Energy Efficiency Financing in MSMEs
K.S.Rawat
Asst. General Manager
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An overview of India’s Enery Scenario
vis a vis MSMEs

India is the fourth-largest energy consumer in the world,
after the United States, China, and Russia.

MSME sector consumes almost half of the total energy
consumption by industrial sector.

Many MSMEs are highly energy inefficient. Energy cost,
as also profits constitute 5% of total sales.

Scope to reduce energy uses almost 25%

Thus, EE can increase profit by 25%.
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Issues and Constraints

High
energy
consumption
technology/processes

Lack of awareness / information on Energy Efficiency (EE)/
EE best practices/EE technologies

Inadequate focus on EE/ clean tech/ renewable energy
financing by the banks

Lack of sufficient expertise in banks to assess EE loans
due
to
obsolete
• Eg. ESCOs not taking off in India, but most successful in
Europe
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Energy Efficiency as a double strategy
Efficiency gains directly
influence profits
Profit
Resource
cost
Profit
Resource
cost
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SIDBI – towards sustainable financing
ACTIVITIES COVERED
 Energy Efficiency – equipments, green building
 Cleaner Production  Waste Management –agro waste, industrial waste
 Fuel Switching- diesel/petrol to CNG/LPG, coal to oil/gas based furnace
 CDM- Jodhpur steel rerolling cluster has been registered under UNFCC
 ESCOs – Energy Service Companies
 Renewable Energy –solar, hydro, bio mass, wind power
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SIDBI’s Financial Initiatives
Pooled Lines of Credit from
International/Bilateral Agencies
(JICA, KfW, AfD, WB)
Handhold
support to
Credit officers
Financial
Initiatives
Simple
Eligibility
Norms
Concessional Lending
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EE-CP Line of Credits to SIDBI
• KFW Environmental Line - Euro 15.24 million from KfW, Germany
in 2003.
Duration of the Project – Feb. 2004 – Dec.2008
Status : Fully utilized, 41 projects covered.
• JICA Energy Saving Line Phase I - JPY 30 billion [Rs.15.8
billion] under ODA from Japan International Cooperation Agency
(JICA).
Duration of the Project – 3 years from August 2008
Status : Fully utilized, provided assistance to more than 2900 MSMEs.
• JICA Energy Saving Line Phase II - JPY 30 billion [Rs.15.8
billion] under ODA from Japan International Cooperation Agency
(JICA).
Duration of the Project – June 2011 to June 2016
Status : Fully committed. Provided assistance to around 1880 MSMEs
with aggregate assistance of around Rs. 2154 crore
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Line of Credits to SIDBI
•
KFW Environmental Line - Euro 38.50 million from KfW, Germany in 2009.
Duration of the Project – Nov.2009 – Dec. 2014
Status : Provided assistance to around 282 MSMEs with aggregate assistance of
around Rs.306 crore.
•
KFW Energy Efficiency Line - Euro 50 million from KfW, Germany in 2009
Duration of the Project – Nov.2009 – Dec. 2014
Status : Provided assistance to around 275 MSMEs with aggregate assistance of
around Rs. 270 crore
•
AFD Energy Efficiency Line - Euro 50 million from AFD, France in 2010.
Duration of the Project – May 2010 – May 2014
Status : Fully utilized provided assistance to around 641 MSMEs.
•
WorldBank Line of Credit - Environment and Social Risk Management
Framework (ESMF) under WB-LoC (USD 120 Million) and WB-LoC-Additional
(USD 400 Million).
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SIDBI’s Loan Sanctioning Procedure under EE & CP LoCs
(i) List based approach under JICA and AfD and KfW LoCs
•
An Energy Saving Equipment List (ESEL), an exhaustive list of energy saving
equipments for various MSME sectors has been prepared by the consultant appointed by
JICA. It takes into consideration the technology which results in saving of electricity by
atleast 10%.
•
The branch officers are required to check only that whether the proposed equipment is
included in the ESEL or not.
•
KfW has also a list which cover certain equipments.
(ii) Tool based approach under KfW LoCs
•
A Loan Eligibility Assessment tool has been developed by the consultant appointed by
KfW. Besides, Energy Saving Equipment List also prepared.
•
The branch officers are required to collect the input energy & production data (Prior and
Post-Investment) from the borrowers and the same will be used for the loan eligibility
assessment.
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Tool Based Approach --------- Loan Sanctioning Procedure
I. Application
II. Eligibility assessment
No Sanctioning of
loan
No
Loan
Application
form
Assess
Energy/
Emission
saving
potential
Requirem
ents
fulfilled?
Yes
Sanctioning of
loan
Establishing
Baseline
III. Monitoring
After
implementation
Verification of
loan and LoC
Post loan data
provision by
borrower or
audits and
SIDBIextrapolation
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Implementation
of measure by
borrower
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Loan Sanctioning Procedure
Detailed steps of Loan Appraisal Procedure
1. BO - Data
2. BO – Enter
3. BO – Enter
request to
borrower
data into
Assessment tool
result from the
Tool into
Reporting Table
5. EEC –evaluate
4. BO – Monthly
and approve
monthly report from
BOs
report to EEC
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Loan Sanctioning Procedure
Detailed steps of Post Monitoring
6. BO - Data
7. Customer–
8. BO – Enter result
Request to
borrower for
baseline post
monitoring data
Enter data into
Monitoring tool
from Monitoring Tool
into Reporting Table
10. EEC –
9. BO – Provide
Evaluate credit line;
monthly report to
EEC
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Loan Sanctioning Procedure - Output
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Loan Sanctioning Procedure – Data Collection Template
Current Production and Energy Use Data
Please provide the following data : Month wise for past 12 months OR Totals for past 12 months
Electricity
Consumption
Month
Fuel 1 (please
Fuel 2 (please
specify fuel name) specify fuel name)
Fuel 3 (please
specify fuel
name)
Fuel 4 (please Production
data
specify fuel
name)
Year
Product
type
kWh/Month
Units
(please specify)
Units
(please specify)
Units
(please specify)
Units
(please
specify)
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Units
(please
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Loan Sanctioning Procedure – Data Collection Template
Information on Proposed Investments
Estimated Energy Consumption after implementation
Current
Technology
Proposed
Technology
Investment
required in
Lakh INR
Electricity
Fuel 1
Fuel 2
Fuel 3
Fuel 4
Units
(please
specify)
Units
(please
specify)
Units
(please
specify)
Units
(please
specify)
Units
(please
specify)
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Estimated
Production
data
Units
(please
specify)
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Loan Sanctioning Procedure – Data Collection Template
Information on Proposed Investments
Improvements in
Current
Proposed
Air
Technology
Water
Soil
Raw
Waste
material
intensit
productivity
y
Waste treatment /
Technology
pollution pollution contamination
handling
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Case Studies – 01
CNC Turning Center, Lucknow
•
A newly established unit located in Lucknow. The unit was started in
January, 2012 and involved in manufacturing of various types of railway
components like Cylinders and Pistons
Baseline scenario
The machine installed is used for performing different kinds of
machining job works. The machine installed is Sprint 25 TC and
manufactured by Batliboi, Surat .






Energy efficient operation with quality
production
Less dependency on machine operator
because of CNC features
Linear motion guide ways for X & Y axis
60 degree slant angle bed
Compact less floor space with all items
hydraulics power pack, electrical cabinet etc.
machine mounted
Coolant tank integral part of machine base
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Case Studies – 01
CNC Turning Center, Rajendra Industrial Corporation, Lucknow
Actual Energy Savings by installing CNC Turning Center
The
analysis
of
monitoring data reveals
that the energy saving
potential
of
energy
efficient CNC Turning
Center 33 % when
compared
with
the
conventional lathe
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Case Studies – 02
Rapier loom, M/s Textiles, Karimnagar
•
M/s Textiles is a green field project and established in June 2011. The
plant is located in Plot No. 31, Sircilla Textile Park, Baddenapalli Village,
Sircilla Mandal, Karimnagar District of Andhra Pradesh and is engaged in
the manufacture and marketing of grey cloth.
Baseline scenario
•
•
The raw material, polyester grey yarn, is procured from large companies
like Reliance and the finished product is marketed through local traders/
buyers. The plant operates for two shifts in a day and 300 days in a year.
Since it is a green field project, at the inception of the project, the
management had the option to go for either less capital intensive
conventional looms or energy efficient rapier looms. However, the
management was aware of the advantages associated with the rapier
looms over conventional looms such as high production, low
maintenance costs, low energy consumption, and high throughput and
quality. The plant receives its electricity supply from the Sircilla Electric
Cooperative
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Case Studies – 02
Energy saving high speed Rapier Looms
•
•
•
M/s Textiles had installed energy saving high speed rapier looms in
their plant
The equipment was supplied by Sulzer, a leading manufacturer of
power looms in India. There are a total of 36 rapier looms (the major
components are warp beam, heddles, harnesses, shuttle, reed & take
up roll) with an aggregate installed production capacity of 27 lakh
meters per annum.
The manufacturing process involves major operations like shedding,
picking, battening, and taking up. The total load of rapier looms is 126
HP (@3.5 HP). The rapier looms are designed for processing all kinds
of manmade yarn and the advantages are:
High production capacity
Low energy consumption
Suitable to weave wide variety of fabrics
Low maintenance cost
Man-machine interface for easy operation and control.
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Case Studies – 02
Rapier loom, M/s Textiles, Karimnagar
Energy saving potential
Energy consumption of rapier looms and
conventional looms were monitored
during the field study and the data was
analyzed to assess the actual energy
saving potential of the rapier looms. The
specific energy consumption was found
to be 0.3 kWh/meter for conventional
looms and 0.206 kWh/meter for high
speed rapier loom. The analysis of
baseline and the post-project energy
consumption data reveals that the
energy saving potential of rapier looms is
31.4% when compared to conventional
looms.
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Case Studies – 02
Rapier loom, M/s Textiles, Karimnagar
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Case Studies – 03
Shree Industries Pvt. Ltd
Business Line: Manufacturing of Tyres and Tubes for automobiles. (Small Scale)
Old Machine: Conventional pressing machine which consumes high energy and
process time of rubber heating is slow with a production of 400 tyres/day.
New machine: Energy Efficient Roto-cure machine which requires less time to heat
the rubber thereby increase the production rate (500 tyres/ day) of the unit.
Loan amount assisted: Rs. 150 lakh
Project Benefits:
Annual Electricity saving: 14,370 kWh
Annual fuel saving: 22,500 litres of Diesel
Annual Green House Gas Reduced: 72.25 tons of CO2 equivalent.
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Case Studies – 03
Shree Saraswati Industries Pvt. Ltd
New Roto-Cure Machine
Old machine (Pressing Machine)
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Case Studies – 04
Ceramic Tile Manufacturing unit
Revenza Ceramics
16.07.14
LNG consumption
Electrical energy consumption
2,50,000
62,000
Annual production (Year 1)
30,000
Surface area per kg of tiles
0.067
Gas consumption per year
Gas energy consumed per year
30,00,000
3,27,90,698
Loan amount
SCM of LNG / month
kWh/month
MT
m2/kg
SCM
kWh
700 Lakh
Production in m2 of product
Assumed production output
20,06,706
m2/yr.
Electrical
Estimated energy consumption
Specific energy consumption
Gas
7,44,000 kWh/yr.
30,00,000 SCM/yr.
0.37 kWh/m2
1.49 SCM/m2
1.25 ~1.43 kWh/m2
1.28-2.11 SCM/m2
Average value
1.34 kWh/m2
1.695 SCM/m2
Energy Savings
19,44,986 kwh/yr.
4,01,366 SCM/yr.
1,614.34 tons/yr
887.02 tons/yr
Benchmark (BEE report) *
CO2 emission savings
CO2 emissions saved per lakh of loan
3.57 tons of CO2 /YR
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Ceramics, Morbi. Ceramic wall tile manufacture
Technology applied is LNG fired roller Kiln.
 Other machinery such as presses and glazing lines are also energy efficient.
Specific CO2 savings estimated at 3.57 tons of CO2/a.
Based on benchmark for the Indian ceramic tile manufacturing industry, the plant is
expected to have lower specific energy consumption. The benchmark for the ceramic
tile industries applied is taken from a BEE study on EE options in ceramic cluster.
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Some Cases
Project of setting up of a foundry unit by acquisition of Automatic Moulding
Machine, Fully Automatic Sand Plant, CNC Surface Grinding/Polishing Machine
(Deburring Machine ), Online Shot Blasting Machine, Induction Furnace with
Cooling System, Automatic Pouring System .
A printing unit going for 4 colour offset printing machine instead of normal
printing machine.
CNG Taxi Financing, Mumbai – Collateral free loans provided to 838 taxi drivers
in Mumbai to phase out their old taxis under a structured arrangement with Taxi
drivers Association and Maruti Suzuki.
Chandigarh Auto Loan Financing- SIDBI has re financed number of auto for
substituting petrol with LPG based system.
Solar Lanterns in Manipur – Micro loans to the ultimate beneficiaries in Manipur
for purchasing 50,000 solar lamps.
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Some Cases
Channel Financing - Partnered with NBFCs, to provide loans to MSMEs to acquire
energy efficient equipments/CNG&LPG vehicles under a simplified credit delivery
mechanism without any collateral security.
Structured Arrangement- Tied up with a husk fired gassifier manufacturer for
installing husk based gasifiers for boilers in industries.
Tied up with a CNC machine manufacturer for supplying equipment to MSMEs.
ESCO based financing for installing variable frequency drives in various industries
for energy efficiency has been provided with a revolving limit.
Green buildings with ECBC, LEED or Griha rated projects
are financed at
Faridabad, Indore, Mumbai, New Delhi, etc.
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