EESL: The procurer for masses

Energy Efficiency Services Limited (EESL) could come across as yet another government initiative that is unrelenting in its pursuit of energy efficiency and EESL has managed to do that in the past few years but through a radical step. The drop in LED bulb prices (7W/9W) in the last few years is hard to be missed although the reason behind the drop goes unnoticed at times.  After setting a precedence or claiming to have set one, EESL has geared up on the next big vision of its former Minister Piyush Goyal, ‘Electrification of Indian transport by 2030’.

UJALA

Unnat Jeevan by Affordable LEDs for All (UJALA) scheme previously called Domestic Efficient Lighting Programme (DELP) has been funded by KfW, AFD and ADB in procuring LEDs for large scale distribution through local utilities across states. As of Sept. 2017 it claims to have distributed over 260million LEDs leading to a cost saving of over 13,000 Cr per year with an avoided peak demand of over 7GW (Dashboard).

How did it happen?

The price of LEDs have come down significantly, a 7W LED in 2014 costed INR 310 which in 2017 is less than INR 70 and even the retail prices for 9W LED is less than INR 100. The quality of the bulbs is always debated but EESL offers free replacement for the faulty ones (3yr window) and claims to have a fault rate of less than 1%. A few experts however feel the lumens from EESL LED is low.  Although the procurement practices have been questioned by the opposition, EESL claims to have endorsements from its funding agencies for its procurement which is completely transparent through a eprocurement platform(Read an IEA report on the same).

 

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Large scale public procurement has been a success across countries as the bulk procurement through demand aggregation has proved to decrease cost by close to 20%. In EESL case, the LED drive has achieved over 70% cost reduction.

Make in India

One of the key successes of the EESL has been the emphasis on Make in India. It has transformed the Indian LED industry that was manufacturing 1-2 Lakh LEDs a month to now produce 3-4 Crore LEDs/month in a span of just three years. As on today, all LEDs procured for domestic lighting, public street lighting procured by EESL are manufactured in India.

Electric Vehicles

EESL taking up the procurement of Electric Vehicles (EV) and Electric Vehicle Supply Equipment (EVSE) is not without a reason. The cost of EVs, batteries are high and there is negligible manufacturing in the country in this sector. The subsidies through FAME have been flowing for the last few years but the supply and demand has not scaled up. If large scale procurement of EVs in China especially in public transportation is anything to go by, India can hope to replicate it or kick start EV and battery manufacturing in India.

EESL1

In between LED procurement and the foray into EVs, EESL has tested waters and found success in lighting/appliances procurement (tube lights, fans and ACs), it has also procured energy efficient solar pumps in large scale and distributed to state DISCOMs. It has also bought solar modules in bulk quantities and supplied to projects undertaken by public sector corporations. Building on its success, it has also floated tenders for procurement of LEDs for UK and Malaysia right out of India since 2017. Just a few weeks before the release of tenders for EV, EEESL also floated a tender for procurement of 5 million smart meters for utilities in  Haryana and Uttar Pradesh, two states with the largest power theft/loss.

The national EV policy is yet to be finalised and so is the specifications for charging infrastructure, ‘Bharat Charger‘; EESL however has indicated its ambitious procurement target early on giving the industry a big wake up call to what is likely to happen. The 10,000 sedan programme aims to procure 10,000 vehicles in the medium term with the first order accounting for 1000 of them to be supplied in Delhi/NCR. Similarly 400 EV charging stations are to be setup in Delhi/NCR region out of the 4000 targeted between 2017-2019. Currently, the specifications of the sedan match Mahindra eVerito the lone EV sedan manufactured in India. In addition to these, EESL has also floated an expression of interest inviting industry to procure and lease E-auto rickshaws through app based model without batteries. It hopes to separate batteries out of these vehicles to keep the costs low ( public buses to follow in the long run). It will in all likelihood setup an energy business offering swappable batteries for e-rickshaws and then public buses (?).

The tenders are yet to be awarded but even at the nascent stage the intent of EESL is quite clear. The short successful track record will give companies a confidence in its procurement policies. Since the potential off-takers in this business have already expressed interest, the plan should see a smooth roll out of EVs by the start of 2018. However, the success of this mission of EESL should be gauged on how much of local manufacturing it is able to generate for EV, EVSE and batteries in India. Nevertheless, EESL through its vision (Ministry of Power’s) and action is turning out to be the ‘The procurer for masses’. Only time will tell if they can sustain the same momentum with a new minister at the helm.

About EESL

EESL was incorporated as. Joint Venture of 4 CPSUs of Ministry of Power NTPC, PGCIL, REC and PFC and is under the administrative control of Ministry of Power, Government of India since 2015.

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