In an exclusive conversation with CXO News and APAC News Network, Arvind Kumar Talan, CFO, of Energy Efficiency Services Ltd (EESL) explains the dynamics of the UJALA scheme and reveals plans around EV charging infrastructure and EESL Mart e-marketplace.
How would you explain the operational functioning and business model of EESL?
EESL’s operational framework is built around several key initiatives that drive its mission of enhancing energy efficiency. We implement large-scale programmes such as the Unnat Jyoti by Affordable LEDs and Appliances for All (UJALA) scheme for distributing LED bulbs and the Street Light National Program (SLNP) for LED street lighting, which has collectively saved over 57 billion kWh of energy annually and significantly reduced carbon emissions.
EESL’s innovative Pay-As-You-Save (PAYS) financing model allows consumers to adopt energy-efficient technologies without any upfront costs, with EESL investing in projects upfront and recovering costs through the savings generated over time, typically within 7 to 10 years. This approach has made energy efficiency more accessible to a broader audience.
Our procurement-based business model consolidates demand for energy-efficient products. This model is transforming the market in terms of pricing and production of energy-efficient products in India. EESL’s mandate to conceptualize and implement nationwide programmes supports the country’s sustainable development goals by making energy-efficient products more accessible and affordable, without imposing any subsidy burden on the government.
Programmes like UJALA have significantly reduced energy bills for households and organizations across the country. By aggregating demand, we procure large volumes of products, resulting in substantial price reductions.
For example, the price of a 7W LED bulb dropped from Rs. 550 in 2014 to Rs. 38 in 2017, while the quality improved from 70 Lumens/Watt to 110 Lumens/Watt. This reduction in prices, achieved through bulk procurement, has made energy-efficient appliances more affordable for the masses. Additionally, the widespread use of LED bulbs has decreased power bills for average households by almost 90%.
By focusing on procurement and market transformation, EESL is setting the roadmap for energy efficiency in India, making it more accessible and affordable, and significantly contributing to the nation’s sustainability goals.
What are your roles and responsibilities as the CFO of EESL?
As the Chief Financial Officer of Energy Efficiency Services Limited (EESL), my primary responsibility is to oversee all financial operations of the company. This includes developing and implementing financial strategies that align with our mission and vision, ensuring that we effectively support energy efficiency initiatives across India.
I am tasked with managing the preparation and oversight of our budget, ensuring optimal allocation of resources to maximize our impact. Timely and accurate financial reporting is crucial, and I ensure that both internal and external stakeholders receive the information they need to make informed decisions.
Additionally, I focus on identifying and managing financial risks, evaluating investment opportunities, and ensuring compliance with all financial regulations and standards.
What are the key regulatory requirements for EESL and what are the challenges in conformance with those compliances?
EESL has developed an Environmental, Occupational Health & Safety and Social (EHSS) Manual that establishes essential protocols for managing environmental impacts, ensuring occupational health, and maintaining safety standards. This manual is particularly significant for guiding operations in projects such as UJALA and the Street Light National Programme (SLNP). It aligns with both national and state regulations, as well as international standards set by organizations like the International Finance Corporation (IFC) and the World Bank.
EESL is required to comply with various regulatory bodies, including the Bureau of Energy Efficiency (BEE), the Ministry of Environment, Forests and Climate Change (MoEF), and the Central Pollution Control Board (CPCB). This compliance entails regular reporting and monitoring of environmental impacts and health and safety risks associated with their projects, ensuring that EESL’s operations adhere to established legal and ethical standards.
There are several challenges in ensuring compliance with regulatory requirements. One significant issue is the complex regulatory landscape, which includes a multitude of national and state regulations that are continually evolving. This complexity necessitates constant updates to internal processes and documentation. Additionally, resource allocation poses a challenge, as adequate staffing and funding for the Environmental, Occupational Health & Safety and Social (EHSS) department are critical for effective risk management.
The need for robust monitoring and reporting systems further complicates compliance efforts, requiring significant resources to ensure adherence across various projects. Lastly, cultural and operational adaptation is essential, as EESL must engage multiple stakeholders, including local communities and subcontractors, to ensure that all parties understand and comply with EHSS standards, which can be particularly challenging in diverse operational environments.
What are the key strategic plans for EESL toward scaling up decentralized solar power?
EESL is implementing a range of strategies to enhance the deployment of decentralized solar power. By forming robust partnerships with distribution companies (DISCOMs), EESL is facilitating easier access to land and promoting rooftop solar installations on government buildings and DISCOM infrastructure, thereby negating the need for additional land acquisition. Furthermore, EESL is exploring microfinancing options in collaboration with financial institutions to render smaller-scale projects more attractive to investors.
We also aim to bolster financial viability and reduce costs by leveraging the carbon credit market and creating standardized designs for decentralized solar initiatives. Through its emphasis on partnerships, innovative financing, standardized designs, and policy advocacy, EESL seeks to make decentralized solar projects more practical and financially appealing. These initiatives not only contribute to a sustainable energy future but also empower local communities to engage more actively in the renewable energy sector.
What is EESL’s commitment to the government’s UJALA program and what are the steps you are implementing accordingly?
Lighting accounts for the largest share of energy consumption year-round and this is utilized by consumers, industries, government institutions, and the corporate sector as the primary source of illumination. Facilitating connectivity, trade, education, safety, and illumination is crucial to national infrastructure. India has been a frontrunner in recognizing the cost and sustainability benefits of high-quality, energy-efficient lighting.
However, quality illumination often comes at a high cost, posing challenges for economically disadvantaged citizens. Energy Efficiency Services Limited (EESL) took the initiative to provide large-scale access to efficient lighting at a reasonable cost, ensuring equitable illumination for all.
For this, EESL launched the Domestic Efficient Lighting Programme (DELP) which was later named the Unnat Jyoti by Affordable LEDs for All (UJALA). The UJALA initiative by EESL was launched by our Honourable Prime Minister Shri Narendra Modi on January 5th, 2015. Under his aegis and vision, the UJALA program has been instrumental in promoting energy efficient LED lighting.
To further extend the benefits of UJALA Programme to the remote regions of India, EESL introduced Gram UJALA. EESL is implementing the UJALA Programme with the help of its bulk procurement model to leverage economies of scale, where demand aggregation leads to higher reach for LED bulbs at affordable prices. The Gram UJALA, on the other hand, is being implemented through carbon financing for funding of the program. In addition to this, EESL works with distribution companies (DISCOMs) through a benefit sharing model. EESL partners with DISCOMs to provide affordable LED bulbs through three models:
- Upfront Model:
Consumers purchase LEDs at upfront cost and save on electricity bills.
- DISCOM Cost Recovery Model:
Consumers pay a small part, while DISCOMs pay EESL the balance over 3-10 years, recovering costs through monetized energy savings from reduced connected load.
- On Bill Financing (OBF) Model:
Consumers repay EESL’s entire LED cost, including awareness, distribution, and capital, through easy installments deducted from electricity bills over 8-12 months.
Over the years, UJALA has grown to be a significant catalyst in social, economic, and ecological transformation. It has encouraged the Make in India initiative by putting domestic manufacturing of LED bulbs on a sustained upward trajectory. It has also benefited consumers by bringing down the price of LED bulbs from Rs. 400 to Rs. 75 between 2015 and 2022 – thus outperforming its original mandate of LED distribution.
Similarly, as part of Gram UJALA, consumers in India’s rural regions are given 7W and 12W LED bulbs, at a price of Rs 10 each for the purchase of a maximum of 5 LED bulbs against submission of an equal number of ICLs that are in working condition.
Thus, UJALA has fundamentally changed how LED bulbs are perceived by India’s masses, first by making them eminently affordable through economies of scale, and then using this cost benefit to drive the message of reduced energy bills and better lighting quality.
What are the key targets of the Unnati Jyoti by Affordable LEDs for All scheme and how are you looking at achieving them?
The Unnati Jyoti by Affordable LEDs for All (UJALA) scheme has set ambitious targets to drive energy efficiency and sustainable development in India. The primary goals of UJALA include the widespread distribution of LED bulbs to millions of households, achieving substantial energy savings by replacing traditional incandescent and CFL bulbs with LEDs and significantly reducing greenhouse gas emissions to contribute to India’s commitment to combating climate change.
Additionally, the program aims to lower electricity bills for consumers by promoting the use of energy-efficient LEDs and fostering economic growth and job creation through investments in the LED market and manufacturing.
To achieve these targets, EESL employs bulk procurement strategies that have successfully reduced the procurement cost of LED bulbs from INR 310 to just INR 38, and the selling price from INR 500-600 to INR 70, making LEDs affordable for all consumers.
EESL leverages a robust distribution network to ensure that LED bulbs, tube lights, and energy-efficient fans are available across urban and rural areas, having distributed over 36.87 crore LED bulbs, 72.19 lakh LED Tube lights, and 23.59 lakh Energy efficient fans to date. Extensive public awareness campaigns educate consumers about the benefits of LEDs, encouraging them to switch from traditional lighting solutions to energy-efficient alternatives.
Furthermore, EESL collaborates with state utilities and local bodies to promote the UJALA scheme and facilitate the distribution of LED bulbs, ensuring seamless implementation at the grassroots level. Continuous monitoring and evaluation of the program’s progress help identify areas for improvement and fine-tune strategies to meet targets. By focusing on these key targets and implementing effective strategies, EESL is committed to making the UJALA scheme a cornerstone of India’s energy efficiency initiatives, driving sustainable development, and contributing to a greener future.
Charging infrastructure is a big bottleneck for the improvement of the charging infrastructure for EVs. How is EESL looking to address this challenge?
The expansion of EV charging infrastructure encounters several key obstacles that need resolution for seamless scalability. The high costs associated with upstream infrastructure, coupled with restrictions on LT connections capped at 50kW, lead to expensive upgrades and inconsistent electricity tariffs for commercial charging stations.
In states such as Maharashtra, Rajasthan, and Haryana, high fixed demand charges result in actual tariffs exceeding Rs. 20/unit. Furthermore, the lengthy process for load sanction and approvals, along with urban location challenges requiring right of way (RoW) permissions, further delays infrastructure development. Standardizing tariffs and streamlining the approval process can alleviate these issues.
Technological and interoperability challenges also create significant barriers. The absence of standardized connectors for electric two-wheelers (E2W) and three-wheelers (E3W), compatibility issues between various charging protocols, and the rapid pace of advancements in charging technology risk rendering existing infrastructure obsolete.
Establishing industry-wide standards for connectors and protocols and promoting backward compatibility in new charging technologies can help address these concerns. Additionally, access to finance is restricted by the lack of proven business models, limited awareness among financial institutions, and stringent collateral and creditworthiness requirements. Collecting and sharing data on successful business models, educating financial institutions, and introducing tailored financial products that can improve access to finance.
Other challenges include land acquisition difficulties, utilization issues, and insufficient incentive mechanisms. Acquiring large urban land parcels, dealing with overlapping land rights, and managing redevelopment projects complicate land acquisition. Simplifying land acquisition processes, clarifying land rights, and implementing stringent quality control and certification standards are necessary.
Developing and promoting state-level incentives, streamlining application procedures, and establishing standardized communication protocols for a national roaming exchange can enhance the utilization of public EV chargers. By addressing these challenges through comprehensive policy reforms, standardization efforts, financial incentives, and streamlined processes, the expansion of EV charging infrastructure can be significantly accelerated.
What are going to be EESL’s key focus areas in the future in opening up new opportunities in the energy ecosystem?
For EESL, the foremost priorities in the coming years revolve around advancing energy efficiency and sustainability initiatives, particularly focusing on two key areas: energy-efficient fans and electric cooking, specifically induction cooktop.
To revolutionize cooking practices in India and emphasize the importance and urgency of energy-efficient fans, we are set to distribute 10 million efficient BLDC fans and 2 million energy-efficient induction cooktop nationwide. Through these initiatives, EESL continues to lead the way in the energy efficiency sector, making substantial contributions towards a sustainable and energy-efficient future for India.
Additionally, EESL has recently expanded its energy efficiency portfolio with the introduction of 5-star rated 6-Watt LED bulbs. As part of our ongoing commitment to the Unnat Jyoti by Affordable LEDs for All (UJALA) programme, these highly efficient LED bulbs promise 30% energy savings while maintaining the same level of light intensity.
We also recognize the substantial energy consumption associated with common household appliances. The data suggests that approximately 45% of global energy consumption stems from just 20 basic appliances with a significant portion used in both commercial and domestic settings. Hence, EESL underscores the importance of targeting the retail sector.
To address this, we have recently launched an energy-efficient appliances marketplace (EESLMart), catering to both B2C and B2B segments. It is poised to become the go-to destination for energy-efficient appliances and solutions, featuring appliances including, BLDC ceiling fan – 5 Star (with remote), BLDC ceiling fan – 5 Star (without remote), emergency LED bulb – 10-Watt, LED bulb- 6 Watts, 20-Watt Int Batten tube light, 1.5, 1.0 TR super-efficient 5 Star ACs and induction cooktop.
With EESLMart.in, EESL is collaborating with various state DISCOMs and consumer service providers like APEPDCL, Tata Power Renewable and others to enhance the speed of adoption for energy efficient appliances.
Through this platform, we aim to provide an affordable, seamless, and efficient procure-to-pay experience, empowering environmentally conscious consumers and bridging the information gap on energy-efficient products. By focusing on these initiatives, we are facilitating a mass movement towards energy efficiency, significantly contributing to sustainability efforts across both domestic and industrial sectors.
How is EESL’s e-marketplace expected to encourage increasing access to energy-efficient appliances?
EESL’s e-marketplace, EESLMart, is set to revolutionize access to energy-efficient appliances by addressing key barriers and streamlining processes for consumers and businesses alike. By creating a centralized platform, EESLMart will significantly lower the high transaction costs typically associated with scaling energy-efficiency projects.
This reduction in costs will make energy-efficient products more accessible and affordable for a wider audience. The marketplace will feature standardized agreements for products and services, simplifying the procurement process and facilitating scalability, which will build trust and ease of adoption among consumers and businesses.
Moreover, EESL Mart will be integrated with advanced information technology systems, expediting approval processes for large-scale projects. This integration will ensure faster project deliveries and appraisals, making energy-efficient solutions more readily available. The digitization of various processes, including entity appraisal, GST performance, and self-assessment, coupled with automated processes integrated through SAP, will streamline vendor payments and supply chain management, enhancing efficiency and reliability.
Aligning with EESL’s mission to spearhead energy efficiency projects in India, EESLMart aims to unlock the potential of the energy efficiency market and provide universal access to innovative energy-efficient solutions, including our appliances such as BLDC Fans, LED bulbs, ACs, and induction cooktop.
With a strong focus on addressing environmental challenges, EESL Mart is dedicated to contributing to India’s goal of becoming a net-zero emissions nation. By offering cutting-edge, affordable, and highly efficient solutions, the marketplace will support a sustainable and environmentally conscious future.
Rupa Kumari & Rajneesh De, APAC News Network
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