Municipal Energy Efficiency Program in Tamil Nadu, India

Municipal Energy Efficiency Program Tamil Nadu, India: A Replicable Approach to Project Financing Through ESCOs (Energy Service Companies) Kateri Callahan, President Alliance to Save Energy 1850 M Street, NW Washington, D.C. 20036 www.ase.org [email_address] A

What is the Alliance to Save Energy?
Mission:
To promote energy efficiency worldwide to achieve a healthier economy, a cleaner environment, and greater energy security.
Organization:
Staffed by 90+ professionals
34 years of experience
$16 million annual budget
Premier energy efficiency organization in the world
Offices in South Africa, India, Mexico and Eastern Europe

What is the Face of the Alliance?
Business ▪ Government ▪ Public Interest
Coalition membership of more than 175 diverse organizations
Involvement by businesses in all economic sectors
Participants active in policy research, standards, education & communication

Efficiency of Water Systems WATERGY makes the best use of two valuable, limited resources: water & energy WHY IS THIS IMPORTANT?  Every liter of water that passes through a system has a significant energy cost .  Water sector efficiency leaves more funds for crucial and often underfunded public services .  In most developing countries, 1/3 to 1/2 of water produced is lost. AND IT’S COST EFFECTIVE …  Rapid Payback : generally from a few months to 3 years  Huge Savings : at least 20% in energy costs; much higher possible  Makes the most of existing infrastructure ; reduces the need for new

Cost-Effective Interventions  Pumps  Leak Management  Automated Controls  Metering & Monitoring

Energy Efficiency in Indian Municipalities – Context
Indian municipalities spend an estimated 40-60% of their annual
budget on energy costs
Numerous barriers to saving energy:
Lack of technical, managerial, financial capacity for improving energy efficiency
Lack of adequate metering (e.g., in buildings, water supply, street lighting systems)
High rates of unaccounted for water; unreliable water services
Lack of Government policy on reducing energy consumption
Low confidence in public-private partnerships

Tamil Nadu Project - An Overview
Purpose:
Improve energy efficiency of water supply and street lighting systems in Tamil Nadu
Create replicable financing model and toolkit to ensure that municipal EE projects are successfully implemented using performance contracting/ESCOs
Partners:
Alliance to Save Energy, REEEP
Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL)
Tamil Nadu Urban Development Fund (TNUDF)
Municipal Administrations, Urban Local Bodies

Project Overview
Unique Team: TNUDF + The Alliance + Municipal Administrations
Program management experts
Infrastructure development experts
Energy Efficiency technical experts
Phased Approach:
Phase I – 29 cities
Phase II – 16 cities
First statewide bundled municipal EE initiative for water pumping and street lighting in India

Project Highlights
*Two ESCOs selected to carry out the Phase I project*
Step 1 -- Investment Grade Audits
Baseline parameters
Energy saving projects/proposals
Comprehensive reengineering design
Project cost & economics
Project duration
Risk assessment and mitigation
Step 2 -- Implementation of Improvements, Monitoring & Verification of Results
Project financing
Complete installation and commissioning
Savings measurement and verification – “ IPMVP”
Equipment maintenance

Project- Financing Model

Project Output
Developed financial tool kit for municipal EE project
Model EOI, RFP, EPC document along with evaluation criterion
M&V Plan and reporting formats
Investment grade energy audit guidelines
Project repayment mechanism
Watergy M&V protocol developed and tested for its suitability in Indian context
Strategy document to scale up program in other municipalities in Tamil Nadu, based on the lessons learned

Policy Outcome
The Government of Tamil Nadu issued a Government Order (GO), a first-of-its-kind GO in India, empowering municipalities to proceed with project implementation through performance based contracts through ESCO mechanism.
http://www.reeep.org/57.17564/tamil-nadu-ee-drive-strengthened-by-government-order.htm

Project Impact
Tamil Nadu project concept and methodology replicated in USAID-supported Gujarat state-wide municipal EE program (159 cities)
BEE’s municipal demand side management program is based on Tamil Nadu project methodology
Other urban local bodies in India are using Tamil Nadu project concept and documentation to develop municipal EE projects
TN Government Order is helping other states initiate similar programs
Banks and FIs have started to show interest in lending for large municipal EE projects
New opportunities for private service providers & energy professionals to partner with ESCOs in municipal EE projects

Thank you!!
Kateri Callahan
President, Alliance to Save Energy
[email_address]

Municipal Energy Efficiency Program in Tamil Nadu, India

by Alliance To Save Energy

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