-50W. Considering that almost 30 million fans are sold every year, the potential to reduce energy demand is significant. Replacing the country’s 35 crore inefficient ceiling fans with 5-Star-rated ceiling fans could save 47 billion KWh and reduce load by over 12,250 MW.

Under the National Energy Efficient Fan Programme, EESL has already provided 620.000 5-Star rated ceiling fans for just Rs. 1,150 per fan, instead of Rs. 1,650, highlighting how the high former price was the primary reason for its low penetration in Indian households. The consumer’s electricity bills will reduce by about Rs. 700-730 per year, allowing to recover the extra costs of the fan in less than 2 years.

Then you took over the indian AC market

The EESL model is based on one of the principle of manufacturing industry: the price of a product is inversionally proportional to its scale of manufacturing. We first forecasted aggregate demand for energy efficient ACs which are still not popular due to their high retail costs. We then set a large global tender, putting in competition Godrej, Daikin and Voltas to ask them to not only drop the price as much as they could but also build the most efficient AC possible. Voltas, India’s largest AC maker, won the bid with a 7 star rated AC at the price of a 4 star AC available on the market today, which is Rs 41,300 (€ 524).

This Super-Efficient ACs, a split inverter model with a cooling capacity of 1.5 tonnes, can also provide cooling capacity at high ambient temperature, while normal ACs degrade their cooling capacity as room temperature increases. These superior ACs consume about 750 kWh per year whereas conventional AC consume 1160 kWh/annum, so this technology enables consumers to save up to 40% in energy costs. Furthermore, these new ACs use 100% copper coil and additional anti-rust coating, enhancing product longevity. The first 50,000 units of these ACs are being sold in these days, while we plan to invite shortly bids for another 200,000 units and to explore opportunities to engage utilities, institutions, commercial and industrial establishments for demand aggregation and scaling-up of this programme.

Did you calculate the benefits in terms of energy and greenhouse gases savings?

Sure, just by deploying the first 50,000 super-ACs, we expect to save approximately 145.5 million kWh of electricity per year, mitigating around 120 Mt of CO2 annually. 

How are you funding this ambitious programme? 

The approximate investment for this project is around 24 million Euro, partially supported by a grant from the Global Environment Facility (GEF), with the Asian Development Bank (ADB) providing grant support and loans, while the United Nations Environment Program (UNEP) providing technical assistance.

How are consumers getting to buy these ACs?

The ACs are simply being sold through a dedicated website where customers can directly make orders and payments and have their ACs being delivered at their doorstep and installed by professionals within 72 hours. EESL is also offering a complaint redressal support during the life of the programme, attractive EMI options through selective banks, and a buyback option for customers looking to upgrade their AC. 

This is stunning. How could this scheme be replicated in other countries, and what are in your opinion the enabling factors?

We are currently holding talks with the administration of several countries which are interested in replicating our business model in their own countries.