A Market-backed Model for AGDSM
A Market-backed Model for an
Agriculture Demand Side Management
Presented By –
Apurva Chaturvedi USAID
Rakesh K Goyal Tetra Tech
Ashish Meshram Tetra Tech
December 14, 2011
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A Market-backed Model for AGDSM
Why Agriculture Demand Side Management (AgDSM) in India?
Agriculture consumes 23% of power & 38% of water (90% groundwater)
55 – 60% population dependent on groundwater
Financial
health of
power
sector
Availability
of water
both for
irrigation &
drinking
Livelihood
of Farmers
Food &
Water
security of
1.2 Billion
population
Subsidy
of 8 billion
US $ per
annum
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A Market-backed Model for AGDSM
Pilots Conducted before the development of innovation
Project
Duration
Location
Energy efficiency through
replacing pump sets
1993-1996
Warangal District,
Andhra Pradesh
Replacement of pipes and
foot valves
1987-1990
Chittor District, Andhra
Pradesh
Funding
agency
Nature of work/Key
learning
JBIC (earlier, OECF) Replacement of conventional
pumps with efficient pumps;
savings were measured
DFID
Replacement of pipes and foot
valves; 5-15% savings were
achieved.
DFID
AP Transco- supplied pumps
converted to single phase. Pump
can work on single phase.
APEEP single-phase high1998-2000
voltage distribution system
for 16 villages
Nalgonda District,
Andhra Pradesh
Implementation of power
1992
factor correction devices in
the agriculture sector
Madhya Pradesh
--
End users reportedly refused to
maintain the installed equipment.
Results could not be measured.
DSM for Climate Change
Project
Agricultural Pump Set
Efficiency Improvement
Programme with NPCL
2002-2005
Madhya Pradesh
CIDA
2001-2002
Noida,
Uttar Pradesh
USAID
Pump replacement achieved 2540% savings.
75 conventional belt-driven aboveground 5 hp pumps replaced by 3.5
hp Kirloskar energy-efficient monoblock pumps; metered supply. 3045% saving achieved.
State government scheme 2003-2004
to improve the efficiency of
agricultural pump sets
2004-2005
Three transformer areas State Government
in Tamil Nadu
Results not known
Reach to Power
Programme of MSEDCLDindori
Agricultural pump
Replacement
2005-2006
8,000 villages in Nasik
District, Maharashtra
Not Known
2006-2007
Doddaballapur
USAID
MERC permitted MSEDCL to charge
expenses to the Load Management
Charge Fund.
Savings of 30-70% were
achieved.
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A Market-backed Model for AGDSM
What Pilots Established –Saving Potential
S.N.
Measures
Potential for Energy
Savings
1
Efficient Pumpsets
15-25%
2
Suction Pipe & Foot Valve
3
Efficient Irrigation Methods
15-25%
4
Total Saving Potential
35-65%
5-15%
4
A Market-backed Model for AGDSM
Pilots Could not be Scaled Up
 Water & Electricity nearly free to farmers
 Absence of market based approach
 Ownership
 ESCO's in a nascent stage
 Reluctance to work in rural areas
 Tough geography and vast area
 Low literacy level of farmers
 Livelihood of farmers depends on irrigation.
 Reliability of DISCOMs getting subsidy has increased
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A Market-backed Model for AGDSM
A market-backed model developed for an Agriculture Demand
Side Management





Farmers - get new
efficient pump, aftersales services, good
quality power & required
amount of water
DISCOM – energy
savings with greater
opportunity cost
ESCO – profit from
saving energy, payback
is less than 5 years

Project based on
commercial
principles
Long term horizon –
no ‘snap back’ effect
Project risks shared
among stakeholders
and ESCO
Innovation

Process adopted
Rules of public
procurement followed
 Active engagement
of all stakeholders
 Extensive groundwork
– studies, information –
reduce perceived
project risks
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A Market-backed Model for AGDSM
Innovation – Key stakeholders Roles and Responsibility
ESCO
DISCOM
• Up gradation and
maintenance of
Electrical Network
suitable for efficient
pumps and Metering
Public Private
Partnership
• Support to ESCO
in building
relationship with
farmers
• Water side
interventions
•Capacity Building
of farmers
•Timely payment to
ESCO for energy
saving
• All Approvals from
Regulator & State
Govt.
•Feedback from
farmers
• Financing,
Planning,
procurement,
replacement and
maintenance, of
pumps.
•Obtaining farmers
acceptance
Farmers
A free new branded energy efficient
pump sets and better O&M
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A Market-backed Model for AGDSM
Innovation-Tested at Site
Site Profile
Location
: Doddaballapur (BESCOM)
70 KM from Bangalore, India
 Geographical area
: 11,000 Acres
 No. of villages/population
: 34/17,000
 % net sown area
: 75%
 % irrigated area
: 16%
 Major crops
: Mulberry & Grapes
 Depth of ground water
: 400-750 ft.
 No. of feeders/pump-sets
: 4/604
 Typical pump sets capacity
: 10-15 HP
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A Market-backed Model for AGDSM
Innovation- Test Implementation Overview
Electrical
Network
•Separate
agriculture
feeders
• Data
collection
• Mining
• Presentation
• Preparing
business model
• Draft RFP and
marketing
• Pre NIT
• Pre- bid
meeting
• Site visit
• Bid evaluation
• Negotiation
and award
Baseline
Project
Execution
• Consumption
before pump
replacement
• Pump
replacement
• Ag & Non-Ag
Load
• Monitoring
& evaluation
protocols
• Supply hours
• Pump running
hours
• Single phasing
• Acceptance by
stakeholders
• Governing
structure
Savings
• HVDS
• Capacitor
Banks
Electronic
meters
Bid Process &
Selection of
ESCO
Data
• Keeping
stakeholders
informed
Capacity Building of Farmers
Project Monitoring
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A Market-backed Model for AGDSM
Innovation-Salient Features of the Contract (ESCO and DISCOM)
Sr.
No
Particulars
Remarks
1
Contract Term
10 years from 1st April 2011. Contract was signed in July 2009
2
Area is ring faced
Number of pumps are ring fenced.
3
Ownership of Pump
Co-ownership between
agreement.
3
Energy Saving Payment
Mechanism
Within 15 days of invoice. ESCROW account
4
Base Line True up Mechanism
Number of hours of 3 phase supply availability. Number of hours to
be determined from downloaded data.
5
O&M of pumps during the 10
years period.
O&M office and call centre in the area. Price list to be decided by
the committee involving farmers. Within 72 hours otherwise penalty.
6
Grievance Handling Procedure
(Pump and electrical)
A procedure with three tier mechanism for satisfactory resolution of
the grievance.
7
Governing Structure
A three tier governing structure to steer, monitor and resolve
of operational issues.
8
CDM registration
Mandatory. Hot country approval obtained
farmer
and
ESCO
through
a
written
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A Market-backed Model for AGDSM
Innovation-Metering and Verification Protocol
Findings
 Contracted Load of Pumps as per BESCOM Record
 Actual Connected Load of Pumps
 Average Capacity of a Pump as per BESCOM record
 Actual Average Capacity of a Pump
= 2.6 MW
= 5.9 MW
= 4.3 KW
= 9.7 KW
 About 16% pumps in each month have zero consumption.
 Supply hours are more than pump running hours
 Farmers run pump as per their convenience and use capacitors to convert
single phase supply into three phase supply.
New Tools Developed
 Determination of IP set and non IP set Consumption separately
 One meter can help in determination of up to 4 different capacity pumps
consumption.
 Estimation of consumption for the period when meter is not working.
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A Market-backed Model for AGDSM
Innovation-Pilot-Water-Side Interventions
Promotion of Drip Irrigation
Construction of Check Dam
Construction of Field Bunds
Farmer awareness - Cropping
Pattern & Cultivation Practices
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A Market-backed Model for AGDSM
Scaling Innovation -Business Case Study Results with
Maharashtra as Sample State (worst Case 100% debt with 15% Interest)
Project Parameters
Option -1
Replace all
(28,97,157)
Option -2
Replace
Pumps > 10
HP ( 94,264 )
Option -3
Replace Pumps in
Ag Dominated area
Baramati, Nasik &
Amravati
(13,13,630)
8279
416
4071
10022
503
4929
26737
2565
14435
8437
1647
5334
18
56
20
Additional savings in Generation capacity
(Rs Crores)
3052
285
1635
Additional savings in Network capacity
(Rs Crores)
2775
259
1486
CER Savings (Rs Crores)
2174
211
1165
30314
1287
15395
Capital Cost (Rs Crores)
Debt Service (Rs Crores)
Energy Savings (Rs Crores)
Project NPV (Rs Crores)
Project IRR (%)
Subsidy & Cross-Subsidy Avoided
(Rs Crores)
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A Market-backed Model for AGDSM
Innovation- Pilot Status
 Pumps replaced by energy efficient pumps
 Pumps maintenance Call Centre and office established
 Feedback from farmers is encouraging
 Host country approval for CDM obtained
 First energy saving invoice generated and paid by DISCOM to ESCO- 25%
saving
 A dedicated website for farmers developed (www.agripowerindia.com)
and kiosk installed for use of farmers
 Holistic water side intervention plan is ready implementation to start soon.
 Capacity building is continuous process. .
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A Market-backed Model for AGDSM
Sensitizing Stakeholders About Innovation
Multi-stakeholder Meeting
Interactive session with DISCOM officials
Involving Farmers
Workshop with Pump Manufacturers
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A Market-backed Model for AGDSM
Scaling Innovation at India Level will  Save Electricity (19 Billion Units)
 Save Network Capacity (83,557 ckt. Kms and 13,126 MVA)
 Can help to bridge existing demand supply gap of electricity (by 60%)
 Can improve the financial health of the power sector
 Saves Subsidy annually (8000 Cr INR )
 Cross-Subsidy – Boost Industrialization, Reduce cost
 Reduce Carbon Emissions (14.8 Tera Tonnes per annum)
 Save Water
 Rural development
 Arrest shift from rural to urban
Data from CEA Annual Report 2008
A conservative saving of only 20% has been assumed.
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A Market-backed Model for AGDSM
Scaling up of Innovation at India Level - Requires
CAPACITY
BUILDING
SITE
ACTIVITIES
A MARKET -BACKED
MODEL for AgDSM
POLICY
DOCUMENTATION
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A Market-backed Model for AGDSM
Coordinated Approach
Ground Water
Urban
Development
Food Security
Surface Water
AGDSM
Rural
Development
Agriculture
Finance
Energy
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A Market-backed Model for AGDSM
Key Issues
Sr.
No.
Issues
Addressed
Un-addressed For Large Program
1
Market based
commercial approach
Public Private Partnership model in AGDSM
projects is possible
more risks to be shared by DISCOM/Govt
2
Financing
Financing from financial institutions like
NABARD is possible
Guarantee for the loan ?
3
Baseline Data
Methodology and tools established.
Measurement and availability of data
4
Availability of NHEP
Only 35 -40% pumps manufacturered today
are NHEP (progressive pump manufacturer’s)
Increasing it to 100% will be a challenge.
Market for BEE star rated pump is
developing. BEE star rated NHEP > 15 HP
still not available.
5
Power supply
improvement
HVDS and capacitor banks
Segregation of Ag feeder is very helpful.
6
Capacity Building
Course material developed
On going process
7
Pump Manufacturer
Interested to sell energy efficient pumps
Not interested to share the risk of saving.
8
Water-side
Interventions
Pilot successfully executed
M&V protocol to be established.
9
Calculation of energy
savings
Truing-up mechanism for calculating energy
savings.
Risk associated due to change in cropping
pattern, availability of power supply etc.
Documentation
Electrical Case Studies, RFP, Policy work,
Documentary and Guide for Ag DSM under
preparation
On going Process.
10
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A Market-backed Model for AGDSM
Innovation won 2nd India Power Awards -2009
Project Partners
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