Energy Efficiency through ICT in India: more needs to be done to demonstrate value
- 08 December 2010
MUMBAI, 8 December, 2010: On Friday December 3, as negotiators worked in the early hours in Cancun Mexico, a group of 22 participants from technology companies and financial institutions gathered at IDFC’s offices in Mumbai for a half-day session on how to finance energy efficiency in buildings and the electricity grid. With targets for reducing emissions intensity of 20-25% by 2020 over 2005 levels, the optimism and momentum behind energy efficiency regulation should ideally drive innovative services and financing.
Ms. Nitya Ramakrishnan from Cisco, Dr. Rahul Tongia, Principal Research Scientist, CSTEP and Mr. Samir Menon, Tata Consulting Services spoke on smart buildings and smart grids, their state of deployment in India and how they are creating value for private and public sectors. A group of participants from IDFC and Yes Bank, amongst others, also contributed to a lively discussion.
The challenge in India is not to be underestimated: 200 million people have migrated to cities since 1992, doubling the urban population. Peak electricity load – due to residential and commercial demand – is three times the daily average, causing huge challenges for utilities trying to keep prices reasonable for everyone, while also serving the needs of the growing middle class and commercial or industrial sites. Millions of people live without power, and to continue to meet 8% growth in demand, 500 MW capacity will need to be added each week.
Smart technologies can help meet India’s challenges. Accounting, auditing, monitoring and control tools can make buildings into ‘smart loads’ so that they can respond to the electricity grid in near-real time. Utilities like the one in Mangalore are getting 15-minute readings from residents and street lights to manage a basic amount of energy supply for everyone during peak times, reducing outages. Payback on these solutions is 1 - 3 years, but more would be possible if longer paybacks were acceptable.
But the barriers to developing smart solutions are also not to be underestimated. In Cisco’s buildings, for instance, 10,000 points of data are analyzed every 4 seconds. This level of data analysis may not be scalable. And it is not always clear to board members or building owners that the savings accrued through better management and monitoring tools will pay back when expected, as savings timescales are difficult to predict.
The participants at the roundtable thought that demonstration projects were needed, to understand not just what technologies could be deployed to manage demand for power, but also how the business case could be developed for both the public and private sectors.
Cisco is already saving over 30% of building energy through its management tools Mediator and EnergyWise. Mangalore is reducing 10% of AT&C losses, and their customers are happy because basic appliances can be kept on during peak times, when power is normally cut off. These successes have carbon benefits. But the challenge will be to scale them up. Currently, Cisco is testing their products in their own buildings and Mangalore’s utility is self-funding their pilot. How will they scale it up when most of the benefits accrue not to the utility, but to citizens or the city?
A key driver to overcome these challenges will be a services-oriented approach. As India invests $1 trillion in its infrastructure in the coming years, private and public sector will need to make the most of smart solutions that provide services to the millions of people moving to cities, or the millions being supplied with energy for the first time. But the benefits still need to be better understood, tested and measured. Financiers would like to understand exactly who the customers are that will be interested in ‘smart’ energy efficiency solutions, what incentives really work to change behavior, and what the regulatory or information barriers are that stand in the way. What we certainly can rely on, is that a diversity of solutions will be tried and tested, and India’s innovation will inform the rest of the world.