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The Indian Energy Efficiency Market Opportunities and Strategies for Australian Companies
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The Indian Energy Efficiency Market
Opportunities and Strategies for Australian
Companies
Australia Unlimited
INDIA – a major global economy
US$ 1.7 Trillion
economy
11th largest global
economy, poised to be
the 3rd largest by 2030
Australia’s 3rd largest and
fastest growing trade
partner
Home to a number of the
world’s leading
corporates
Rapidly expanding domestic
market of 1.2 billion people
Australia Unlimited
Clean Tech Market Snapshot
The Indian market for Low Carbon & Environmental Goods & Services over
the next decade is valued at US $310 billion (UKTI 2011)
World’s fourth largest clean tech opportunity (US, China and Japan) with a
6% share of the global market (EY 2011)
The projected market potential for green building material and technologies
is estimated to be US $100 billion (Green Building Association 2012)
In 2012 Energy Efficiency is estimated to be a US$ 16 billion opportunity,
and the Bureau of Energy Efficiency forecasts expenditure of $148 billion
throughout the next decade.
The water and wastewater market was valued at $4 billion in 2011, and is
growing at a rate of 10-12% every year (TERI)
Over 160,000 MT of municipal solid waste is generated daily, driven by
rapid urbanisation, with 500m people projected to move from rural
communities to cities by 2020.
Australia Unlimited
Key Market Drivers
Energy security and water scarcity are national priorities
Water and waste management challenges due to rapid industrial
growth and urbanization
Abundance of untapped renewable energy resources such as solar,
wind, biomass and water
Escalating costs of conventional energy sources with depleting fossil
fuel reserves
Supportive government policies
Increased investments by global corporations to reduce climate
change risks and pursue new products/service opportunities
A$ 1 trillion investment in infrastructure - 2012 to 2017
Australia Unlimited
Sectors with Momentum
Energy Efficiency at plant and building level
Water and waste water management, particularly biological treatment
Smart grid technologies and distributed power generation
Environmental goods and services
Waste management
Green building products and services
Clean coal technologies
Energy Efficiency - Attractive Business Opportunities in India
Page 7
We intend to cover…
► Increasing Investment in Energy Efficiency in India
► Driving Forces for Increasing Energy Efficiency in India
► Market Transformation towards Enhanced Energy Efficiency
Building Sector
Industries
► Business Implications & Opportunities
Page 8
Increasing Investment in Energy Efficiency in India
New entry - Indian EE business
► In 2009, Schneider Electric, acquired
Bangalore-based Conzerv Systems, an
INR 700 million company providing energy
efficiency solutions in the Indian market.
No transaction details were disclosed. [1]
► In December 2009, the global energy
services major Dalkia acquires Indian
premier energy services company, DSCL
ESCO for an undisclosed amount. [2]
► Indian IT giant Wipro invested in energy
efficiency and clean tech market by starting
Wipro Eco-energy.
EE business volume in India
► Century cement India has given ABB an
order worth around USD 18 million to
increase productivity and energy efficiency. [3]
► TERI and Dalkia Energy won contracts
from SIDBI for providing energy efficiency
advisory solutions for MSME sector in five
identified cluster. Maximum project value of
about USD 4.5 millions.
Indian energy efficiency market evolved rapidly over the last 5 years due to government
initiatives and investment from large players (domestic and global). Few cases are as
below:
[1] http://www.business-standard.com/india/news/schneider-electric-acquires-conzerv-systems/63762/on [2] http://www.aeee.in/node/44 [3] http://www.abb.com/cawp/seitp202/1e92ba88d982559585257a5900492539.aspx
Page 9
Climate change – the global
response
Driving Forces for Energy
Efficiency in India
Page 10
Drivers of Growth of Enhanced Energy Efficiency in India
Competitive
Advantage
Energy
Demand
Sustainability
Climate
Change Regulatory
Driving Energy
Efficiency
Over the last 20 years, primary energy
consumption in India has increased
from 1.02 x 108 MTOE per year to 6.15
x 108 MTOE per year
Source: US Energy Information Administration
Page 11
Energy Efficiency – Integral to India’s Climate Change Responsibilities
Energy Conservation
Act, 2001,
Amendment 2010
Electricity Act, 2003
NMEEE (National
Mission on
Enhanced Energy
Efficiency)
Building Energy Efficiency
Designated Consumers (DC) &
Industries
Energy Efficiency Audits & ESCO
Labeling of Appliances
Demand Side Management (DSM)
Smart Grid
Open Access
Perform, Achieve and Trade (PAT)
Market Transformation on Energy
Efficiency (MTEE)
Financing for Energy Efficiency
Power Sector Technology Strategy
Low energy design concepts
Energy Conservation
Building Code
(ECBC)
Minimum energy efficiency standards for
commercial buildings
Encourages energy efficient buildings/
retrofit of buildings
Energy performance of buildings
Energy efficient construction
Achieve 20-25%
reduction of GHG
Intensity by 2020
(Voluntary)
Energy
Efficiency
Objective – Low
Carbon Growth
Carbon tax
Internal target
under NAMA and
other regulations
National Mission on
Sustainable Habitat
(NMSH)
Emphasizes the greater use of public
transport and non-motorized modes of
travel.
Sustainable urban infrastructure
National Urban
Transport Policy
2006
Page 12
Few Financial Schemes – Strengthening Energy Efficiency Market in India
SIDBI (Small Industries
Development Bank of
India)
MoMSME (Ministry of
Small Scale Industries)
IREDA (Indian Renewable
Energy Development
Agency) Grants
Petroleum Conservation
Research Association
(PCRA)
Industrial Development
Bank of India
(IDBI)
SIDBI and BEE are working as co-implementing agencies for preparing a World-Bank funded
project titled “Financing energy efficiency at MSMEs”
SIDBI Financial Scheme for energy saving projects in MSME sector under JICA (Japan
International Corporation Agency) Line of Credit
Scheme for energy savings projects- Nationalized banks
Credit linked capital Subsidy scheme (CLCSS)
Incentives offered by state/ central governments
80% depreciation in the first year on the specified energy efficiency equipment and
concessional excise and customs duty on notified energy conservation equipment to promote
energy efficiency
Concessions/ Rebates and Special Provisions from IREDA
Energy Audit Subsidy
Scheme for setting up of Energy Audit Centre/ upgrading energy auditing facilities
Energy Audit Subsidy Scheme
Equipment Finance
Page 13
Climate change – the global
response
Market Transformation towards Energy
Efficiency
Page 14
Railway, 2% Public Lighting, 1%
Industry, 46%
Commercial, 8%
Domestic, 21%
Miscellaneous, 2%
Public Water Works & Sewage
Pumping, 2% Agriculture, 18%
Energy Consumption in India – Sector wise
Industry (46%) is currently the
largest energy consuming sector
Commercial building segment
consumes around 8% of total
energy consumption
Potential Energy Savings
in Industrial Sector is
around 6.99%
Potential Energy Savings
of up to 30-50% in
India’s commercial
sector
Energy
Saving
Opportunities
Aggregate Investment Potential in Energy
Efficiency Sector in India amounts to
USD 9.8 Billion (Source: WRI Report, 2008)
Source: BEE, 2009
Page 15
Energy Intensive Industries in India (Designated Consumers)
Iron &
Steel
Chlor-Alkali
Textile
Paper &
Pulp
Fertilizers
Power
(Thermal)
Cement
Aluminium
Designated
Consumers (DC) – 8
Energy Intensive
Industries
DCs contribute to 25% of the
nation’s GDP*
DCs account for 45% of industrial
energy use in India*
Wide variance in process energy
efficiency among DCs indicating
large potential of energy savings.
(Source BEE study)
Major Drivers - Economic growth
and competing energy demand
Thermal power will continue to be
India’s main source of electricity
for decades to come
Infrastructure development and
automotives drive cement, iron
and steel growth
*http://geda.gujarat.gov.in/pdf/Designated%20Consumers%20(DC).pdf
Page 16
Energy Efficient Opportunities in DCs National Targets of Energy Savings
Opportunities for Energy Savings
► Primary Aluminium - Alumina Refining,
Aluminium Smelting
► Secondary Aluminium - Primary heating,
Electric Motors, Pumping Systems
Aluminium
Cement
Opportunities for Energy Savings
► Grid & Power Management
► Power from waste heat recovery
► Use of alternate fuels
Power
(Thermal)
Opportunities for Energy Savings
► Air and flue gas cycle
► Steam, feed water and condensate cycle
► Fuel and ash cycle
► Electrical & Lighting system
► ECW & ACW System
► Compressed air and HVAC system
Opportunities for Energy Savings ► Fuel Switch ► Cogeneration & Renewable energy ► Improved products and services
Fertilizers
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
7.73
0.455
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
11.87
0.698
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
101.14
3.10
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction (MMTOE)
7.86
0.462
Source: BEE, India
Page 17
Energy Efficient Opportunities in DCs National Targets of Energy Savings
Source: BEE, India
Opportunities for Energy Savings
► Chemical recovery and cogeneration units
► Capacity utilization & technology
► Waste heat recovery facilities
Paper & Pulp
Textile
Opportunities for Energy Savings
► Spinning
► Weaving
► Wet processing
Chlor-Alkali Opportunities for Energy Savings
► Switch from Mercury Cell to
Membrane Cell Technology
► Improved Products and Services
Opportunities for Energy Savings
► Smelting reduction
► Top gas recycling blast furnace
► Use of charcoal and waste plastic
► Molten oxide analysis
► Waste energy recovery
► Coke dry quenching
► Advanced wet quenching
Iron & Steel
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
2.09
0.123
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
1.62
0.095
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
0.84
0.049
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
28
1.647
Page 18
Energy Efficient Opportunities in Commercial Building Sector
Lighting Systems & Control
Construction Materials, Building Facades,
Paints, Insulation
Heating, Ventilation & Air Conditioning
(HVAC)
Building Design & Planning
Energy efficient building management
system (eBMS)
Building Energy Audits
Opportunities
Identified for
Energy Efficiency
in Buildings
Electrical energy consumption –
46,685 GWh (2007-08)
Source: General Review 2009, Central Electricity Authority
Electrical energy saving potential through
energy efficiency: 1.92 Billion kWh (2007-08)
Energy Benchmarking
Heating Ventilation & Air
Conditioning (HVAC), 55%
Lighting, 25%
Internal Loads, 15%
Others, 5%
Energy consumption distribution in
commercial buildings, BEE
For Building with electricity demand >500kW.
Total Energy Consumption: 9.92 Billion kWh
(2007-08)
Source: National Productivity Council (NPC)
Page 19
Climate change – the global
response
Business Implications &
Opportunities
Page 20
Business Implications of Energy Efficiency in Indian Market
Energy efficiency has introduced many new business
implications
► New business challenges – addressing cap and trade
(PAT compliance) costs, calculating value at stake,
assessing strategic risks
► New market opportunities – transforming business
processes, changing buying patterns for procurement and
consumers – focus on energy efficiency, creating new
markets and industries through innovation
► New regulatory environment – addressing recent and
anticipated regulations and policies, reassessing directors’
responsibilities
► New risks – managing new risks: the threat of climate
change, was ranked as the number 4 business risk in the
Ernst & Young 2009 business risk report
► New technology – smart grid, cleantech, carbon capture
and storage, and others
Energy efficiency is an issue with
direct economic implications that will
transform business
New risks New regulatory
environment
New market
opportunities
New business
challenges
New
technology
Energy efficiency
Among sustainability issues, energy efficiency has been driven to the top of the business agenda due to its
impact on business performance
Page 21
Opportunities for Australian Companies in Indian Market
Mapping technology/ solutions offered
by Australian companies against
Indian energy efficiency market
Non-ferrous metals
(Aluminium)
Smart Grid
Energy performance
contracting (EPC)
Energy efficiency and
energy management
solutions
Opportunities in Indian energy efficiency market estimated at 148 Billion USD
* Estimated in NMEEE
The Indian energy efficiency market creates significant business and
investment opportunities for the Australian companies
Page 22
Opportunities- Energy Performance Contracting (EPC)
Avenues of energy efficiency
Energy performance contracting is an financing
technique offered by ESCOs that uses cost savings
from reduced energy consumption to repay the cost
of installation of energy conservation measures
Another model practiced under EPC is Energy
Performance Guarantee. Under this scheme, the
ESCOs guarantee the energy savings that may be
achieved by implementing energy efficiency
measures
Both models are marketed in India with second
model mostly practiced by OEMs
Market potential in India
Opportunities Major players in India
Siemens
MITCON Consultancy Services Ltd
Thermax India Ltd
Johnson Controls (India) Pvt. Ltd.
Honeywell Automation India Ltd
Transparent Energy Systems Pvt. Ltd.
Feedback Infrastructure Ltd.
The policy environment of the country is aligning itself towards a host of
energy efficiency initiatives
Installing cogeneration and captive power plants could spur demand in the
industry
Competition in the ESCO industry remains low because of the high
growth trajectory coupled with the small number of firms
Knowledge and experience in efficiency technologies and their
implementation pose the biggest barriers because of the technical risks
that ESCOs assume
Swiss challenge may be explored by new entrant in this segment
* Powering Up, The Investment Potential of Energy Service
Companies in India, WRI, 2008
As policy and demand converge, considerable growth potential for energy
efficiency and the ESCO market
The industrial sector , which includes small, medium and large industrial
enterprises offers a good opportunity to save 49 Billion kWh of energy
per year, with an investment potential of 3 Billion USD.*
Increasing price of fuel, inclusion of 477 energy intensive large scale
industries across sectors within first PAT cycle (2012- 2015), global
competition created by open market policy, large scale programs
introduced by Global Environmental Facility (GEF) for promoting energy
efficiency in MSMEs would drive increased implementation of energy
efficiency in industrial segment
Page 23
Opportunities- Energy Efficiency and Energy Management Solutions
Avenues of energy efficiency
Defining energy reduction goals
Developing energy strategy
Base-lining, benchmarking, formulation of action
plan
Setting appropriate reduction targets
Energy audits
Energy data analysis
Identification, evaluation and development of EE
opportunities, including business case, design,
manufacture, implementation, commissioning and
monitoring
Market potential in India
The end use energy efficiency potential in industry and building sector alone
is of the order of INR 100 Billion and INR 20 Billion per year respectively*
Projected market potential for energy efficiency in India reported by different
organizations like BEE, USAID, WRI, GIZ indicate encouraging growth trend
for energy efficiency
Energy audits in several sectors indicates energy saving potential of 23%-
46% in end uses such as lighting, cooling, ventilation, refrigeration etc
Opportunities Major players in India
Honeywell
Emerson Climate Technologies
KLG Systel
HCL
TCS
Accelerating economic development has prompted India’s energy demand to
double by 2030 due to which there is a critical need for energy efficiency
The opportunities available in the mid cap segment may be initially explored
by Australian firms because it is fast growing and has limited in-house core
competence in energy efficiency
Attractive opportunity for Australian companies to participate in state-
supported initiatives in India (in programs funded by the Indian Government
or international funding agencies like UNDP, GEFA, DIFID, JICA, GIZ etc)
* Electricity Demand Side Management (DSM) in India, USAID, India
Page 24
Opportunities- Smart Grid
Avenues of energy efficiency
Networking platforms enabling conversion of
electronic devices into smart devices
Back-end smart-grid management software
Home area networking (HAN) devices and
systems
Networked solutions for distributed generation and
street lighting
Market potential in India
The market in India today is at a nascent stage. However, it is estimated that
the country will install 130 Million smart meters by 2021
The current smart- grid market in India is estimated to be 1.1 Billion USD
with a 16.3% CAGR forecast between 2011 and 2015*
Market entry strategy Major players in India
HCL Infosystems
Echeleon Corporation
CISCO
General Electric
Telvent
Siemens
IBM
Capgemini
Implementation of smart grids projects in India is currently at pilot phase to
evaluate best possible frameworks and business models
Though Indian utility companies understand the benefit of smart grid, the
poor financial strength of the DISCOMs and other socio economical
conditions posts challenges in the implementation of smart grid in India
This market segment may be driven in near future through Government
initiatives; hence Interested partners for Smart Grid may join India Smart
Grid Forum to remain updated about future plans and policy initiatives
*Per market insights cited by CMR India, Energy & Utilities Practice, January 2012 and Global Smart Grid Federation, October 2011.
Page 25
Favoring Growth of Australian Companies in Indian Energy Efficiency Market…
Population growth and
economic development in
India will increase the
demand of new technologies
in India
Analysis of Australian company energy efficiency offerings suggests that there is a huge growth
opportunity in the Indian market by collaborating with local players/ government in India
Global commitments of energy
reduction targets is increasing
the policy intervention in India
Utilities are playing a key role
in deployment of energy
efficiency programmes
favoring possibility of tie-ups
with the utilities
In India, DCs account for 25%
of the GDP and 45% of the
commercial energy. With
increasing government
intervention, technology
change would happen at a
faster rate driving technology
up gradation
70% of buildings are yet to be
developed till 2030 displaying
a crucial need of energy
efficient technologies and
products and energy service
contracts
Energy efficiency- ‘A
key selling point’
Page 26
Climate change – the global
response
Thank You
Australia Unlimited
India: Suggested Market Entry Approaches
• Tapping large corporates for niche product offerings in Energy
Efficiency, Environmental management solutions, Waste Water
solutions
• Local manufacturing in a JV - the most appealing way to seize
market opportunities
• Technology Transfer (Licensing) or project specific technology
provider
• Exporting through local distributor- suitable for specific niche
products and services not available locally or available in
insufficient supply
• Targeting Multilateral agencies' (UNDP, IFC, World Bank, ADB)
projects
Australia Unlimited
Tips on Doing Business in India
• 28 States with different business practices, regulations, opportunities,
languages and culture
• India is a highly competitive market
– a priority for leading companies from across the world
• Research and due diligence are critical
– shop around and do your homework before entering into agreements
• Know your strengths and focus on key opportunities
– The size and scale of business potential can be overwhelming
• Indian bureaucracy is legendary
– Be prepared for longer time frames for decisions and success
• Relationships are key
– budget for regular travel, training and ongoing business development
– does your potential partner have the right connections to succeed?
• Leverage Austrade’s networks and expertise
Australia Unlimited
Live Commercial Opportunities from India
Water and waste water:
• Doshion Ltd - seeking technology partnership for water distribution business
comprising of source intake facility, transmission networks, treatment, technology,
distribution, waste treatment, recycle, reuse and Zero Liquid Discharge (ZLD)
Energy efficiency:
• Waaree Energies Pvt Ltd - seeking solar technologies such as solar thermal, water
heating, solar water purification and desalination units
• Mamata Energy - seeking technology tie-up in solar concentrators, thermal power
generation and hot water systems
Environmental management / monitoring and control:
• Uniphos Environtronic Pvt Ltd - seeking air quality monitoring systems and water
COD and BOD monitoring systems
• Terracon Ecotech Pvt Ltd - seeking consultancy service in the area of ecological and
mining restoration
Waste management:
• Shapoorji Pallonji - Seeking technology provider for JV in solid waste treatment for
converting municipal waste to diesel
Vocational training in Cleantech:
• Tata Quality Management System - seeking courses in the area of climate change
capacity building for the group companies such as Tata Motors, Tata Steel, Tata
Chemicals etc.
Australia Unlimited
Successful Australian companies in India
Australia Unlimited
Austrades’ Market Activities-
Potential Lauchpad
Oct 12
• Energy Efficiency workshops in India to potential customers to showcase
Australia capability – looking for Australian industry speakers
Oct 12 through to March 2013
• Clean technology, energy efficiency and green building missions to India
organised by State Governments
Nov 12
• Australian Innovation Forum
May 13
• Indian Government mission to Oz Water, Australia
Australia Unlimited
Indian network
Kylie Bell
Trade and Investment Commissioner
Malini Dutt
Vijay Kumar
Ramakrishna Dastrala
Jinendra Khara
Sectoral
opportunities
Contact us for assistance:
Vijay Kumar
Austrade, New Delhi (India)
T: +91 11 4575 6226
Malini Dutt
Austrade, Mumbai (India)
T: +91 22 6116 7133
Kylie Bell
Austrade, Mumbai (India)
T: +91 22 6116 7117
