2.

Energy Conservation Act-2001 and Related Policies

2. ENERGY CONSERVATION ACT-2001 AND RELATED

POLICIES

Energy conservation Act-2001 and its features, Notification under the Act Schemes of
Bureau of Energy Efficiency (BEE)- ECBC, S&L, DSM, BLY, SME’s, Designated Agencies,
Electricity Act 2003, Integrated Energy Policy, National Action plan on Climate Change

2.1 Introduction
Energy Conservation Act (EC Act) was enacted by the Government of India in 2001 to provide legal
framework and institutional arrangements for enhancing energy efficiency. This Act led to the
creation of Bureau of Energy Efficiency (BEE) as the nodal agency at the center and State
Designated Agencies (SDAs) at the State level to implement the provisions of the Act. The Central
Government, State Government and Bureau of Energy Efficiency have major roles to play in
implementation of the Act. The Mission of BEE is to develop policy and strategies based on self-
regulation and market principles with the goal of reducing energy intensity of the Indian economy.
This will be achieved with active participation of all stakeholders, resulting in rapid and sustained
adoption of energy efficiency in all sectors.

2.2 Salient Features of the Energy Conservation Act, 2001 (Amended in 2010)
The Act empowers the Central and State Governments to facilitate and enforce efficient use of
energy and its conservation, notify energy-intensive industries, establishments and commercial
buildings as designated consumers and prescribe energy consumption norms and standards for
designated consumers. The Act was amended in 2010.

The Amendment expanded the scope of energy conservation norms for buildings and tightened the
applicability of energy efficiency norms for appliances and equipment. It provided a framework
within which savings on energy use can be traded between those industries who are energy
efficient and those whose consumption of energy is more than the maximum set by the
government. The amendment increased penalties for non-compliance and provided for
establishment of appellate tribunal for energy conservation to hear appeals against the orders of
the adjudicating officer or the Central Government or the State Government or any other authority
under the Energy Conservation Act.

The excerpts of relevant sections of Energy Conservation Act are reproduced below for the benefit
of Energy Managers and Energy Auditors. However the full text of the act is available in BEE
website.

Key Definitions as Outlined in the Act

Building: “building” means any structure or erection or part of structure or erection after the rules
relating to energy conservation building codes have been notified (under clause (p) of section 14 and
clause (a) of section 15) and includes any existing structure or erection or part of structure or

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erection, which is having a connected load of 100 Kilowatt (kW) or contract demand of 120 Kilo-
volt Ampere (kVA) and above and is used or intended to be used for commercial purposes.

Designated agency: Designated agency means an agency which coordinates, regulates and enforce
provisions of this act within a State.

Designated consumer: Designated consumer means any user or class of users of energy in a energy
intensive industries and other establishments specified in the Schedule as designated consumer.

Energy: Energy means any form of energy derived from fossil fuels, nuclear substances or
materials, hydro-electricity and includes electrical energy or electricity generated from renewable
sources of energy or biomass connected to the grid.

Energy audit: Energy audit means the verification, monitoring and analysis of use of energy
including submission of technical report containing recommendations for improving energy
efficiency with cost benefit analysis and an action plan to reduce energy consumption.

Energy conservation building codes: It means the norms and standards of energy consumption
expressed in terms of per square meter of the area and wherein energy is used and includes location
of the building.

Energy consumption standards: It means norms for process and energy consumption standards
(specified under clause (a) of section 14).

Energy savings certificate : “Energy savings certificate” means any energy savings certificate
issued to the designated consumers (under sub-section (1) of section 14A).

Equipment or appliance: It means any equipment or appliance which consumes, generates,

transmits or supplies energy and includes any device that consumes any form of energy and
produces a desired work.

CHAPTER IV of EC Act

13. Powers and Functions of Bureau

13. (1) The Bureau shall, effectively co-ordinate with designated consumers, designated agencies
and other agencies, recognize and utilise the existing resources and infrastructure, in
performing the functions assigned to it by or under this Act.
(2) The Bureau may perform such functions and exercise such powers as may be assigned to it
by or under this Act and in particular, such functions and powers include the function and
power to -
(a) recommend to the Central Government the norms for processes and energy consumption
standards required to be notified under section 14A;
(aa) recommend to the Central Government for issuing of the energy savings certificate

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(b) recommend to the Central Government on display label on equipment or on appliances and
manner of display under clause (d) of section 14;
(c) recommend to the Central Government for notifying any user or class of users of energy as a
designated consumer under clause (e) of section 14;
(d) take suitable steps to prescribe guidelines for energy conservation building codes under
clause (p) of section 14.
(e) take all measures necessary to create awareness and disseminate information for efficient use
of energy and its conservation;
(f) arrange and organize training of personnel and specialists in the techniques for efficient use
of energy and its conservation;
(g) strengthen consultancy services in the field of energy conservation;
(h) promote research and development in the field of energy conservation;
(i) develop testing and certification procedure and promote testing facilities for certification and
testing for energy consumption of equipment and appliances;
(j) formulate and facilitate implementation of pilot projects and demonstration projects for
promotion of efficient use of energy and its conservation;
(k) promote use of energy efficient processes, equipment, devices and systems;
(l) promote innovative financing of energy efficiency projects;
(m) give financial assistance to institutions for promoting efficient use of energy and its
conservation;
(n) levy fee for services provided for promoting efficient use of energy and its conservation;
(o) maintain a list of accredited energy auditors as may be specified by regulations;
(p) specify, by regulations, the qualifications, criteria and conditions subject to which a person
may be accredited as an energy auditor and the procedure for such accreditation;
(q) specify, by regulations, the manner and intervals of time in which the energy audit shall be
conducted;
(r) specify, by regulations, certification procedures for energy managers and energy auditors to
be designated or appointed by designated consumers;
(s) prepare educational curriculum on efficient use of energy and its conservation for educational
institutions, boards, universities or autonomous bodies and coordinate with them for
inclusion of such curriculum in their syllabus;
(sa) conduct examination for capacity building and strengthening of services in the field of
energy conservation including certification of energy managers and energy auditors.
(t) implement international co-operation programmes relating to efficient use of energy and its
conservation as may be assigned to it by the Central Government.

CHAPTER V of EC Act

Power of Central Government to Facilitate and Enforce Efficient Use of Energy and its
Conservation

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14. Central Government may, by notification, in consultation with the Bureau, -

(a) specify the norms for processes and energy consumption standards for any equipment,
appliances which consumes, generates, transmits or supplies energy
(b) specify equipment or appliance or class of equipments or appliances, as the case may be, for
the purposes of this Act;
(c) prohibit manufacture or sale or purchase or import of equipment or appliance specified under
clause (b) unless such equipment or appliances conforms to energy consumption standards;
– Provided that no notification prohibiting manufacture or sale or purchase or import or
equipment or appliance shall be issued within a period of six months from the date of
notification;

– Provided further that the Central Government may, having regard to the market share and
the technological development having impact on equipment or appliance, and for reasons
to be recorded in writing, extend the said period of six months referred to in the first
proviso by a further period not exceeding six months;

(d) direct display of such particulars on label on equipment or on appliance specified and in such
manner as may be specified by regulations;
(e) specify, having regarding to the intensity or quantity of energy consumed and the amount of
investment required for switching over to energy efficient equipments and capacity or
industry to invest in it and availability of the energy efficient machinery and equipment
required by the industry, any user or class of users of energy in the energy intensive
industries and other establishment as a designated consumer;
(f) alter the list of Energy Intensive Industries specified in the Schedule;
(g) establish and prescribe such energy consumption norms and standards for designated
consumers as it may consider necessary:
– Provided that Central Government may prescribe different norms and standards for
different designated consumers having regard to such factors as may be prescribed;
(h) direct, having regard to quantity of energy consumed or the norms and standards of energy
consumption the energy intensive industries specified in the Schedule to get energy audit
conducted by an accredited energy auditor in such manner and intervals of time as may be
specified by regulations;
(i) direct, if considered necessary for efficient use of energy and its conservation, any designated
consumer to get energy audit conducted by an accredited energy auditor;
(j) specify the matters to be included for the purposes of inspection
(k) direct any designated consumer to furnish to the designated agency, in such form and manner
and within such period, as may be prescribed, the information with regard to the energy
consumed and action taken on the recommendation of the accredited energy auditor;
(l) direct any designated consumer to designate or appoint energy manger in charge of activities
for efficient use of energy and its conservation and submit a report, in the form and manner as
may be prescribed, on the status of energy consumption at the end of the every financial year
to designated agency;
(m) prescribe minimum qualification for energy managers to be designated or appointed under
clause (l);
(n) direct every designated consumer to comply with energy consumption norms and standards;

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(o) direct any designated consumer, who does not fulfill the energy consumption norms and
standards prescribed under clause (g), to prepare a scheme for efficient use of energy and its
conservation and implement such scheme keeping in view of the economic viability of the
investment in such form and manner as may be prescribed;
(p) prescribe energy conservation building codes for efficient use of energy and its conservation
in the building or building complex;
(q) amend the energy conservation building codes to suit the regional and local climatic
conditions;
(r) direct every owner or occupier of the building or building complex, being a designated
consumer to comply with the provisions of energy conservation building codes for efficient
use of energy and its conservation;
(s) direct, any designated consumer referred to in clause (r), if considered necessary, for efficient
use of energy and its conservation in his building to get energy audit conducted in respect of
such building by an accredited energy auditor in such manner and intervals of time as may be
specified by regulations;
(t) take all measures necessary to create awareness and disseminate information for efficient use
of energy and its conservation;
(u) arrange and organise training of personnel and specialists in the techniques for efficient use
of energy and its conservation;
(v) take steps to encourage preferential treatment for use of energy efficient equipment or
appliances:
14A (1) The Central Government may issue the energy savings certificate to the designated
consumer whose energy consumption is less than the prescribed norms and standards in
accordance with the procedure as may be prescribed.
(2) The designated consumer whose energy consumption is more than the prescribed norms
and standards shall be entitled to purchase the energy savings certificate to comply with the
prescribed norms and standards.
14B The Central Government may, in consultation with the Bureau, prescribe the value of per
metric ton of oil equivalent of energy consumed for the purposes of this Act.

CHAPTER VI of EC Act

Power of State Government to facilitate and Enforce Efficient Use of Energy and its
Conservation

15. The State Government may, by notification, in consultation with the Bureau -
(a) amend the energy conservation building codes to suit the regional and local climatic
conditions and may, by rules made by it, specify and notify energy conservation building
codes with respect to use of energy in the buildings;
(b) direct every owner or occupier of a building or building complex being a designated
consumer to comply with the provisions of the energy conservation building codes;
(c) direct, if considered necessary for efficient use of energy and its conservation, any designated
consumer to get energy audit conducted by an accredited energy auditor in such manner and
at such intervals of time as may be specified by regulations;

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(d) designate any agency as designated agency to coordinate, regulate and enforce provisions of
this Act within the State;
(e) take all measures necessary to create awareness and disseminate information for efficient use
of energy and its conservation;
(f) arrange and organise training of personnel and specialists in the techniques for efficient use
of energy and its conservation;
(g) take steps to encourage preferential treatment for use of energy efficient equipment or
appliances;
(h) direct, any designated consumer to furnish to the designated agency, in such form and
manner and within such period as may be specified by rules made by it, information with
regard to the energy consumed by such consumer;
(i) specify the matters to be included for the purposes of inspection..

Establishment of Fund by State Government

16. (1) The State Government shall constitute a Fund to be called the State Energy Conservation
Fund for the purposes of promotion of efficient use of energy and its conservation within the
State.
(2) To the Fund shall be credited all grants and loans that may be made by the State Government
or, Central Government or any other organization or individual for the purposes of this Act.
(3) The Fund shall be applied for meeting the expenses incurred for implementing the provisions
of this Act.
(4) The Fund created shall be administered by such persons or any authority and in such manner
as may be specified in the rules made by the State Government.

Power of Central Government or State Government to issue directions

18. The Central Government or the State Government may, in the exercise of its powers and
performance of its functions under this Act and for efficient use of energy and its
conservation, issue such directions in writing as it deems fit for the purposes of this Act to
any person, officer, authority or any designated consumer and such person, officer or
authority or any designated consumer shall be bound to comply with such directions.

Explanation – For the avoidance of doubts, it is hereby declared that the power to issue
directions under this section includes the power to direct –

(a) Regulation of norms for process and energy consumption standards in any industry or
building or building complex; or
(b) Regulation of the energy consumption standards for equipment and appliances.

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CHAPTER VIII of EC Act

PENALTIES AND ADJUDICATION

26. Penalty

(1) If any person fails to comply with the provisions of clause (c) or clause (d) or clause (h) or
clause (i) or clause (k) or clause (l) [xxx] or clause (r) or clause (s) of section 14 or clause
(b) or clause (c) or clause (h) of section 15, he shall be liable to a penalty which shall not
exceed ten lakh rupees for each such failure and, in the case of continuing failure, with an
additional penalty which may extend to ten thousand rupees for every day during which such
failure continues:

PROVIDED that no person shall be liable to pay penalty within five years from the date of
commencement of this Act.

(1A) If any person fails to comply with the provisions of clause (n) of section 14, he shall be
liable to a penalty which shall not exceed ten lakh rupees and, in the case of continuing
failure, with an additional penalty which shall not be less than the price of every metric ton
of oil equivalent of energy, prescribed under this Act, that is in excess of the prescribed
norms.

(2) Any amount payable under this section, if not paid, may be recovered as if it were an arrear
of land revenue.

State designated agencies

As per Energy Conservation Act 2001, State Governments have been empowered to designate
agencies (State Designated Agency i.e. SDA) in consultation with Bureau of Energy Efficiency.
Designated Agencies will have the responsibility to implement the Act within the State.

Responsibilities

• Spread awareness on EC Act

• Undertake voluntary initiatives to promote energy conservation
• Liaison and coordinate with BEE, State Government Departments dealing with energy,
industry, planning, regulators, consumer affairs, municipal bodies etc.
• Capacity building of staff employed
• Launch and maintain state specific website addressing the voluntary and mandatory
provisions of EC Act
• Undertake energy conservation awareness program for consumers, industrial & commercial
sector, school children, farmers etc.
• Arrange interactive meets between energy managers, energy auditors, designated consumers
and other experts

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Duties

• Prepare a list of designated consumers

• Compile information received from designated consumers through annual statements on
energy consumption, energy audit reports, and action taken on the report of energy audit
• Prepare a state and sectoral energy data base and provide the feed back to designated
consumers
• Take all measures necessary to create awareness and disseminate information for efficient
use of energy and its conservation
• Arrange and organize training of personnel and specialists in the techniques for efficient use
of energy and its conservation
• Take steps to encourage preferential treatment for use of energy efficient equipment or
appliances
• Appoint or designate inspecting officer with specified powers as necessary for the purpose of
ensuring compliance with energy consumption standards
• Assist State Government in the preparation of Rules under Section 57 of the Energy
Conservation Act.
• Establish Energy Conservation Fund for the purposes of promotion of efficient use of energy
and its conservation within the State.

2.3 Schemes of BEE under the Energy Conservation Act-2001

 Energy Conservation Building Codes (ECBC)

 Standards and Labeling (S & L)
 Demand Side Management (DSM)
 Bachat Lamp Yojana (BLY)
 Promoting Energy Efficiency in Small and Medium Enterprises (SMEs)
 Designated Consumers
 Certification of energy auditors and energy managers

2.3.1 Energy Conservation Building Code (ECBC)

Energy Conservation Building

Codes (ECBC) was developed to
deal with rapidly increasing energy
consumption in commercial
buildings. ECBC sets minimum
energy efficiency standards for
design and construction of
commercial buildings.

ECBC encourages energy efficient

design or retrofit of buildings so that

 Building function, comfort, health and the productivity of the occupants is considered
 Life cycle costs (i.e. construction and energy cost are minimized)
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ECBC defines the norms of energy requirement per sq.metre of area and takes into consideration the
climatic region of the country, where the building is located. The owners or occupiers have to
comply with energy consumption norms and standards and / or to prepare and implement schemes
for its efficient use and conservation. Central Government can prescribe energy conservation
building codes and direct owners/ occupiers to comply with them. State Governments can modify
the codes to suit regional and local climatic conditions.

For details on energy conservation in buildings and ECBC, reader is advised to refer Book-3,
Chapter 10.

2.3.2 Standards and Labeling (S&L)

There is a wide variation in energy consumption of similar products by various manufacturers. Also
information on energy consumption is often not easily available. This leads to continued
manufacture and purchase of inefficient equipment and appliances.

The objectives of Standards & Labeling Program is to provide the consumer an informed choice
about the energy saving and thereby the cost saving potential of the marketed household and other
equipment. This is expected to impact the energy savings in the medium and long run while at the
same time it will position domestic industry to compete in such markets where norms for energy
efficiency are mandatory.

The main provision of EC act on Standards and Labeling are:

• Recommend to the Central Government, the norms for

processes & energy consumption
standards for any equipment which consumes, generates,
transmits or supplies energy.
• Recommend to the Central Government the particulars
required to be displayed on label of equipment or an
appliances and manner of their display.
• Prevent manufacture, sale and import of such equipment,
which does not comply with the notified standards.
• Promote use of energy efficient processes, equipment, devices
and systems;
• Spread information on the benefits to consumers

Standard: Energy-efficiency standards are procedures and

regulations prescribing the energy performance of
manufactured/commercially sold products sometimes prohibiting the sale of products that are less
efficient than a minimum level. The term “standards” commonly encompasses two possible
meanings:

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a) well-defined test protocols (or test procedures) to obtain a sufficiently accurate estimate of the
energy performance of a product, or at least a relative ranking of its energy performance
compared to that of other models; and

b) target limits on energy performance (usually maximum use or minimum efficiency) based on a
specified test protocol.

Labels: Energy-efficiency labels are informative labels affixed to manufactured products to describe
the product’s energy performance (usually in the form of energy use, efficiency). These labels give
consumers the data necessary to make informed purchases. Mainly there are two types of labels
namely,
a) Comparative label: allow consumers to compare efficiency of all the models of a product in
order to make an informed choice. It shows the relative energy use of a product compared to
other models available in the market.
b) Endorsement label: define a group of products as efficient when they meet minimum energy
performance criteria specified in the respective product schedule/regulation/statutory order.

Minimum Energy Performance Standards (MEPS): MEPS prescribe minimum efficiencies (or
maximum energy consumption) that manufacturers must achieve in each product, specifying the
energy performance(or output) but not the technology or design details of the product. . The MEPS
will be reviewed and upgraded periodically to enhance & ensure the availability of energy efficiency
product in the market.

Star Ratings: A ranking system based on energy efficiency of an appliance declared by

manufacturer. . Depending upon the performance of an appliance, they are rated on a scale of star 1
to star 5. The number of stars depends on the highest pre-set threshold for energy performance that
the appliance is able to meet. Therefore, Star 1 is the least energy efficient (and hence the least
money saved) and star 5 is the most energy efficient (and hence more money saved ).

Label period: The validity period of the energy efficiency label under the energy consumption
standard specified by the Central Government under clause (a) of Section 14 and in case the end
period of the energy efficiency label is not specified, it shall be deemed to be valid until a new
energy efficiency level is announced by the Central Government.

Appliances/equipment covered under S&L program:

In the 11th plan, S&L Programme has been expanded to 18 equipment out of which 4 equipment are
introduced for mandatory S&L scheme from 7th January 2010. The equipment under the mandatory
labeling program are:

1. Household Frost Free Refrigerators

2. Room Air Conditioners
3. Tubular Fluorescent Lamps
4. Distribution Transformers (up to 200 KVA)

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Frost-free Refrigerator TFL AC Distribution Transformer

The following equipment have been introduced under voluntary labeling scheme:

1. Direct Cool Refrigerators

2. Induction Motors
3. Ceiling Fans
4. Agricultural pump Sets
5. Color Televisions
6. Electric Water Geysers
7. Laptop & Notebook
8. Office equipments
9. LPG Stoves
10. Cassette/Floor standing ACs
11. Solid State Inverters
12. Diesel Generators
13. Ballast
14. Diesel Engine driven moonset pumps for agricultural purpose
15. Washing Machine
(Note: More Details are available at www.beestarlabel.com)

Example: Energy & Cost Savings estimation for Star rated appliance

Comparison of Star Rated Refrigerator with Non Star rated Refrigerator (220 Liters)

S No Parameter Star Rated Refrigerator Non Star Rated Refrigerator

1. Cost Rs 17,000/- Rs 10,000/-
2. Star level 5 star No star
3. Annual Electricity consumption 204 Units 520 Units
4. Annual Electricity savings 316 Units
5. Annual Electricity Cost (@Rs 5/Unit) Rs 1020/- Rs 2600/-
6. Annual Money Savings Rs 1580/-
7. Payback Period 1-1.5Years
Note: The cost of refrigerators & electricity consumption non star refrigerator is an assumption for savings estimation.
The actual value may vary

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2.3.3 Demand Side Management (DSM)

Demand Side Management (DSM) means managing of the demand for power, by utilities /
Distribution companies, among some or all its customers to meet current or future needs. DSM
programs result in energy and / or demand reduction. For example, under this process, the demand
can be shifted from peak to off peak hours thereby reducing the need for buying expensive imported
power during peak hours. DSM also enables end-users to better manage their load curve and thus
improves the profitability. Potential energy saving through DSM is treated same as new additions on
the supply side in MWs. DSM can reduce the capital needs for power capacity expansion.

Pilot study undertaken by BEE has indicated energy saving potential of 40% by replacement of
inefficient pumps with Star rated pump sets. BEE has prepared an Agricultural DSM (Ag. DSM)
programme in which pump set efficiency upgradation could be carried out by an Energy Service
Company (ESCOs) or distribution company. The implementation for replacement of inefficient
pumps with Star rated pump sets will be done through the ESCO/Utility who would invest in energy
efficiency measures on a rural pump set feeder on which supply quality enhancements (such as
feeder segregation & High Voltage Direct Supply (HVDS) have already been carried out.

Almost all municipal bodies depend on government support to meet their development and operating
expenses. Government of India, through the Bureau of Energy Efficiency has initiated a municipality
DSM programme to cover 175 municipalities in the country by conducting investment grade energy
audits and preparation of detailed project reports. Energy Service Companies are being encouraged
to take up the implementation of the programme with the help of financial institutions.

2.3.4 Bachat Lamp Yojana (BLY)

The "Bachat Lamp Yojana", which literally means “Save Lamp

Scheme”, aims at the large scale replacement of inefficient
incandescent bulbs in households by Compact Fluorescent Lamps
(CFLs). It seeks to provide CFLs to households at the price similar
to that of incandescent bulbs and plans to use the Clean
Development Mechanism (CDM) to recover the cost difference
between the market price of the CFLs and the price at which they
are sold to households.

The Bachat Lamp Yojana is designed as a public-private partnership between the Government of
India, Investors/private sector CFL suppliers and State level Electricity Distribution Companies
(DISCOMs). The CFL suppliers would sell high quality CFLs to households at a price of Rs. 15 per
CFL within a designated project area in a DISCOM region of operation.

The CFL supplier/Investor would be selected by the DISCOM from a list of CFL suppliers
empanelled by BEE. Under the scheme 60 Watt and 100 Watt incandescent Lamps would be
replaced with 11- 15 Watt and 20 - 25 Watt CFLs respectively. It is estimated that 80% energy
savings can be achieved without affecting lumen intensity.

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Till date, 50 small scale BLY projects from various parts of India have been included in this
registered umbrella framework and 43 projects have been implemented. As a result, about 29.5
million CFLs have been distributed during XI plan period.

2.3.5 Promoting Energy Efficiency in Small and Medium Enterprises (SMEs)

Energy Efficiency in the SME sector assumes importance because of the prevailing high costs of
energy and supply related concerns. It will be useful to build their energy efficiency awareness by
funding/subsidizing need based studies in large number of units in the SMEs and giving energy
conservation recommendations including technology upgradation opportunities. It is envisaged that
such interventions supported by diagnostic studies and pilot projects at cluster level focusing on
energy/resource efficiency, energy conservation and technology up gradation would be helpful in
addressing the cluster specific problems and enhancing energy efficiency in SMEs.

Bureau of Energy Efficiency (BEE) is implementing a program (BEE’s SME Program) to improve
the energy performance in selected SME clusters. The objective of the program is to accelerate the
adoption of energy efficient technologies and practices in the chosen SME clusters through
knowledge sharing, capacity building and development of innovative financing mechanisms. The
project is envisaged to be driven by market based mechanism that include facilitating knowledge
creation at the local level, capacity building of local service providers and technology providers and
thereafter facilitation of energy efficiency measures implementation through collateral funding by
lead banks. The project is thus entirely market driven. Examples of clusters chosen for this project
are Ahmedabad (chemicals), Surat (textiles), Warangal (rice milling) etc.

2.3.6 Designated Consumers (DC)

The Central Government has notified the following 9 energy intensive industries as designated
consumers under The EC Act 2001:

No. Industry Energy consumption

1. Thermal Power Stations 30,000 metric tonne of oil equivalent (MTOE) per year and above
2. Fertilizer 30,000 metric tonne of oil equivalent (MTOE) per year and above
3. Cement 30,000 metric tonne of oil equivalent (MTOE) pe*r year and above
4. Iron & Steel 30,000 metric tonne of oil equivalent (MTOE) per year and above
5. Chlor-Alkali 12,000 metric tonne of oil equivalent (MTOE) per year and above
6. Aluminium 7,500 metric tonne of oil equivalent (MTOE) per year and above
7. Railways Electric traction Sub-Section (TSS), diesel loco shed, Production
units and Workshops of Indian Railways having total annual
energy consumption of 30,000 MTOE or more under Ministry of
Railways
8. Textile 3,000 metric tonne of oil equivalent (MTOE) per year and above
9. Pulp & Paper 30,000 metric tonne of oil equivalent (MTOE) per year and above
Energy Conversion values used for working out annual energy consumption in terms of metric tonne of oil equivalent
For the purpose of this table
i) 1 kg of Oil Equivalent: 10000 kcal
ii) I Metric Tonne of Oil Equivalent (MTOE): 1 x 107 kcal

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iii) In case of coal, petroleum products and other fuels in absence of supplier certificate. GCV of the above fuel (fuel
sample) will be considered as per the test Certificate from a NABL Accredited Lab or State Government Laboratory or
Government recognized Laboratory

As per the Act, Designated consumers have to fulfill the following criteria:

 Designated consumers have to appoint Energy managers with prescribed qualifications.

 The designated consumer has to get an energy audit conducted by an accredited energy
auditor. Designated consumers would comply with prescribed norms and standards of energy
consumption for the industrial sectors.
 Designated Consumers are required to adhere to energy efficient consumption norms
stipulated.
 Designated Consumers are required to submit the status of energy consumption information
every financial year as prescribed.

Perform, Achieve and Trade (PAT) Scheme is a market based mechanism to enhance cost
effectiveness of improvements in energy efficiency in energy-intensive large industries and
facilities, through certification of energy savings that could be traded. The genesis of the
PAT mechanism flows out of the provision of the Energy Conservation Act, 2001 (amended
in 2010).

The key goal of PAT scheme is to mandate specific energy efficiency improvements for the most
energy intensive industries. Sector wise breakup of 478 Designated Consumers, which have been
notified under the Energy Conservation Act, 2001, and covered under PAT Scheme, is as given
below:

Minimum annual energy

Sector consumption for the DC No. of DCs
(tons of oil equivalent)
Aluminium 7500 10
Cement 30000 85
Chlor-Alkali 12000 22
Fertilizer 30000 29
Iron and Steel 30000 67
Pulp and Paper 30000 31
Textile 3000 90
Thermal Power Plant 30000 144
Total 478

The scheme builds on the large variation in energy intensities of different units in almost
every sector. The scheme envisages improvements in the energy intensity of each unit covered by
it. The energy intensity reduction target mandated for each unit is dependent on its operating
efficiency: the specific energy consumption reduction target is less for those who are more efficient,
and is higher for the less-efficient units.

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Further, the scheme incentivizes units to exceed their specified SEC improvement targets. To
facilitate this, the scheme provides the option for industries who achieve superior savings to receive
energy savings certificates for this excess savings, and to trade the additional certified energy
savings certificates with other designated consumers(energy intensive industries notified as
Designated Consumers under the Energy Conservation Act and included under PAT Scheme)
who can utilize these certificates to comply with their specific energy consumption reduction
targets. Energy Savings Certificates (ESCerts) so issued will be tradable at Power Exchanges. The
scheme also allows units which gain ESCerts to bank them for the next cycle of PAT, following the
cycle in which they have been issued. The number of ESCerts which would be issued would
depend on the quantum of energy saved over and above the target energy savings in the assessment
year (for 1stCycle of PAT, assessment year is 2014-15).

After completion of baseline audits, targets varying from unit to unit ranging from about 3 to 7%
have been set and need to be accomplished by 2014-15 and after which new cycle with new targets
will be proposed. Failing to achieve the specific energy consumption targets in the time frame
would attract penalty for the non-compliance under Section 26 (1A) of the Energy
Conservation Act, 2001 (amended in 2010). For ensuring the compliance with the set targets,
system of verification and check-verification will be carried out by empanelment criteria of
accredited energy auditors.

Empanelment Criteria of Accredited Energy Auditor’s Firm for Verification and Check-
Verification under PAT Scheme

Accredited Energy Auditor can apply for Empanelment of Accredited Energy Auditor Firm for
Verification and Check Verification under PAT Scheme and meet the following criteria for Firm
empanelment:

a) has at least one Accredited Energy Auditor whose name is included in the list of the Accredited
Energy Auditors maintained by the Bureau under regulation 7 of the Bureau of Energy
Efficiency (Qualifications for Accredited Energy Auditors and Maintenance of their List)
Regulations, 2010;

(b) has at least three energy auditors (for definition of “energy auditor” refer Clause (c) of sub-
regulation (1) of regulation 2 of the Bureau of Energy Efficiency (Qualifications for
Accredited Energy Auditors and Maintenance of their List) Regulations, 2010;

(c) has adequate expertise of field studies including observations, probing skills, collection and
generation of data, depth of technical knowledge and analytical abilities for undertaking
verification and check-verification;
(d) has a minimum turnover of ten lakhs rupees per annum in at least one of the previous three
years or in case of a newly formed organisation, a net worth of ten lakhs rupees

(In case an Accredited Energy Auditor is not the owner of a Firm, but works in a Firm and
wish to get empanel the Firm, he/she may submit an authority letter from the authorized

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official of the Firm, in original, that the said Firm allow the Accredited Energy Auditor to
apply for empanelment of the Firm with BEE for Verification and Check Verification under
PAT Scheme and will abide by the mandatory provisions as listed in the notification)

2.3.7 Certification of Energy Managers and Auditors:

A cadre of professionally qualified energy managers and auditors with expertise in policy analysis,
project management, financing and implementation of energy efficiency projects would be
developed through Certification and Accreditation programme. BEE has been designing training
modules, and regularly conducting a National level examination for certification of energy managers
and energy auditors.

Qualification for Accredited Energy Auditors and Maintenance of their list, Regulations, 2009

An Energy auditor shall be qualified to become an accredited energy auditor if he / she-

(a) is a certified energy manager and has passed the examination in “Energy Performance for
Equipment and Utility Systems” conducted by Bureau

(b) has an experience of five years in energy audit out of which atleast three years shall be in any
of energy intensive industries

(c) has been granted a certificate of accreditation by the Bureau of Energy Efficiency.

Accreditation Advisory Committee constituted by BEE for the purpose of grant of certificate of
accreditation shall assess the energy audit experience and competence of energy auditor who has
applied for certification of accreditation on the basis of an oral interview.

2.4 Electricity Act, 2003

The government has enacted Electricity Act, 2003 which seeks to transform and develop the
electricity sector by distancing Government from the task of regulation.

Before enactment of this act, electricity supply in India was governed by Indian Electricity Act,
1910, the Electricity (Supply) Act, 1948 and the Electricity Regulatory Commissions Act, 1998.
There was a need to consolidate the provisions of above act and consequently, Electricity Act was
introduced in 2003.

The objectives of the Act are

 To consolidate the laws relating to generation, transmission, distribution, trading and use of
electricity
 To take measures suitable for development of electricity industry
 To promote competition
 To protect interest of consumers and supply of electricity to all areas,
 To ensure transparent policies regarding subsidies
 To promote efficient and environmentally benign policies

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 To constitute Central Electricity Authority (CEA), Regulatory Commissions

Main features of Electricity Act 2003

• Generation free from licensing

• Captive generation free from control
• Re-structuring of State Electricity Boards
• Mandatory establishment of Regulatory Commissions
• Open access in transmission
• Open access in distribution to be allowed by State Regulators in phased manner
• Recognition of electricity trading as a distinct activity
• Stringent provisions for violation of grid discipline and theft of power
• Supply of electricity to all areas and specific provisions for supply in rural areas
• Rationalization of electricity tariff

Role of Government

Central Government will prepare National Electricity Policy and Tariff Policy, focus on rural areas
permitting stand alone systems and non-conventional energy in consultation with States, bulk
purchase of power and distribution through Panchayats, Cooperative Societies, non-Government
organisations, franchisees etc. The constitution of State Regulatory commission is a mandatory
requirement. If subsidy is provided by Central /State Government, provision has to be created in the
budget.

Rural Electrification

Goal of Government is to extend supply of electricity to all villages/hamlets. No licence is required

for generation and distribution in rural area.

Generation

Generation is freed from licensing. Captive Generation is free from controls. Open access is allowed
to Captive generating plants subject to availability of transmission facility. However, clearance of
CEA for hydro projects is required due to concern of dam safety and inter-State issues. Generation
from Non-Conventional Sources / Co-generation will be promoted. Minimum percentage of
purchase of power from renewable energy sources may be prescribed by Regulatory Commissions.

Transmission

Transmission Utility at the Central as well as State level, to be a Government company with
responsibility for planned and coordinated development of transmission network.

However, load despatch would be under control of Government as it is critical for grid stability and
neutrality. Open access to the transmission lines would be provided to distribution licensees,
generating companies. This would promote competitions and lead to gradual cost reduction. Private
licensees would be allowed in transmission.

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Distribution

Distribution would be licensed. Distribution licensees would be free to undertake generation and
generating companies would be allowed to take up distribution businesses. Open access in
distribution would be introduced in phases. Retail tariff would be determined by Regulatory
commission. Metering of all electricity supplied would be made mandatory. Private licensees would
be allowed in distribution.

Renewable energy

A significant regulatory impact on renewable energy was made by the Electricity Act, 2003, which
provides for the determination of quotas or Renewable Purchase Obligation (RPO) by the State
Electricity Regulatory Commissions (SERC). Internationally, this is commonly referred to as the
Renewable Portfolio Standard (RPS). The RPS is a policy instrument that ensures that a minimum
amount of renewable energy is included in the portfolio of resources.

The policy obligates each retail seller of electricity to include in its resource portfolio a certain
proportion of power from renewable energy resources, such as wind, solar, small hydro and various
forms of biomass energy. The retailer can satisfy this obligation by both owning a renewable energy
facility and producing own power or purchasing power from someone's facility.

Consumer

• Consumer to be given connection within stipulated time.

• Penalty in case of failure to give connection
• Ombudsman scheme for consumers grievance redressal
• Regulatory commission to specify Electricity supply code to be followed by licensees
• Appellate Tribunal to hear appeals from consumer against the decision of the State and
Central Regulatory commissions
• Licensees are required to meet standards of performance specified by Regulatory
Commission. Failure to meet standards makes them liable to pay compensation to affected
person within ninety days.

Trading / Market Development

Trading is being permitted with licensing under the safeguard of the Regulatory Commissions.
Regulatory Commissions also have authority to fix ceilings on trading margins, if necessary to avoid
artificial price fluctuations.

Role of Central Electricity Authority (CEA)

• to continue as the main technical Advisor of the Govt. of India/ State Government with the
responsibility of overall planning.
• to specify the technical standards for electrical plants and electrical lines
• to be technical adviser to CERC as well as SERCs

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• to specify the safety standards

Tariff Principles

• Regulatory Commission is responsible to determine tariff for supply of electricity by

generating company on long/medium term contracts.
• No tariff fixation by regulatory commission if tariff is determined through competitive
bidding or where consumers, on being allowed open access, enter into agreement with
generators/traders.
• Consumer tariff should progressively reduce cross subsidies and move towards actual cost of
supply.
• State Government may provide subsidy in advance through the budget for specified target
groups if it requires the tariff to be lower than that determined by the Regulatory
Commission.
• Regulatory Commissions may undertake regulation including determination of multi-year
tariff principles, which rewards efficiency and is based on commercial principles.
• Regulatory Commission will look at the costs of generation, transmission and distribution
separately.

2.5 Integrated Energy Policy

Overview

The power supply position prevailing in the country is

characterized by persistent power shortages, unreliability and
also high prices for industrial consumer. India depends on
imported oil to extent of over 70% and this raises energy
security concerns. Also consistency in policies governing
each sector and consistency in pricing of different types of
energy is lacking. There is a need to establish clarity in the
direction which we must follow in aspects like energy
security, addressing environmental concerns, energy
conservation and Research and Development. To achieve
these objectives, Expert Committee has made a
comprehensive review to make recommendations for
integrated energy policy

India needs to sustain 8% to 10% economic growth rate, over

the next 25 years, if it is to eradicate poverty and meet its
human development goals. To deliver a sustained growth rate of 8% through 2031-32 and to meet
the lifeline energy needs of all citizens, India needs to increase its primary energy supply by 3 to 4
times and, its electricity generation capacity/supply by 6 to 7 times of their 2003-04 levels.

By 2031-32, power generation capacity must increase to nearly 8,00,000 MW from the current
capacity of around 1,60,000 MW. Similarly requirement of coal will need to increase to over 2
billion tonnes/annum based on domestic quality of coal.

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This demand must be met through safe, clean and convenient forms of energy at the least cost in a
technically efficient, economically viable and environmentally sustainable manner. Considering
unpredictable nature of energy supply and disruptions, assured supply of energy is essential to
providing energy security.

Coal will remain India’s most important energy source till 2031-32 and beyond. Thus, India must
seek clean coal combustion technologies and, given the growing demand for coal, also pursue new
coal extraction technologies such as in-situ gasification to tap its vast coal reserves that are difficult
to extract economically using conventional technologies.

Need for Integrated Energy Policy

• Policies affecting energy are determined by different Ministries: Petroleum & Natural Gas,
Coal, Power, Water Resources, Atomic Energy, New and Renewable Energy and Finance
Ministry for tax purposes
• Policies in each sector have evolved independently across sectors and they do not take into
account responses arising from climate change.
• Globally energy prices are rising and domestic energy prices have to reflect these changes to
encourage energy efficiency, and to encourage domestic investment in expanding energy
supply.

The main features of the Policy can be summed up as follows:

Reducing Energy Requirements through Energy Efficiency and Conservation

The focus is on lowering the energy intensity of GDP growth through higher energy efficiency for
meeting India’s energy challenge and ensuring its energy security.

Currently, India consumes 0.16 kg of oil equivalent (kgoe) per dollar of GDP. India’s energy
intensity is lower than the 0.23 kgoe of China, 0.22 kgoe of the US and a World average of 0.21
kgoe. India’s energy intensity is even marginally lower than that of Germany and OECD at 0.17
kgoe. However, Denmark at 0.13 kgoe, UK at 0.14 kgoe and Brazil and Japan at 0.15 kgoe are ahead
of India.

Many sectoral studies confirm that there is scope to improve and energy intensity can be brought
down significantly in India with current commercially available technologies. Lowering energy
intensity through higher efficiency is equivalent to creating a source of untapped domestic energy.

By implementing energy efficiency and conservation, it is possible to reduce energy intensity by up

to 25% from current levels. Efficiency can be increased in energy extraction, conversion,
transportation, as well as in consumption. Further, the same level of output or service can be
obtained by alternate means requiring less energy. The major areas where efficiency in energy use
can make a substantial impact are mining, electricity generation, electricity transmission, electricity
distribution, water pumping, industrial production processes, haulage, mass transport, building
design.

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Other policy measures include,

 Establishing benchmarks of energy consumption for all energy intensive sectors.

 Increasing the gross efficiency in power generation from the current average of 30.5% to
34%. All new plants should adopt technologies that improve their gross efficiency from the
prevailing 36% to at least 38-40%.
 Promoting minimum life cycle cost purchase instead of minimum initial cost procurement by
the government and the public sector.
 Promoting urban mass transport, energy efficient vehicles and freight movement by railways
through scheduled freight trains with guaranteed, safe and timely deliveries.
 Enforcing minimum fuel efficiency standards for all vehicles.
 Instituting specializations in energy efficiency/conservation in technical colleges and
commence certification of such experts.

Ensuring Adequate Supply of Coal with Consistent Quality

The dominance of coal in India’s energy mix will continue till 2031-32. Since decontrolling of price,
the coal sector has become profitable as a result of price increases and increasing share of open cast
production. India would need to augment domestic production and encourage thermal coal imports
to meet its energy needs.

Along the coastal belts (especially western and southern coasts), cost of imported coal is cheaper
than domestic coal. Necessary infrastructure must be created to handle thermal coal imports. This
will facilitate coastal power generation capacity based on imported thermal coal. Imports of thermal
coal will also put competitive pressure on the domestic coal industry to be more efficient.

For increasing domestic coal production, the plan seeks to release coal blocks held by Coal India
Limited (CIL) that cannot be brought into production by 2016-17 to other eligible candidates (i.e.
central and state public sector units) for bringing into production by 2011-12.

The Coal Mines (Nationalization) Act, 1973, to be amended to facilitate: (a) private participation in
coal mining for purposes other than those specified in the Act and (b) offering of future coal blocks
to potential entrepreneurs.

Other measures proposed are:

o To introduce a system of pricing coal based on its gross calorific value.

o To follow international practice of washing coal before use.
o To replace the current system of coal linkages by long-term coal supply agreements with
strict penalties for not meeting contracted supplies, quality and off takes commitments.
o To bring coal under independent regulation to improve exploitation and allocation of
available resources; to regulate e-auctions and coal prices; and to enable competitive market
(proposed to sell 20% of domestic production to be sold through e-auction)

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Ensuring Availability of Gas for Power Generation

There is a total generation capacity of over 12000 MW based on gas and liquid fuels, mostly under
combined cycle operation. However, gas supplies have been restricted and the overall utilisation is
low. Any new gas based power plant would be allowed to be built only with firm and bankable gas
supply agreements. Domestic gas would be allocated to fertilizer, petrochemicals, transport and
power sector at prices that yield fair return to suppliers.

Other proposed measures include:

 Private investment will be sought in all energy sectors.

 Explore possibility of acquiring energy assets abroad
 Clarity and stability in policy to attract investment

Rationalization of Fuel Prices for Efficient Fuel Choice and Substitution

 Tax Policy should be uniform across sectors with specific differences for externality
 Regulation of coal prices to be replaced with market driven price.
 Coal price to be fully variable based on Gross Calorific value and other quality parameters
 Rational State and Central taxes on commercial energy supplies
 Environmental taxes and subsidies to affect choices of fuel

Accelerating Power Sector Reforms

Power Sector Reforms: The reforms focus on controlling the aggregate technical and commercial
(AT&C) losses of the state transmission and distribution utilities. This is needed to create a
financially sound power sector in each state. Only financially healthy state power distribution
utilities can sustain the growing generation and transmission of Central Power Sector.

Accelerated Power Development and Reform Programme (APDRP) has to be restructured to ensure
energy flow auditing at the distribution transformer level through automated meter reading, a
Geographical Information System (GIS) mapping of the network and consumers and the separation
of feeders for agricultural pumps.

Investment in developing a Management Information System (MIS) that can support a full energy
audit for each distribution transformer is essential for reduction in AT&C losses. This will also fix
accountability and provide a baseline which is an essential prerequisite to management reform
and/or privatization.

It is proposed to rehabilitate thermal stations to raise capacity as a least cost short-term measure.
Similarly, rehabilitation of hydro stations would be taken to yield peak power at lowest costs.

Rehabilitation of existing thermal stations to raise capacity at least cost as a short-term measure.
Similarly, rehabilitations of hydro stations would yield peak power at lowest costs.

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Reduction in Cost of Power

In terms of purchasing power parity, the power tariffs in India for industry, commerce and large
households are among the highest in the world. It is important to reduce the cost of power to increase
both the competitiveness of the Indian economy and also to increase consumer welfare.

The following measures are suggested:

o All generation and transmission projects should be competitively built on the basis of tariff-
based bidding.
o Where tariff continues to be determined on the basis of costs and norms, regulators may
either adopt a return on equity approach or return on capital approach, whichever is
considered better in the interest of consumers.
o Unit sizes should be standardized and global tenders invited for a number of units to get
substantial bulk discount.

Role for Renewable Energy

Renewable energy will play a key part in developing energy security. Even if renewable energy
contribution is small, distributed nature of renewable energy provides various benefits such as
environmental friendly nature of technology, less time for setting up the project. The main focus will
be on solar power to attain energy independence in the future. For promoting renewable energy,
incentives / capital subsidy would be linked to actual energy generated and not on capacity installed.

Several initiatives are proposed to boost renewable energy:

 Grid connected renewable to improve quality of supply and provide system benefits by
generating energy at the ends of the grid where supply would have been poor.
 Other forms of renewable energy to be promoted include fuel wood plantations, bio-gas
plants, wood gasifier based power plants, solar thermal, solar water heaters, solar
photovoltaics, bio-diesel and ethanol.
 Incentives should be linked to energy generated and not on capacity installed. Subsidy in the
form of Tradable Tax Rebate Certificate (TTRC) proposed based on actual energy generated.
The rebate claim would become payable depending upon the amount of electricity / energy
certified as having been actually supplied.
 Mandatory feed-in-laws or differential tariffs to encourage utilities to integrate wind, small
hydro, cogeneration into their systems.
 Feed in tariff or RPS (Renewable Portfolio Standard) for efficiency proposed.

Ensuring Energy Security

India’s energy security is primarily about ensuring the continuous availability of commercial energy
at competitive prices to support its economic growth and meet the energy needs of its households
with safe, clean and convenient forms of energy even if that requires directed subsidies.

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India’s growing dependence on energy imports exposes its energy needs to external price shocks and
hence, domestic energy resources must be expanded. All available domestic energy resources have
to be exploited to the maximum as long as they are competitive.

Reducing energy requirements and increasing efficiency are the two very important measures to
increase energy security.

Energy security risks can be reduced by lowering the requirement of energy by increasing the
efficiency in production and use; by substituting imported fuels with domestic fuels; by diversifying
fuel choices (gas, ethanol, tar sands etc.) and supply sources; and by expanding the domestic energy
resource base. Risks can also be reduced by increasing the ability to withstand supply shocks
through creation of strategic reserves, the ability to import energy and face market risk by building
hard currency reserves and by providing redundancy to address technical risks (generator failure,
transmission line trips, oil pipe line leaks etc.).
Recommendations include,

 Increasing exploration to find more coal, oil and gas

 Maintaining a reserve, equivalent to 90 days of oil imports for buffer stock purposes and/or
buy options for emergency supplies from neighbouring large storages such as those available
in Singapore.
 Addressing short-term price volatility through creation of buffer stocks. Operating the
strategic/buffer reserves in cooperation with other countries who maintain such reserves
could also increase their effectiveness.
 In-situ coal gasification
 Extracting coal bed methane from coal mines
 Adopting enhanced oil recovery technologies
 Extracting isolated deposits of all hydro carbons including coal through private sector
 Developing the thorium cycle for nuclear power
 Exploiting non-conventional energy, especially solar power

In addition, India can access cheap natural gas overseas under long-term agreements (i.e. 20-30
years) and it can consider setting up captive fertilizer and / or gas liquefaction facilities in such
countries.

Role of Nuclear and Hydro Power

The developments of hydropower, especially storage schemes, are critical for India as our per capita
water storage is the lowest among other comparable countries. Reducing such storages is critical to
India’s water security, flood control and drought control. However, the environmental concerns and
the problem of resettlement and rehabilitation must be suitably addressed.

India is poorly endowed with Uranium. Available Uranium can meet needs of only upto 10000 MW
of nuclear power. Uranium ore is of low grade containing only upto 0.1% Uranium compared with
12-14% Uranium in resources abroad. Hence, our nuclear power is 2-3 times costlier than
international supplies.

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Three stage strategy of development of nuclear power from pressurized heavy water reactor to fast
breed reactor and finally to Thorium based reactors is being planned.

Promoting and focusing energy related R&D

National Energy Fund is being planned to finance energy R&D on a competitive basis as it is felt
that energy related R&D is not being allocated the resources that it needs. Such R&D would help in
raising energy security and delivering energy independence over long-term. It is also proposed to
develop number of research institutions as centres of excellence in energy research.

A number of technology missions should be mounted for developing near commercial technologies
and rolling out new technologies in a time bound manner. These include coal technologies for
efficiency improvement; in-situ gasification, IGCC and carbon sequestration, solar technologies
covering solar thermal and photovoltaic, bio-fuels such as bio-diesel and ethanol, bio-mass
plantation and wood gasification, and community based bio-gas plants.

Climate Change Concerns

Concern and the threat of climate change has been an important issue in formulating the energy
policy. Initiatives suggested to reduce the green house gas intensity of the economy by as much as
one third are:

 Energy efficiency in all sectors

 Emphasis on mass transport
 Active policy on renewable energy including bio-fuels and fuel plantations
 Accelerated development of nuclear and hydro-electricity
 Technology Missions for clean coal technologies
 Focused R&D on many climate friendly technologies

2.6 National Action Plan on Climate Change (NAPCC)

India is faced with the challenge of sustaining its rapid economic growth while dealing with the
global threat of climate change. This threat comes from accumulated anthropogenic greenhouse gas
emission in the atmosphere generated through long term, energy intensive industrial growth and high
consumption lifestyle. India is very vulnerable to climate: floods, droughts, vector borne disease,
cyclones, ocean storm surges, etc. and at the same time the country does neither have the sufficient
infrastructure nor the resources to face its impacts.

Climate change may drastically alter the distribution and quality of India’s natural resources and
harm the livelihood of its people. With an economy closely linked to its natural resources base and
climate sensitive sector such as agriculture, water & forestry, India may face a major threat because
of climatic change.

India needs a national strategy to firstly, adapt to climate change and secondly to improve the
ecological sustainability while pursuing India’s development path. Recognizing the urgency to chart
an action plan to address the consequences of climate change, NAPCC document was released in

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2008 and it identifies measures to advance India’s development without affecting climate change
related adaptation and mitigation.

Guiding Principles of NAPCC

 Protecting the poor and vulnerable sections of the society through sustainable development
strategy sensitive to climate change.
 Achieving national growth objectives, while enhancing ecological sustainability leading to
mitigation of greenhouse gas emissions.
 Devising efficient and cost-effective strategies for Demand Side Management.
 Deploying appropriate technologies for both adaptation and mitigation of greenhouse gases
emissions extensively as well as rapidly.
 Engineering new and innovative forms of market, regulatory and voluntary mechanisms to
promote sustainable development.
 Effecting implementation of programmes and projects through local government institutions
and public private partnership.

NAPCC outlines a number of steps to simultaneously advance India’s development and climate
change-related objectives of adaptation and mitigation.

Eight National Missions

There are eight National Missions which form the core of the National Action Plan are:

 National Solar Mission

 National Mission for Enhanced Energy Efficiency
 National Mission on Sustainable Habitat
 National Water Mission
 National Mission for Sustaining the Himalayan Ecosystem
 National Mission for Green India
 National Mission for Sustainable Agriculture
 National Mission for Strategic Knowledge on Climatic Change

National Solar Missions : India is a tropical country, where sunshine hours are long and with high
intensity. Solar Energy, therefore, has great potential as a future energy source. At present efficiency
levels, 1% of land area is sufficient to meet electricity needs of India till 2031. It also has the
advantage of permitting a decentralized distribution of energy, thereby empowering people at the
grassroots level. There is need to create affordable and more convenient solar power systems and
enable storage of solar power for sustained long term use.

A National Solar Mission is being launched to significantly increase the share of solar energy in the
total energy mix as well to increase the use of other renewable and non-fossil fuel options such as
nuclear energy, wind energy and biomass.

National Mission for Enhanced Energy Efficiency: The Energy Conservation Act of 2001
provides a legal mandate for the implementation of the energy efficiency measures through the
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institutional mechanism of Bureau of Energy Efficiency (BEE) in the Central Government and
designated agencies in each state. A number of schemes and programmes have been initiated under
the Act and implemented by BEE has resulted in avoided capacity addition of 10836 MW the XI
Plan.

The National Mission for Enhanced Energy Efficiency (NMEEE) aims to strengthen the market for
energy efficiency by creating conducive regulatory and policy regime and has envisaged fostering
innovative and sustainable business models to the energy efficiency sector.

The mission was approved for two years of the 11th Plan period (2010 -11 and 2011-12) with an
outlay of Rs.235.50 crore and continuation of the mission for XII Plan was approved with an outlay
of Rs. 775 crores.

The NMEEE spelt out four initiatives to enhance energy efficiency in energy intensive industries
which are as follows:
1. Perform Achieve and Trade Scheme (PAT), a market based mechanism to enhance the
cost effectiveness in improving the Energy Efficiency in Energy Intensive industries through
certification of energy saving which can be traded.
2. Market Transformation for Energy Efficiency (MTEE), for accelerating the shift to
energy efficient appliances in designated sectors through innovative measures to make the
products more affordable.
3. Energy Efficiency Financing Platform (EEFP), for creation of mechanisms that would
help finance demand side management programmes in all sectors by capturing future energy
savings.
4. Framework for Energy Efficient Economic Development (FEEED), for development of
fiscal instruments to promote energy efficiency.

The Mission seeks to upscale the efforts to unlock the market for energy efficiency which is
estimated to be around Rs. 74,000 crore and help achieve total avoided capacity addition of 19,598
MW, fuel savings of around 23 million tonnes per year and green house gas emissions reductions of
98.55 million tonnes per year at its full implementation stage.

PAT is currently under implementation and nearing completion of its first cycle of three years that
started in 2012-13 after the notification of mandated specific energy consumption reduction targets
for 478 Designated Consumers from 8 energy intensive sectors that include Aluminum, Cement,
Chlor- Alkali, Fertilizer, Iron & Steel, Paper & Pulp, Thermal Power, Textile. The SEC reduction
targets aim to secure an energy saving of 6.686 million tonne of oil equivalent. PAT is a multicycle
scheme and in the subsequent cycles more units within the existing sectors and more sectors will be
included to bring the energy efficiency of the economy to a higher level.

Under MTEE, two programmes have been developed i.e. Bachat Lamp Yojana (BLY) and Super
Efficient Equipment Programme (SEEP) to bring market transformation for highly efficient
appliances/equipment. The Bachat Lamp Yojana (BLY) that was instrumental in the market
transformation of CFLs, its institutional structure is envisaged to be used for promotion of LEDs.

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The other component under MTEE is a new programme called SEEP which is designed to bring
accelerated market transformation for super efficient appliances by providing financial stimulus
innovatively at critical point/s of intervention. Under this program, ceiling fan has been identifies as
the first appliance to adopted. The goal is to support the introduction and deployment of super
efficient 35W ceiling fans, as against the current average ceiling fan sold in Indian market with
about 70W rating by providing incentives to fan manufacturers.

EEFP provides platform where financial institutions, ESCOs and government work together for the
development of energy efficiency market and for the identification of issues related to this market
development. MOUs are signed with financial institutions to promote financing for energy efficiency
projects. Further, capacity building exercises such as development of training modules, and training
for financial institutions on energy efficiency project financing.

Two funds have been created viz. Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE) and
Venture Capital Fund for Energy Efficiency (VCFEE) under FEEED to provide partial coverage of
risk involved in extending loans for energy efficiency projects provide guarantee and to provide
equity capital for energy efficiency projects respectively.

National Mission on Sustainable Habitat : A National Mission on Sustainable Habitat is planned

to make habitat sustainable through improvements in energy efficiency of buildings, management of
solid waste and shift to public transport. The mission will promote energy efficiency as an integral
component of urban planning and urban renewal through three initiatives.

The Energy Conservation building code, which addresses the design of new and large commercial
building to optimize their energy demand, will be extended in its application and incentives provided
for retooling existing building stock.

Recycling of material and Urban Waste Management will be a major component of ecologically
sustainable economic development. India already has a significantly higher rate of recycling of waste
compared to developed countries. A special area of focus will be the development of technology for
producing power from waste. The national Mission will include a major R&D programme, focusing
on bio chemical conversion, wastewater use, and sewage utilization and recycling options wherever
possible.

Better urban planning and modal shift to public transport. Making long-term transport plans will
facilitate the growth of medium and small cities in ways that ensure efficient and convenient public
transport.

National Water Mission: National Water Mission focuses on ensuring integrated water resource
management to conserve water, minimize wastages and ensuring equitable distribution across and
within States.

Under provisions of National Water Policy, the following goals are set:

 Enhancing water use efficiency by 20%

 Recycling of waste water to meet large part of water needs of urban areas

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 Adoption of new and appropriate technologies such as low temperature desalination for
coastal cities
 Basin level management strategies such as rain water harvesting etc.
 Improving efficiency of existing irrigation systems, recharging of underground water
sources, and adoption of large scale irrigation programmes.

National Mission for Sustaining the Himalayan Ecosystem: This mission focuses on sustaining
and safeguarding the Himalayan glacier and mountain ecosystem. The extent to which Himalayan
glacier is receding and problems to be addressed will be studied. Observation and monitoring
network will be set up to assess fresh water resources and health of ecosystem. Community based
management of Himalayan ecosystems will be promoted with incentives to community
organizations and panchayats for protection and enhancement of forest lands.

National Mission for a Green India: Green India initiative will focus on enhancement of
ecosystem services including carbon sinks. Green India campaign is already being launched for
afforestation of 6 million hectares. The Mission aims to increase land area under forest and tree
cover from the current level of 23% to 33%.

National Mission for Sustainable Agriculture: The Mission aims to make Indian agriculture more
resilient to climate change. It would identify and develop new varieties of crops and especially
thermal resistant crops and alternative cropping patterns, capable of withstanding extremes of
weather, long dry spells, flooding, and variable moisture availability.

Agriculture will need to be progressively adapted to projected climate change and the agricultural
research systems must be oriented to monitor and evaluate climate change and recommend
changes in agricultural practices accordingly.

This will be supported by the convergence and integration of traditional knowledge and practice
systems, information technology, geospatial technologies and biotechnology. New credit and
insurance mechanisms will be devised to facilitate adoption of desired practices.

Focus would also be on improving productivity of rainfed agriculture.

National Mission on Strategic Knowledge for Climate Change: Mission would identify
challenges and responses to climatic change through enlisting global community in research,
technology development and collaboration. It will ensure funding of high quality and focused
research into various aspects of climate change.

The Mission will also have on its research agenda, socio-economic impacts of climate change including
impact on health, demography, migration patterns and livelihoods of coastal communities. It would
also support the establishment of dedicated climate change related academic units in Universities and
other academic and scientific research institutions in the country which would be networked.

A Climate Science Research Fund would be created under the Mission to support research. Private
sector initiatives for development of innovative technologies for adaptation and mitigation would be
encouraged through venture capital funds. Research would be undertaken through identified centres

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to support policy and implementation. The Mission will also focus on dissemination of new
knowledge based on research findings.

List of Acts, Rules and Regulations relevant to Energy Managers and Energy Auditors

No. Title
1. THE ENERGY CONSERVATION ACT, 2001
[Act 52 of 2001, dt. 29-9-2001]
[As amended by Act No. 28 of 2010, dt. 4-8-2010]
2. THE ENERGY CONSERVATION (THE FORM AND MANNER FOR SUBMISSION OF
REPORT ON THE STATUS OF ENERGY CONSUMPTION BY THE DESIGNATED
CONSUMERS) RULES, 2007
[GSR 174(E), dt. 2-3-2007]
3. THE ENERGY CONSERVATION (FORM AND MANNER AND TIME FOR
FURNISHING INFORMATION WITH REGARD TO ENERGY CONSUMED AND
ACTION TAKEN ON RECOMMENDATIONS OF ACCREDITED ENERGY AUDITOR)
RULES, 2008
[GSR 486(E), dt. 26-6-2008]
4. THE ENERGY CONSERVATION (INSPECTION) RULES, 2010
[GSR 645(E), dt. 27-7-2010, w.e.f. 30-7-2010]
5. THE BUREAU OF ENERGY EFFICIENCY (QUALIFICATIONS FOR ACCREDITED
ENERGY AUDITORS AND MAINTENANCE OF THEIR LIST) REGULATIONS, 2010
[Notification No. 02/11(7)/09-BEE, dt. 31.3.2010]
6. THE BUREAU OF ENERGY EFFICIENCY (CERTIFICATION PROCEDURES
FOR ENERGY MANAGERS) REGULATIONS, 2010
[Notification No. 2/11(2)/07-BEE, dt. 15-10-2010]

7. THE BUREAU OF ENERGY EFFICIENCY (MANNER AND INTERVALS OF TIME FOR

CONDUCT OF ENERGY AUDIT) REGULATIONS, 2010
[Noti. No. 02/11(6)/05-BEE, dt. 28-4-2010]

8. ENERGY CONSUMPTION NORMS AND STANDARDS FOR DESIGNATED

CONSUMERS,
GSR 269 (E) dt 30th March, 2012
9. ENERGY CONSERVATION (MINIMUM QUALIFICATION FOR ENERGY
MANAGERS) RULES, 2006.
G.S.R. 309 dt. 8th December, 2006
10. ENERGY CONSERVATION (FORM AND MANNER AND TIME FOR FURNISHING
INFORMATION WITH REGARD TO ENERGY CONSUMED AND ACTION TAKEN
ON RECOMMENDATIONS OF ACCREDITED ENERGY AUDITOR) RULES, 2008.

G.S.R. 486 (E) dt 26th June, 2008

11. (ALTERED) LIST OF ENERGY INTENSIVE INDUSTRIES AND OTHER
ESTABLISHMENTS SPECIFIED IN THE SCHEDULE TO THE SAID (EC) ACT
S.O. 394 (E) dt 12th March, 2007

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12. APPELLATE TRIBUNAL FOR ENERGY

CONSERVATION (PROCEDURE, FORM, FEE AND RECORD OF PROCEEDINGS)
RULES, 2012
GS.R. 510(E) dt 28th June, 2012

The full references of these are available in the BEE website.

Solved Example:

In a textile plant the average monthly energy consumption is 7,00,000 kWh of purchased electricity
from grid, 40 kL of furnace oil (specific gravity =0.92) for thermic fluid heater, 60 tonne of coal for
steam boiler, and 10 kL of HSD ( sp.gravity = 0.885) for material handling equipment.

Given data:
(1 kWh = 860 kcal, GCV of coal= 3450 kcal/kg, GCV of furnace oil= 10,000 kcal/kg, GCV of
HSD= 10,500 kcal/kg, 1kg oil equivalent = 10,000 kcal)

a) Calculate the energy consumption in terms of Metric Tonne of Oil Equivalent (MTOE) for the
plant.
b) Calculate the percentage share of energy sources used based on consumption in MTOE basis.
c) Comment whether this textile plant qualifies as a notified designated consumer under the Energy
Conservation Act?

Ans:

a) (40000 x0.92x 10000) + (60000 x 3450) + (7,00,000 x 860) + (10,000x 0.885 x 10,500)

MTOE = (36.8 x 107) + (20.7 x 107) + (60.2 x 107)+ (9.2925 x 107)

107
= 127 Metric Tonnes of Oil Equivalent per month

b) Electricity % = 47.4, Furnace oil% =29.0, Coal % =16.3, HSD% =7.3

c) Annual energy consumption of the textile plant = 127 x 12 = 1524 MTOE which is less than
3000 MTOE cut off limit as notified under the EC act. Therefore this textile plant is not a
designated consumer for the present energy consumption levels.

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QUESTIONS
Objective Type Question
1 The legal framework for energy efficiency in India is given by

a) Electricity Act 2003 b) Energy Conservation Act 2001

c) Electricity (supply) Act 1958 d) Indian Electricity Act 1910
2 The first amendment to the Energy Conservation Act was made in

a) 1948 b) 2003 c) 2007 d)2010

3 The nodal agency at the centre for implementing the EC act is

a) CEA b) SDA c) BEE d) Ministry of Power

4 The minimum connected load for a building as defined in the amended EC act is

a) 100 kW b) 100 kVA c) 500 kW d) 500 kVA

5 As per EC act, the definition of energy audit does not consider

a) monitoring b) verification c) analysis d) duration of audit

6 Star rating is a part of ______ programme of BEE

a) DSM b) BLY c) S&L d) none of the above

7 For the purpose calculating MTOE for a designated consumer the calorific value of oil
is taken as

a) 10,500 kcal/kg b) 10,000 kcal/kg c) 10,400 kcal/kg d) 9,800 kcal/kg

8 The norms for energy consumption in ECBC is defined as energy consumption per____

a) day b) hour c) square foot d) square meter

9 DSM is of benefit to

a) Government b) DISCOM c) user d) all of the above

10 The major portion of subsidy under BLY is met be revenues from

a) electricity boards b) CDM c) DISCOMS d) central budget

Short Type Questions
S-1 Explain what is meant by Renewable Purchase Obligation (RPO)
S-2 Explain the reforms in the distribution brought about by Electricity Act 2003
S-3 Explain the difference between Standards and Labelling?
S-4 List at least five national missions under the National Action Plan for Climatic Change
S-5 Distinguish between designated agency and designated consumer
Long Type Questions
L-1 Explain the ‘Bachat Lamp Yojana’ scheme

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L-2 Explain five important features of the energy conservation act, 2001?

REFERENCES

1. National Action Plan on Climate Change prepared by Prime minister’s Council on Climate
Change
2. Integrated Energy Policy Report of the Expert Committee (August 2006) prepared by Planning
Commission New Delhi

http://www.bee-india.nic.in/
http://www.energymanagertraining.com

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