As everyone knows, the future of India is bright. But here’s another ‘feel good’ point for you. Adding brightness — why, even keeping the current luminosity — is going to cost less.
A veritable silent revolution has been going on in the country since January 5, 2015. Under the ‘Domestic Efficient Lighting Programme’ of the government, 7.48 crore incandescent bulbs have been replaced with LED bulbs. It is fun to watch the programme’s website . The number keeps changing (increasing) every 15 seconds. When I began the first sentence of this article, it was 7,48,21,380. It is now 7,48,21,405. The value of the energy saved is ₹10.65 crore a day, and counting.
The LED bulb programme throws light on the enchanting world of energy efficiency. It also illustrates the most fundamental aspect of change, which is, you can change anything if you get the economics right.
An LED bulb is incredibly superior to either the incandescent bulb or a CFL (compact fluorescent lamp, but this article is not about that. There is plenty of dope on that in this resource ). This article is about how they seem to be getting the economics right.
Enter Energy Efficient Services
The ‘they’ refers to a government-owned company called Energy Efficient Services Ltd. In 2013-14, or two years after it was incorporated, this company’s turnover was ₹20 crore. Last year it was ₹70 crore, and it made a net profit of ₹9 crore. In the current financial year, which will end this month, the turnover is expected to be — hold your breath — ₹700 crore, and net profit ₹50 crore! The Managing Director speaks confidently of achieving a turnover of ₹2,500 crore next year (2017-18). There is a plan to come out with an IPO, so start saving to buy their shares.
So what does EESL do? Simple. It goes to customers, door-to-door, tells them about how replacing their old lamp with an LED lamp will save their electricity bill. Typically, the customer tells the EESL representative, yeah, I know about LED, but those bulbs are damn expensive. How much? The representative asks. Well, the price of the LED bulb has been coming down, from ₹700 for an 8W bulb in recent memory, to about ₹280 or so now, but it is still far, far more expensive than the ₹15 I would pay for a regular filament bulb, right?
At this point, the EESL representative puts his hand inside his hat and pulls out the rabbit. I will give you an LED at ₹105, you game? The customer is taken aback a bit. ₹105… hmmm… Fine, good deal, but still nowhere near ₹15, right? The EESL chap has been expecting this, so he springs his next surprise. Don’t worry, he says, just give me ₹10 now, pay the rest little by little, out of the savings in your electricity bill. If the LED goes kaput within three years, you get a free replacement.
Deal!
Energy savings companies
EESL is what is called an ESCO — short for Energy Savings Company. ESCOs invest in energy saving at customers’ premises and let the customer pay out of the savings. But this business, at least in India, has been fraught, mainly because it has been tricky to measure‘savings’ in a way that both parties agree, which is in turn because conditions of usage vary. ESCOs have quite not taken off, though the business makes a lot of sense.
EESL seems to have had it easy, because it gave away the bulbs practically free and collected its money through the electricity distribution companies to whom the customer paid the bills. Now, EESL wants to do with ceiling fans what it is doing with bulbs. Considering that there are 3.5 crore ceiling fans in the country, there is plenty of meat to chew.
ESCOs have had teething problems but have come some way down the learning curve. EESL has taken the lead and shown the way — it could experiment a bit because of its rich parents: NTPC, Rural Electrification Corporation, Power Finance Corporation and Power Grid Corporation, all well-heeled public sector giants. Its model will be studied by others and replicated, mutatis mutandis, (which means, ‘with appropriate modifications). And what have you?
The enchanting world of energy efficiency.
If you replace a lot of power-guzzling gizmos with energy efficient ones, they save you save ₹74,000 crore a year — and a big career opportunity.
Oh, by the way, the website mentioned at the beginning of the article, shows a new number now: 4,48,28,096. Between the time I began writing this piece and now, the country has seen 6,664 old lamps replaced with new.