Energy as a Service in Contemporary India, Energy News, ET EnergyWorld | Whuff News

OPINION: Power as Service in Contemporary India

Energy Requirements of India: Goals and Objectives

From generating electricity to transportation, energy is used for many things. With India witnessing rapid urbanization and industrialization and marching towards becoming a $5 trillion economy, its energy needs are growing exponentially. In terms of global carbon emissions, India is ranked third. To cope with the increase in energy needs in India, the Prime Minister of India, Shri Narendra Modi, has revised the NDC (Nationally Determined Contribution) in 2021, which was initially announced at the Conference of the Parties (COP21) in 2015. The revised NDC featured five key areas. (Panchamrit) of the Indian climate movement. These five commitments were to achieve net zero emissions (measurement of carbon emissions and carbon absorption in the environment) by 2070, increasing the power of renewable sources to fulfill 50 percent of energy needs, reducing the total cost of carbon emissions by 1 billion tons. , and a reduction of less than 45 percent in the nation’s carbon intensity. The goals set at the 26th session of the Conference of the Parties (COP26) will be achieved through a major effort by various sectors. Basically, the Ministries of New and Renewable Energy (MNRE) and the Office of Environment, Forestry, and Climate Change (MoEFCC), as well as heavy industries promoting the development of EVs (electric vehicles), will carefully manage and monitor the system to strengthen climate action in India.Traditional Ways of Meeting India’s Energy Demands: Hits and Misses

Over the years, in India, energy needs have been met by companies known as Energy Service Companies (ESCO). About 149 ESCOs are affiliated with the Bureau of Energy Efficiency (BEE). Such energy service companies use traditional method of service delivery. After a thorough energy analysis of existing utilities, ESOCs design, re-model, and provide customer-oriented energy conservation services in an energy-driven project. They are also looking to design the energy value chain through EPC (Energy Performance Contracting), a new way of financing energy projects. According to EPC, the energy service company will deploy the equipment needed to increase energy efficiency. However, they do not have end-to-end management, for example, if installed equipment becomes obsolete and needs to be replaced or repaired. In the traditional way ESCOs operate, the customer is expected to bear a large portion of the energy production costs. Since operational risk is involved, it makes ESCOs less attractive to both consumers and financial institutions. That is why, in technical terms, the energy solutions provided by ESCOs have proven to be effective; however, because it is less expensive, the ‘business’ side has made it less popular with consumers.

The constraints facing the operation of ESCOs are caused by growing energy demands and rapid changes in customer preferences. Therefore, to avoid the negative effects of climate change and effectively achieve environmental sustainability in India, the authorities must seriously examine and implement new solutions that will grow the energy sector and help develop a healthy, green and sustainable approach to the environment. One such effective strategy is to deploy an Energy-as-a-Service (EaaS) model. It has been rightly said that modern problems require modern solutions. EaS business models use a modern approach compared to the ESCO model and are gaining popularity.

The EaS Model: A Solution Driven by Innovation

The EaS model is essentially a partnership between an energy consultant and energy service companies (ESCOs). EaS consultants use their expertise to make appropriate recommendations for increasing electricity and changing supply and control methods used by clients. They ensure the delivery of energy-related products and integrated services and offer them to customers in exchange for a monthly subscription, in simple terms, for a recurring cost. The EaS provider manages the ownership and infrastructure and assumes the capital investment. According to a report by Deloitte, 2019, EaaS helps to design a flexible system according to the needs and requirements of commercial customers who wish to improve their energy management and shift the burden of capital costs and daily tasks to EaS providers. Due to the lack of direct electricity payments and the avoidance of expensive equipment upgrades, the customer is in a closed and attractive position.

EaS model in India

Recently, Infosys entered into an agreement with British Petroleum Company Limited, to combine the digital strategies used by Infosys with BP’s energy expertise. The partnership aims to achieve carbon neutrality across all Infosys campuses and ensure end-to-end management of energy assets and services. The latest AI (Artificial Intelligence) technology will drive the process. Therefore, effective establishment of EaaS model in India will lead to meaningful and cost effective recommendations for energy production, systematic installation of energy goods and services and careful micro-management of day-to-day operations in energy related sectors. It can be concluded that the EaS approach utilizes technological advancements and makes energy products and services affordable and easily available. As a result, EaS, as a current method, leads to 3D’s, digitization, de-centralization and de-carbonization.

Budget Allocation for Promotion of Power Sector in India

The Indian Renewable Energy Development Agency, which supports RE industry projects, has received government approval in January 2022 for an investment of Rs 1,500 million ($200 million). In addition, the government has commissioned a green energy corridors plan, which will help seven countries build the infrastructure needed to connect renewable energy sources with the energy system. At an estimated cost of Rs 12,031 billion ($1.6 billion), the corridor scheme will receive 33% of the central funding, or Rs 3,970 million ($530 million).

The energy-as-a-service model is gaining popularity as it supports energy production from natural sources such as solar power, wind power and hydropower. Because of this, both large scale and commercial solar projects will get a big boost. By 2030, the Indian government aims to deploy 280 GW of solar power. As a result, the government has allocated Rs 19,500 crore for the PLI scheme (production-linked incentives) to boost the production of solar photovoltaic (PV) modules. MNRE has allocated 315 million dollars ($2,369 million) for the establishment of grid-connected solar power, the capacity of which will increase by 7.5 GW of solar power by 2021-2022. 300,000 solar lights, 2.5 million solar observation lights, and solar power packs will all be installed as part of the off-grid solar power system.

Policy initiatives to promote EaS in India

Since the launch of the “Make in India” campaign in 2014, various initiatives have been put in place to make India an attractive destination for manufacturing and foreign investors. One of the key strategies to boost this initiative is ‘product-related incentives’ in the solar energy sector, and it strengthens the effectiveness of the EaS model by creating a sustainable supply network and increasing the efficiency of local producers.

The EaS model has been widely adopted by Australia, and its market is expected to grow at a compound annual growth rate (CAGR) of 8.5%. One of the main factors driving the market in Australia is the increased support of the Australian government towards renewable technologies and distributed energy generation. Since the establishment of the distributed energy system is expected to result in increased growth of the EaaS market, the Australian government launched the Distributed Energy Integration Program (DEIP) in 2018 to bring together all stakeholders, including public institutions, business leaders, market centers, and consumer groups with a specific purpose to increase energy efficiency for all end users. It also helped the necessary stakeholders in dealing with technical and commercial difficulties. The Australian government has also recognized the impact of renewable technology adoption in developing an EaS incentive model. The Clean Energy Council reported that electricity generation in Australia grew from 14.6% in 2015 to 24% in 2019 due to renewable energy sources. India, improving its EaS support policy, can learn from Australia’s schemes and make the necessary plans to support the energy-as-a-service model. It could introduce schemes to increase investment towards renewable energy generation to achieve the net zero target by 2070. It can also formulate policies to encourage public and private stakeholders to accelerate the adoption of renewable technologies to reduce carbon emissions and support EaS on a large scale. .

Future prospects

India needs 3.5 trillion units of electricity to achieve an economic growth rate of 7.3% by 2036. [CEA (Central Electricity Authority)]. Therefore, the proper allocation of the budget towards the energy sector and the successful implementation of the EaS business model will reduce carbon emissions and expand the energy sector. Such a system also helps to combat the serious challenges posed by the complexities between ownership and control in the electricity sector. In addition to effective changes in the energy-driven policy framework, India needs more partnerships such as Infosys and BP, which help reduce financial costs and the burden of providing and managing energy service users. Therefore, it leads to a transition to a technology-driven economy.

[This piece was written exclusively for ETEnergyworld by Anurag Wasnik, Innovation Lead, Atal Innovation Mission, NITI Aayog, and Unnati Tolani, Project intern, Atal Innovation Mission]

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