India Targets $8.9 Billion in Energy Efficiency Cost Savings

  • Plan can help avoid peak load of 30 gigawatts in 3 years
  • Savings seen challenging for generators running below capacity

India’s plan to replace energy-intensive appliances with more efficient designs is expected to save as much as 600 billion rupees ($8.9 billion) a year, according to the head of the government arm spearheading the country’s drive.

The federal power ministry’s plan to replace incandescent lights with LED bulbs and use energy-efficient irrigation pumps, fans and air conditioners can cut about 30 gigawatts of peak-hour generation demand in three years, said Saurabh Kumar, managing director of Energy Efficiency Services Ltd., a joint venture of four government-run power companies. That is equivalent to fivefold the peak summer needs of the capital New Delhi.

Prime Minister Narendra Modi has emphasized efficient energy use to conserve resources and help curb environmental damage in a fossil-fuel driven economy. The plan is crucial to fulfilling his promise of providing around-the-clock electricity to every household by 2019.

Cost-saving estimates are calculated using a power price of 4 rupees per kilowatt hour. The LED bulbs program is expected to result in savings of about 100 billion kilowatt hours a year, while replacing half of the 20 million irrigation pumps will result in annual savings of 25 billion kilowatt hours. Another 25 billion kilowatt hours a year of savings are expected from efficient air-conditioners, Kumar said.

Modi’s goal of universal power is hamstrung by money-losing state distributors that struggle to pay for electricity, which ends up resulting in outages and idle generation capacity. The nation’s coal-fired plants used an average 68 percent of their capacity in April, according to data from the power ministry’s Central electricity Authority. The efficiency drive adds another challenge for the power producers.

“Clearly the space for conventional power producers in India is shrinking,” said Debasish Mishra, a partner with Deloitte Touche Tohmatsu LLP in Mumbai. “It’s possible that we may see hardly any thermal capacity addition in the next five years.”

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