Reduced power demand has been an issue for some time in India and it has been blamed largely on financially challenged DISCOMs (utility companies). One of the most overlooked reasons is energy efficiency.
In 2015, the Indian government unveiled a program called ‘Unnat Jyoti by Affordable LEDs for All’ (UJALA) which was launched with an aim to promote efficient use of energy at a residential level and enhance consumer awareness so they can choose efficient equipment and reduce energy bills, thereby helping to conserve the environment.
While energy efficiency is good for the environment it also means reduced demand for power generation including solar and wind.
According to an Energy Statistics Report, domestic energy consumers account for around 24 percent of the total electricity demand in India. As per a study conducted by the Ministry of Environment and Forest that was carried out in 2011, lighting consumption constituted about 30 percent of overall residential energy consumption. Indian households use Incandescent Light (ICLs) bulbs, tube lights (fluorescent lamps) and compact fluorescent lamps (CFLs).
The Electric Lamp and Component Manufacturers Association of India (ELCOMA) estimated that in 2012, more than 750 million ICLs and 400 million CFLs were sold in India. The energy efficient light emitting diode (LED) bulbs can be used to replace these 78.5 crore ICLs with LED bulbs, LEDs use 85 percent less electricity for delivering the same output.
The UJALA program officially targets to replace 770 million conventional lighting solutions with LEDs. Further, UJALA targeted to save 100 billion units of electricity, reduce installed capacity by 20,000 MW and mitigate the emission of 79 million tonnes in greenhouse gases.
The program promotes the use of LED bulbs as a substitute for incandescent bulbs, tube lights, and CFL bulbs. LED bulbs which are distributed under the UJALA program are available at subsidized rates at special counters set up at designated places in different cities across the country. To be eligible to procure LEDs under UJALA, a household must have a metered electricity connection from the respective electricity DISCOM.
The Energy Efficiency Services Limited (EESL), a government company under the administrative control of Ministry of Power, has been assigned the responsibility to implement this program. EESL works with electricity distribution companies through a benefit sharing approach. The UJALA program obviates the need for DISCOMs to invest in the upfront cost of LED bulbs; EESL procures the LEDs bulbs and provides to consumers at a rate of under $1 each as against their market price of $2.3 – 3.08.
The upfront investment made by EESL is paid back in two different ways as indicated under:
- DISCOM Cost Recovery: The investments of EESL is recovered from the DISCOMs as an annuity over a period of 3-10 years by monetizing the energy savings that accrue as a result of replacing incandescent lamps with LEDs. Each replacement leads to a reduction of the connected load by 53 Watt. The energy savings are monetized based on the peak procurement cost of DISCOM and are used to pay back the investment made by EESL under approval by the State Electricity Regulatory Commission.
- On Bill Financing (OBF): Cost recovery from consumers by deduction of installments of $0.154 every month for 8-12 months.
The price of appliances is calculated by considering costs of a component such as the price of bulb, distribution, awareness cost, which is discovered through competitive bidding, annual maintenance cost (AMC), cost of capital, and administrative costs.
Since its launch almost five years ago, over 347 million LED’s have been distributed under the UJALA program. This has translated into energy savings of over 45,000 kWh per year. Cost savings per year from UJALA is around ₹180 billion ($2.60 billion). According to the UJALA dashboard, the avoided peak power demand is around 9,000 MW, and the reduced greenhouse gas emissions are estimated at 36.5 million tons per year. According to the UJALA portal, the failure rate of LEDs that have been distributed is around 0.99 percent.
A report published by EESL and the International Energy Agency stated that India was the second largest LED market in the world worth ₹21.4 billion ($309 million) in revenues in 2015 (equivalent to the GDP of the metropolitan area of Miami) and UJALA has played an important role in this rapid growth. Also, LED retail prices dropped by 75% in four years. UJALA has reduced annual household electricity bills by about 15% savings, enabling consumers.
However, EESL faced some hurdles while implementing this program. When asked about the issues faced, Venkatesh Dwivedi, Director (Projects), EESL said, “The initial challenge under this program was to increase accessibility and affordability of energy efficient appliances to the common man. As in the case of any other energy efficiency program, UJALA also entailed the risk of technological aversion and the challenge of sensitizing the customers on the advantage of LED bulbs over other options. To overcome this, EESL facilitated bulk procurement of LED household lamps which subsequently lowered the cost of the product, making it affordable for consumers. Through the practice of bulk procurement, the price of the 9-Watt LED bulbs under the UJALA program has been brought down by 85 percent”.
EESL further plans to continue to work on delivering multiple benefits to other Indian manufacturers with the introduction of new energy efficiency initiatives to transform the markets for residential fans, street lighting, and agricultural pumps.
On the future prospects of UJALA, Dwivedi said, “According to estimates, the Indian LED lighting market is expected to reach a size of ₹310.1 billion ($4.48 billion) by 2020. The growth will be spurred by increasing interest in newer technologies, solutions, and increasing awareness created by LED suppliers through product promotion and advertising. Also, the Smart Cities Mission will also give an impetus to the demand for LEDs. However, going forward, the technology adoption and consumer price sensitization will be the key drivers of India’s LED growth story. India’s entrepreneurial spirit will be put to the test with the emergence of newer technologies in the lighting sector. We are confident that the tremendous success of UJALA will be replicated in our other programs as well.”
In February 2019, Coimbatore Smart City issued a tender for the replacement of existing conventional street lights by smart LED energy efficient lamps. The scope of work of this tender also included fixing accessories across the city of Coimbatore, as well as west and south core areas of the Coimbatore Smart City.