The GEF-5 project focuses on improving energy efficiency in India’s MSME industrial sector, via continued capacity building, information dissemination, and establishment of standard operating procedures to implement energy efficiency (EE) investment projects.
Budgeted at 31.3 million USD, the 60-month project has the following objectives:
i. Promote the implementation of energy efficiency in the MSME sector
ii. Create and sustain a revolving fund mechanism to ensure replication of sectoral energy efficiency measures
iii. Address the barriers for scaling-up energy efficiency measures, and thereby promote a cleaner and more competitive Indian MSME industry
• As funding agency, GEF has partnered with the United Nations Industrial Development Organization (UNIDO)
• UNIDO is serving as implementing body
• Ministry of MSME is serving as leading executing agency
• EESL has been appointed as the main Executing partner
Component 1: Programme to identify energy-intensive clusters and replicable technologies
Based on GEF-5’s objective, 10 energy-intensive clusters have already been identified. These include Jodhpur (limestone), Varanasi (brick kilns), Vapi (chemical and dyes), Surat (textiles), Morbi (ceramics), Vellore (rice mills), Jorhat (tea), Odisha (sponge iron), Batala/Jalandhar/Ludhiana (casting & forging), and Pali (textiles). 33 technologies that can have maximum impact on the clusters have also been identified.
Component 2: Demonstration projects and aggregation of demand for demonstrated technologies
The project will shortlist 100 local service providers (LSPs) and unit level technical personnel for installation, operations and maintenance of demonstrated technologies. This will be done through cluster level workshops. A LSP coordination mechanism shall be established through the Project Management Unit (PMU).
Further, PMU experts engaged by EESL will also manage a peer-to-peer network to analyse and validate the energy savings information from the demonstration projects.
This network will include local technology experts, LSPs, and representatives of MSME Associations at the cluster level. This will not only enhance the credibility of the results, but also foster information exchange amongst industrial enterprises and encourage new business.
Findings from project demonstrations will be disseminated as case studies across the network. The network will also be used to enlist MSME units for replication and scaling up activities
MSME units will be shortlisted to demonstrate the identified technologies, based on their availability and willingness to share technical and commercial data, provide access to other units for technologies implemented.
Demonstrations will include customization of the technologies to suit the units’ requirements, and retrofits with the most energy efficient systems.
Following the demonstration activities, EESL will aggregate the demand with a target to reach out to about 400 units in the clusters where implementation of technical proposals is possible. The investments in these units will be done by EESL through its own funds (equity from its own sources) or commercial loans from SIDBI and/or other banks, or by an ESCO which will be facilitated by EESL with financial assistance from schemes of the Ministry of MSME.
Component 3: Financing models to support replication of energy efficiency projects in MSMEs.
Sustainable and effective financing mechanisms will be established to support the replication of MSME energy efficiency projects.
Towards this goal, officials from relevant government agencies (including the Ministry of Micro, Small and Medium Enterprises, Ministry of Environment, Forest and Climate Change, and the Ministry of Power and private banks and financial institutions will be sensitized on promoting EE equipment and trained on evaluating and investing in industrial EE projects.
To ensure that the replication of the EE projects in the MSME sector continues beyond the GEF project, a Revolving Fund will be set up to sustain the activity. The EMRF will be seeded with the GEF grant, to be disbursed to industrial MSME Units and will be accredited by a portion of the returns that EESL will receive from implementing the project.
This model aims to reduce transaction costs of MSME units which will be undertaken by the SME Implementation Plan of EESL (SMEIP-E). Towards this, financial arrangements with banks and financial institutions will be calculated by EESL. The models will work on the principle of ‘Pay-As-You-Save’ (PAYS) wherein regular payments to EESL/ESCO will be done by the units after technology installation.
Presently, seven baseline surveys and five videographic studies have been conducted in the shortlisted clusters. These studies have captured the present scenario and the industry’s sentiment towards the upcoming project. Additionally, five insightful workshops have been conducted in Surat, Vapi, Jodhpur, Odisha and Ludhiana clusters to generate maximum awareness among the target group of beneficiaries.
GEF is an international partnership of 183 countries, international institutions, civil society organizations and the private sector that addresses global environmental issues. GEF’s primary objective is to reduce greenhouse gas (GHG) emissions and address global environment issues. India ranks among nations most vulnerable to climate change and is also world’s third biggest emitter of greenhouse gases. With the Indian energy sector accounting of 71 percent of total greenhouse gas (GHG) emissions, there is abundant potential for end-use efficiency in meeting energy demands without sacrificing growth.
With our successful track record of deployment of large-scale energy efficiency programmes like UJALA, GEF will be funding our programmes to scale up our energy efficiency programs and new technology applications for the project ‘Creating and Sustaining Markets for Energy Efficiency’.
GEF 6 will provide composite funding support of $454 million to EESL sourced from various multilateral and bilateral agencies. These include a GEF grant of $20 million, and co-financing of $434 million in the form of loans and equity, including a $200 million loan from the Asian Development Bank. Partners include Asian Development Bank (ADB) and the United Nations Environment Programme (UNEP) as implementing agencies for the GEF Project., and Kreditanstalt für Wiederaufbau (KfW). The project will achieve total direct energy savings of 38.3 million gigajoules (GJ) by 2022, and 137.5 million GJ by 2032.
GEF-6 funding will be channelized to mitigate 60 million tonnes of CO2 equivalent through EESL-executed programs. This project aims to further support and create enabling conditions for four of EESL’s existing technologies involving street lighting, domestic lighting, five-star rated ceiling fans and agricultural pumps. Additionally, the funding will help EESL diversify its portfolio across three new technologies such as super-efficient ceiling fans, Tri-generation and Smart Meters.
1. Expanding and sustaining investments in existing market sectors, and support a certain portion of EESL’s existing target for installation of street lighting, domestic lighting, five-star ceiling fans and agricultural pumps
2. Building market diversification: development and implementation of new ESCO business models through installation of new technologies of super-efficient ceiling fans, tri-generation technologies and smart-grid applications
3. Replication and scaling up: Developing a long-term growth strategy based on collected lessons, experiences, and insights.
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