India is a developing country with a per capita GDP (nominal) of around USD 1408 per annum.

Transcription

1 7 th November 2016

2 India is a developing country with a per capita GDP (nominal) of around USD 1408 per annum. The per capita electricity consumption stands low at 917 kwh, which is barely one third of the world s average consumption. The energy intensity of the economy has decreased from goe (grams of oil equivalent) per Rupee of GDP in 2005 to goe per Rupee GDP in 2012, a decline of over 2.5% per annum. The per capita emissions of many developed countries vary between 7 to15 metric tonnes, however, the per capita emissions in India were only about 1.56 metric tonnes in

3 Bureau of Energy Efficiency was set up as the nodal central agency in 2002 under Energy Conservation Act 2001 State Designated Agencies at the state level were created for implementation of the EC Act. The National Mission for Enhanced Energy Efficiency (NMEEE) is one of the eight national missions under National Action Plan on Climate Change (NAPCC) with the objective of promoting innovative policy and regulatory regimes, financing mechanisms, and business models Ministry of Power (MOP) and Bureau of Energy Efficiency (BEE) were tasked to prepare the implementation plan for the NMEEE and this mission has been approved in June

4 Perform, Achieve and Trade (PAT) scheme for large energy users Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE) Venture Capital Fund for Energy Efficiency (VCFEE) Standards & labeling programme for EE appliances Energy audits of buildings, municipalities and SMEs Establishment of EESL to facilitate public sector EE Performance contracting based demonstration projects ESCO accreditation ESCO capacity building SME program with SIDBI M&V protocols (available in Operations Manual for PRGFEE) (For further details on EE programmes please visit BEE s website at ) 4

5 The cumulative energy consumption was 4241 mtoe during at the user-ends. It is estimated that 476 mtoe (i.e. 11.2% of the total consumption) energy was saved due to energy efficiency efforts during 2000 to Out of this, about 23% savings is due to direct result of BEE s interventions. BEE s initiatives have contributed in avoiding capacity addition of 10,836 MW during 2006 to The national energy conservation award (NECA) scheme which was launched by Ministry of Power in 1999 has also resulted savings in participating industries. So, the overall savings due to BEE s schemes/programs is about mtoe during Under PAT scheme of NMEEE, 478 DCs in 8 sectors have been given target to achieve energy savings target of 6.6 mtoe in PAT cycle I ( to ), against which savings of 8.67 mtoe was achieved (from 427 DCs) 5

6 NMEEE spelt out the following four initiatives to enhance energy efficiency: Perform Achieve Trade (PAT) - a flagship initiative for reduction of specific energy consumption, with an associated market based mechanism through which additional energy savings can be quantified and traded as ESCerts. Energy Efficiency Financing Platform (EEFP) To provide platform to interact with financial institutions and project developers for implementation of energy efficiency projects Market Transformation for Energy Efficiency (MTEE) - To shift to energy efficient appliances in designated sectors through innovative measures that make the products more affordable. Framework for Energy Efficient Economic Development (FEEED): To provide appropriate fiscal instruments that may supplement the efforts of government for creation of energy efficiency market. The following funds have been created under FEEED: Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE) Venture Capital Fund for Energy Efficiency (VCFEE) 6

7 Market Higher cost of energy efficient products Limited technical knowledge on EE technologies and their performance Limited capacity of service providers to provide the entire range of services required for EE project implementation Constraints on interruption to ongoing production processes Finance Lack of knowledge and awareness of conventional lenders on EE technologies Absence of instruments for non-recourse finance Perceived difficulty in evaluating financial returns of EE projects and associated risk perception High project development and transaction costs due to small project size 7

8 Under Energy Efficiency Financing Platform (EEFP), BEE has signed MoUs with few FIs to create financing mechanism for making a commercial and sustainable energy efficiency market A few training modules were also developed in 2011 for capacity building of bank staff. In FY , two conferences were organized in Pune and Chandigarh. Two capacity building workshops have also been organized in Delhi and Mumbai in association with PACE-D In 2015, BEE signed a MoU with Indian Banks Association to work in collaboration with them for organizing this Training Programme for scheduled commercial banks on Energy Efficiency Financing. Training Programme for Scheduled Commercial Banks on energy efficiency financing is designed and being implemented in collaboration with SDAs and IBA. 8

9 BEE with support from SIDBI has launched the booklet on Success stories of energy efficiency projects financed in India. This booklet of 50 success stories of Energy Efficiency projects financed by SIDBI covers 20 industrial sectors across the country to adopt energy efficient technologies and processes. A Training manual on energy efficiency financing has also been launched with the support of USAID PACE-D TA program. This Training manual has been constructed to train the trainers as well as the credit/risk/ project financing team to understand the business models of energy efficiency projects, its associated risks/benefits, M&V processes and evaluation of projects. In NECA 2015, two new categories, for Financial Institutions and for the best business models were also introduced for encouraging financing in Energy Efficiency sector. 9

10 BEE & IBA Training of Banks officials Bank officials from each SCBs where Trainers are not present Second phase Trainers Bank officials of respective banks BEE & IBA Training of Trainers Training colleges - SCBs Training cells/ institutions - SCBs Independent training institutions/ consultants/ research institutes/ Universities/ any other organizations First phase 10

11 PRGFEE is a risk sharing mechanism to provide financial institutions (scheduled commercial banks and NBFCs) with a partial coverage of risk involved in extending loans for energy efficiency projects. Government of India has approved around Rs. 312 crores for PRGFEE. PRGFEE will act as a first-loss and subordinated recovery guarantee Guarantees a maximum 50% of the loan or Rs. 10 crores per project, whichever is less. In case of default, the fund will: Cover the first loss subject to maximum of 10% of the total guaranteed amount Cover the remaining default (outstanding principal) amount on pari-passu basis upto the maximum guaranteed amount The support under PRGFEE is limited to Government Buildings, private buildings (commercial or multi-storey residential buildings), Municipalities, SMEs and industries PRGFEE Rules have been notified by Ministry of Power in May

12 Others PRGFEE Fund BEE GoI Supervisory Committee Implementing Agency Documents Submission Agreement Empanelled PFIs DPR Loan ESCO

13 Default PRGF FI Debt PRGF FI Default PRGF FI Default PRGF Default PRGF FI FI First Loss: 10% of Guaranteed Amount Remaining: Pari Passu Case - I Case - II Case - III Case - IV = =12.5

14 PFI shall take guarantee from the PRGFEE before disbursement of loan to the borrower. The Guarantee will not exceed Rs 10 crore per project or 50% of loan amount, whichever is less. Maximum tenure of the guarantee will be 5 years from the date of issue of the guarantee Eligible projects under the PRGFEE, for which Participating Financial Institution (PFI) can apply for a guarantee, could be credit facilities extended by PFI to ESCO for energy efficiency projects. Participating Financial Institutions (PFIs) will be empanelled with BEE and an EoI was floated on 30 th October 2015 for empanelment of PFIs. So far, IDFC Bank, Yes Bank, Andhra Bank and Tata Cleantech have been empanelled with BEE and ESCOs can approach these empanelled banks to get finance for EE projects and get benefit from PRGFEE. 14

15 BEE has appointed the consortium of REC-RECPDCL-EESL as the Implementing Agency for PRGFEE in IA shall give approval on proposals for PRGFEE and sign guarantee agreements, carry out regular monitoring of project and appointment of M&V Agency for processing guarantee claims, etc. BEE has constituted a Supervisory Committee to provide guidance as well as monitoring progress in PRGFEE. Two meetings of Supervisory Committee (SC) were held in In the third meeting of SC held in September 2016 the Operations Manual for PRGFEE was approved. 15

16 This project will contribute to the NMEEE initiative of Govt. of India, and will mobilize and leverage large scale commercial financing for EE investments. The total project cost is estimated to be USD 43 million (equivalent to about Rs. 258 crores) It will support energy efficiency projects in mid-tier large industries, MSMEs, street lighting and buildings. The Guarantee will be Rs.15 crore per project or 75% of loan amount, whichever is minimum. The maximum tenure of each sub-guarantee supported by PRSF will be 5 years. The PRSF shall continue for 15 years, however, it could be extended till 20 years on the request of SIDBI. SIDBI has been selected as Project Execution Agency (PEA) by World Bank and EESL is providing technical support to address broader Energy Efficient market barriers. 16

17 This fund is to provide equity capital for energy efficiency projects in Government buildings, private buildings (commercial or multi-storey residential buildings) and Municipalities in the first phase. The VCFEE Rules 2016 is under process of notification. A single investment by the fund shall not exceed INR 2 crore. Fund shall provide last mile equity support to specific energy efficiency projects, limited to a maximum of 15% of total equity required, through Special Purpose Vehicle (SPV) or INR 2 crores, whichever is less. 17

18 This fund shall be registered with SEBI under SEBI (Alternative Investment Funds) Regulation, 2012 The Board of Trustees for VCFEE has been constituted. The Trust of VCFEE has been constituted as provisions of Indian Trust Act 1882 and trust deed was registered with jurisdictional sub-registrar Government of Delhi in July The preparation of documentation and evaluation strategy for VCFEE is under process BEE has selected SIDBI as a Fund Manager for management of the funds of VCFEE and will be primarily responsible for making investment on behalf of VCFEE. 18

19 Illustration: Total capital requirement for EE Project EQUITY VCFEE 4% Loan 70% Equity: Self & from other sources 26% 15% of the equity is approximately 4% of the total capital requirement for any EE project, which may be invested under VCFEE. 19

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21 For further information, please contact: Ms. Vineeta Kanwal Assistant Energy Economist Bureau of Energy Efficiency Ministry of Power, 4th Floor, Sewa Bhawan, Sector 1 R. K. Puram, New Delhi Ph: Fax : vkanwal@beenet.in WEB : 21