Guaranteed Energy Savings through ESCOs in Refrigeration

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Guaranteed Energy Savings through ESCOs in
Refrigeration Airconditioning
DV Satya Kumar IVR Kumar Shri Shakti Alernative
Energy Ltd
Green Refricon 2002 29-30 August 2002,
Chennai Organised by CII - Green Business Centre
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Outline of the Presentation

• Energy Scenario in India
• Why Energy Efficiency
• ESCO approach to energy saving
• Highlights of ESCO case study in a 5 Hotel
• ESCO projects in Refrigeration Airconditioning
• Shared Savings Vs Guaranteed Savings by ESCOs
• Challenges (barriers?) to ESCO approach

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Energy Scenario - Poor Efficiency
Source CMIE, 1996
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• Indias GDP Energy Ratio (Energy consumed for
  each unit of GDP)
• 2.5 times that of US,
• 3.5 times that of UK and
• 7 times that of Japan
• (Source CMIE, Sep 1996)
• Which means that we use energy very inefficiently
  and it not only reduces our competitiveness in
  the global markets but adds to pollution

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Energy Scenario - Low Consumption
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Power Sector Performance

• Electricity generation capacity increased from
  1300 MW in 1947 to over 100,000 MW in 2001.
• Per capita consumption 226 kWh in India is
  relatively low
• In 1991, private proposals exceeded 150,000 MW,
  while as of Jan 2001, just 3,500 MW of IPP power
  was actually operational
• Over 110,000 MW capacity increase is targeted by
  2007, while in last four years the annual
  capacity growth has averaged 3,000 MW
• FDI of US 200 bn needed for 110,000 MW
• Approach to overcome power shortages is being
  driven largely by additions to generation capacity

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Power Sector Performance - Financial Losses in
Rs Crores per year
Source Bulletin on Energy Efficiency, Jan 2002
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Energy Conservation in IndiaRecent Developments

• Energy Conservation Act (passed Aug 2001)
• Bureau of Energy Efficiency to be established
• Donors increased involvement (GEF, DFID, USAID,
  World Bank, etc.)
• Central Government has set a target for 30
  reduction by 2007-8
• President Kalam has agreed for a comprehensive
  audit of Rastrapathi Bhavan housing 330 rooms and
  1200 employees
• For too long, throughout the world, energy
  conservation has in practice meant energy
  conversation. This time I ask of all of us, to
  walk the talk. Shri A.B. Vajpayee, at the
  Energy Conservation in the New Millennium
  Conference in New Delhi on 23rd August, 2002.

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PUBLIC SERVICE MESSAGE BY DVB
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Why Energy Efficiency?

• Future power sector reforms will have to be
  efficiency driven rather than tariff driven
• Megawatts can be generated through Negawatts -
  energy saved through EE measures
• Cost of energy saving is a lot cheaper than
  setting up new power plants
• Distributed Generation and Renewable Power
• Air conditioning, Refrigeration, Water Heating,
  Space Heating and Lighting are important areas
  for EE

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ESCO Services of SSAEL

• Established in April 1999
• Saved over Rs 6 million in first year
• (Rs 4 million of electricity and Rs 2 million of
  oil)
• MoUs with PCRA and CII-EMC
• Services
• Baseline studies (energy audits)
• Energy saving performance contracts

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Select Clientele of SSAEL for Energy Services

• Avon Organics Ltd
• Nizams Institute of Medical Sciences
• Ranit Pharma Ltd
• Shri Shakti Cylinders Pvt Ltd
• The Tulip Manohar Hotel
• (formerly the Ramada Hotel Manohar)

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FRIENDLY ENERGY SOLUTIONS
Our Prominent Customers ...
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Highlights of Case Study

• 135 room 5 star hotel with an annual energy bill
  of Rs.120 lakhs.
• Saved Rs 33 lakhs (oil and electricity in one
  year) i.e. 25 of annual energy bill
• Energy bill remained same though occupancy
  increased by 16 and power tariff by 20
• Multi-disciplinary Energy Management Team, Top
  Management Support, Measurement and Verification
  of savings

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Energy Savings in Case Study

• TOTAL SAVINGS Rs.33 Lakhs.

• CMD REDUCTION Rs.4.88 lakhs.
• ELECTRICAL ENERGY Rs.22.00 lakhs (4.88
  lakh kWh)
• HSD Rs.5.21 lakhs (37 KL)

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Benchmarking - Conventional

• Specific Energy Consumption - Summer (kWh/Room
  Night) - 156.00 before audit
• Specific Energy Consumption - Summer (kWh/Room
  Night) - 109.00 after first year of
  implementation.
• Specific Energy Consumption - Winter (kWh/Room
  Night) - 105.00 before audit
• Specific Energy Consumption - Winter (kWh/Room
  Night) - 75.60 after first year of implementation.

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Benchmarking- Modified

• Two components of Energy Consumption.
• Fixed component - no relation on operations
• Variable component - direct relation on occupancy

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Benchmarking- Modified

• Fixed Energy Consumption (kWh/month)-Summer-
  1,10,000 before audit
• Fixed Energy Consumption (kWh/month)-Summer-
  1,00,000 after first year of implementation.
• Fixed Energy Consumption (kWh/month)-Winter-
  94,000 before audit
• Fixed Energy Consumption (kWh/month)-Winter-
  85,000 after first year of implementation.

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Benchmarking- Modified

• Specific Energy Consumption (kWh/roomday)-Summer-
  80.00 before audit
• Specific Energy Consumption (kWh/roomday)-Summer-
  60.00 after first year of implementation.
• Specific Energy Consumption (kWh/room
  day)-Winter- 50 before audit
• Specific Energy Consumption (kWh/room
  day)-Winter- 35.00 after first year of
  implementation.

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Benchmarking- Modified

• Hotel Operations are different from a
  conventional industry.
• 40 to 50 of energy consumption is fixed.
• Modified benchmarking takes into account of these
  factors.
• Measurement Verification Protocols are the key
  for determining energy savings actually achieved

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ESCO Projects in Refrigeration Airconditioning

• Implementation of IAQ Standards.
• Heat Recovery from Return Air Systems.
• Chiller Replacements for replacing R22 by 2015.
• Replacement of Reciprocating system with energy
  efficient screw chiller/centrifugal chiller.
• Condenser Heat Recovery for Hot Water Generation
  by use of Heat Pumps.
• Energy Efficient Air Handling Units and Pumps.
• Vapour Absorption Machines
• Building Management Systems

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ESCO Shared Savings Model
Customer
Savings Guarantee
Fixed Repayment Schedule
ESCO
Lender
PERFORMANCE RISK
CREDIT RISK
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ESCO Guaranteed Savings Model
CREDIT RISK
Customer
Fixed Repayment Schedule
Savings Guarantee
ESCO
Lender
PERFORMANCE RISK
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Relevance of US ESCO Model in India?

• Business came largely from Federal buildings,
  municipalities, hospitals, universities and
  schools
• Federal mandate to reduce energy consumption
• Utility driven DSM programs increased credibility
• Better financing mechanisms
• Institutional mechanisms - DoE, IIEC, ASE,
  NAESCO, LBL, MV Protocols
• Regulatory support and EE projects funds
  appropriation

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Challenges (Barriers) To ESCO Approach

• Low awareness
• Lack of end user data
• Irrational energy prices in india
• Limited availability of energy saving products
  and equipment
• Lack of financial mechanisms and poor bankability
  of proposals
• Lack of right incentives
• Few ESCOs

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Nothing great was ever achieved without
enthusiasm

• - Ralph Waldo Emerson