Title of the Side Event:
How India Scaled up Energy Efficiency via Innovative business models
Demand side management tools such as energy efficiency facilitate least cost planning and generate reductions in greenhouse gas emissions. The INDCs submitted under the Paris Agreement show that renewable energy and energy efficiency are central to the climate change mitigation efforts of most countries. However, energy efficiency projects typically face under-investment due to misalignment of incentives, and difficulties in capturing positive externalities from energy efficiency as part of investment returns.
Business and financing models for energy efficiency projects should take account of the unique risks and returns arising in the sector. Innovative business models have facilitated the development of suitable risk-sharing mechanisms between the public and the private sector, created opportunities for projects to raise green investment, and provided access to capital markets to diversify sources of finance. New business models have also revolutionized service and product delivery, making it possible for energy efficiency technologies to reach new markets and attain commercial viability.
An example of such innovation is Energy Efficiency Services Ltd., which has successfully distributed over 130 million LED bulbs and replaced 1 million street lights under its National LED programs, thereby avoiding an additional capacity creation of 3,466 MW and reducing 14 million tCO2e. EESL’s interventions have enabled a reduction of over 70% in the price of LED bulbs in 3 years.
Going forward, it is important to draw lessons from past experiences with various business models for energy efficiency, and identify factors that acted as catalysts to their success. The proposed panel discussion will focus on the challenges facing energy efficiency, innovative financial and service delivery models, and international experiences in the sector, particularly in the context of channelizing green investments towards the sector and unlocking private investment and capital markets.
The proposed panel discussion will fall under Thematic Track 2.2.1: Sectors relevant to climate change mitigation including inter alia: a) Renewable energy, Energy efficiency and energy access.
COP 22’s focus is on operationalizing the Paris agreement by mobilizing and accessing climate finance for mitigation and adaptation in developing countries. The role of innovative financial instruments such as green bonds to access climate finance will be discussed.
The Indian capital market is relatively new to green bonds, and the event will discuss parameters that influence investor decisions, including underlying project portfolio, cash flows, credit ratings, risk allocation, financing instruments, hedging costs, and monitoring and reporting arrangements including Green certification.
International experience with green bonds and lessons for India – expected benefits to issuing institutions and corporates, the need for credit enhancement and risk mitigation, addressing investor concerns, models that have seen success.
The event would be of relevance to other developing economies similar to India, especially developing African and South East Asian countries, in executing similar initiatives. The fact that EESL is in the process of setting up operations in Africa and other places to replicate its Indian success story in designing and implementing business models on energy efficiency, would be good news to governments and further whet investor appetite.
Proposed List of Participants
Welcome Address: Smt. Anju Bhalla, Joint Secretary, Ministry of Power: 10.00-10.05 Hrs.
Key Note Address by Secretary (Power): 10.05-10.15 Hrs.
1st Half of F/N session: How India Scaled up Energy Efficiency via Innovative business models
In addition to the participants, there shall be two organizers from EESL/TERI who will coordinate the event.