Agriculture Demand Side Management (AgDSM)
Challenges & Benefits
By
Bureau of Energy Efficiency (BEE)
Contents
1
Energy Scenario of Agriculture Sector
Policy Alternatives for EE in Agriculture
3
AgDSM Initiatives by BEE
Proactive Initiatives by States
5
4
AgDSM Pilot Projects
Institutional barriers
7
2
Way ahead
6
Agriculture Pumpset Scenario: India
I.
Total agricultural pump sets employed ~ 20.27 million
II. Agriculture sector consumes ~ 18% of total electricity supplied (160 BU).
III. New connections per year - 0.5 million
IV. CAGR is more than 6.5 %
V. Electricity supply is free or applicable tariff is very low.
VI. Less or no metering for energy consumption
VII. Poor quality of power supply
VIII. Theft and high T&D losses
IX. Energy saving potential is more than 30%
Source: Directorate of Economics and Statistics;
CEA, Planning Commission.
Agriculture Pumpset Scenario: India
Concerns:
•
Market dominated by un-organised sector providing low cost, low efficiency pumpsets.
•
Efficiency level of BEE star rated Energy Efficient pump-sets (EEPS) is about 30 to 40
% higher than that of these conventional pumps. However, cost of Energy Efficient
pump-sets is higher by 20% .
•
Inefficient conventional pumpsets lead to higher subsidy burden on the State
Governments. Rs. 55,000 crores
•
The average cost of power supply in India during 2012-13 was Rs. 5.01/ kWh and the
realization from agricultural sector during the same period was Rs. 1.48/kWh
•
No market incentive for purchase/replacement of BEE star rated EEPS because of
subsidized tariff.
Source: Directorate of Economics and Statistics;
CEA, Planning Commission.
Policy Alternatives for EE in Agriculture Sector
① Alternative No. 1 – Right Pricing for electricity tariffs
② Alternative No. 2 – Prohibition for manufacturing of inefficient pumpsets
③ Alternative No.3 – Agriculture Demand Side Management
Initiatives
A. Efficiency up gradation of existing pumpsets
B. State-wide regulation for mandatory use of star rated EEPS
for new agriculture connections.
Demand Side Management (DSM)
DSM makes only sense for a power utility, if
•
DSM is applied to all non paying or below
delivery cost paying customers, or
•
DSM activities strictly reduce peak load without
cutting into revenues from well paying
customers.
AgDSM Programme
Objective :- To create framework for market based transformation in agriculture pumping
sector by launching few pilot projects and introducing policy based interventions.
Achievements  Launch star labeling program for agriculture pumps
 11 DPRs prepared covering 20,750 pumpsets. Average 40% (96 MU/year) energy
saving potential assessed in the energy consumption of these pumpsets.
 Three business models viz. ESCO, Hybrid & DISCOM developed for project
implementation in 8 States (Maharashtra, Rajasthan, Gujarat, Punjab, Haryana,
Madhya Pradesh, Andhra Pradesh & Karnataka).
 One pilot project in Solapur, Maharashtra implemented. Annual Savings of 6.1 MU
achieved by replacing 2209 inefficient pumps with BEE Star rated pumps.
 Capacity building and awareness workshops held in 7 States for DISCOM officials
and 26 open house sessions for farmers organized.
 Designed and implemented M & V protocol
 Encouraged states for mandatory use of BEE star rated pumpsets for every new
agricultural connection.
Summary of DPRs
State
No. of
pumps
covered
Avg.
Existing
Saving
% of
operating consumpti potential saving
on
efficiency of
(million potential
kWh)
proposed
(million
EEPS
kWh)
IRR
(%)
Status
2124
55%
47.34
16.7
35%
41.4 RFP was floated by M/s UHBVN
for hiring implementation agency,
only one bid received from
Kirloskar pumps but project could
not be taken over by agency.
Gujarat –
PGVCL
1782
55%
17.0
7.46
44%
28.7 DPR submitted
Gujarat –
MGVCL
533
58%
9.18
2.615
28%
28.3 Consultation sessions were held
with DISCOM officials to implement
the project on DISCOM mode but
eventually disagree to take it for
implementation.
Haryana
(UHBVNL)
Summary of DPRs
State
No. of
Avg.
Existing
Saving
% of
pumps
operating consumpti potential saving
covered efficiency of
on
(million potential
kWh)
proposed
(million
EEPS
kWh)
IRR
(%)
Status
2186
56%
20.0
7.38
37%
1806
50%
24.91
11.275
45%
M.P(East)
1918
45%
16.5
6.02
38%
42.0 M/s PSPCL floated RFP twice for
selection of implementing agency
but no bids were received.
30.0 Consultation is gong on between
EESL & JVVNL for implementation
of the project on ESCO mode.
17.5
DPR submitted
MP (West)
1067
51%
5.36
2.53
47%
33.1
DPR submitted
AP (East)
2204
53.35%
49.5
19.76
39%
15.7
DPR submitted
AP
(Central)
2312
68%
18.77
9.05
48.64%
45.0
DPR submitted
Karnataka
1288
45%
10.73
3.599
36.8%
35.0
EESL is implementing the pilot
project in Mysore.
Punjab
(PSPCL)
Rajasthan
(JVVNL)
Business Model: DISCOM Mode
The DISCOM utilizes its own funds collected under a tariff regulation for replacement of old
inefficient pumps with new higher energy efficiency pump sets and contract out repair and
maintenance of pumps and certain aspects of project works to a project contractor.
Consumers
•
Utility / Discom
Electricity
sales
•
•
•
•
Sale of saved energy to other
consumers
Government / Regulatory
Commission
•
•
•
Reduction in Subsidy payments
Policy Guidelines and Approvals
Policy
guidelines &
Approvals
Capital for Installation of new pumps
Improved Collection efficiency
Reduced Losses and Peak Load
Subsidy Reduction due to saved energy
Payment
Security
Package
Regulator
Inclusion in Annual Revenue
Requirement
Monitoring
Agency
Farmer
•
•
•
•
Contractor
Free Energy Efficient Pump set
Reduced Energy Bills
Free Maintenance
Quality Power Supply
Pump
•
•
•
Third Party
Testing
Agreement
Design / Installation / Commissioning
& R&M
Demonstrate the energy savings
Repair and Maintenance
Business Model: ESCO Mode
An ESCO which has a contract with DISCOM finances and implements the project; the ESCO
would borrow the project debt and repay it from project energy saving revenues. The
pump manufacturers can also participate as ESCOs in this mode of implementation.
Consumers
•
Utility / Discom
Electricity
sales
Sale of saved energy to other
consumers
•
•
•
Government / Regulatory
Commission
•
•
•
Reduction in Subsidy payments
Policy Guidelines and Approvals
Policy
guidelines &
Approvals
Improved Collection efficiency
Reduced Losses and Peak Load
Subsidy Reduction due to saved energy
Payment
Security
Package
Regulator
Inclusion in Annual Revenue
Requirement
Monitoring
Agency
ESCO
Farmer
•
•
•
•
Free Energy Efficient Pump set
Reduced Energy Bills
Free Maintenance
Quality Power Supply
Pump
•
•
•
•
Third Party
Testing
Agreement
Capital for Installation of new pumps
Design / Installation / Commissioning & R&M
Demonstrate the energy savings
Repair and Maintenance
Business Model: HYBRID Mode
ESCO provides part of project funds through debt & equity and sign a contract with
DISCOM, whereas as the investment made by ESCO would be paid by DISCOM through
LMC fund and from sharing of energy saving revenue.
Consumers
•
Utility / Discom
Electricity
sales
•
Sale of saved energy to other
consumers
•
•
•
Government / Regulatory
Commission
•
•
•
Reduction in Subsidy payments
Policy Guidelines and Approvals
Policy
guidelines &
Approvals
Annual payment from Special DSM fund to
support capital expenditure
Sharing of savings to support operating
expenses
Improved Collection efficiency
Reduced Losses and Peak Load
Payment
Security
Package
Inclusion in Annual Revenue
Requirement
Farmer
ESCO/ Contractor
•
•
•
•
Free Energy Efficient Pump sets
Reduced Energy Bills
Free Maintenance
Quality Power Supply
•
•
•
•
Regulator
Monitoring
Agency
Third Party
Testing
Agreement
Capital investment for Installation of new pumps
Design / Installation / Commissioning & R&M
Demonstrate the energy savings
Repair and Maintenance
Initiatives by States
States
Haryana
•
•
Initiatives
Mandatory use of EE pumpsets vide notification issued in October
2010.
Financial assistance of Rs. 400/HP for adoption of EE pumpsets by
HAREDA.
Punjab
•
Rajasthan
•
•
Mandatory use of EE pumpsets vide notification issued in October
2011.
Notification by PSERC for implementation of AgDSM initiatives.
Incentive of Rs. 750/HP for adoption of EE pumpsets.
Chhattisgarh
•
Rebate in electricity bills for adoption of EE pumpsets.
Karnataka
•
Gujarat
•
Mandatory use of EE pumpsets vide notification issued in
November 2008.
DISCOMs of Gujarat are preparing plan for implementation of
AgDSM projects under DSM regulations
Pilot AgDSM Project
AgDSM Pilot Projects Status
State
Initiatives
Maharashtra
•Pilot Project in Solapur district covering 2209 pumpsets is being
implemented, reflecting annual savings of 6.1 MU.
Karnataka
•Pilot project in Hubli (HESCOM) covering 590 pumpsets is
implemented, reflecting annual savings of 2.92 MU.
•Implementation of DPR in Mysore (CESC) is completed.
Rajasthan
•Implementation of DPR in Jaipur district is under consideration.
Andhra Pradesh
•Implementation in East Godavari (APEPDCL) is initiated.
First AgDSM Pilot Project in Solapur, Maharashtra
 Pilot project on PPP mode is in
progress in Maharashtra (Sholapur
Circle).
 Initial capital investment by ESCO
 ESCO would get 20% of the capital in
5 yearly installments plus 30% of the
energy savings.
 M&V methodology is in place.
 Savings of 25% achieved - Annual
Energy Saving of 6.1 MU for 2209
pumpsets.
 Energy savings of 9.1 MU is assessed
considering the normalization
factors.
Solapur pilot project by MSEDCL


All figures in
Rs. lakhs
Initial Capital Cost
(Rs. 706 lakh)
DSM fund


Initial capital investment by ESCO
ESCO would get 20% of the capital in 5 yearly installments
plus 30% of the energy saving
2209 pumps have been replaced
Annual energy Saving of 6.1 MU
Annual subsidy
reduction of Rs. 37 lakh
State Govt.
Payment from saving (30% - 49.2 lakh)
ESCO/Pump
Manufacturer
Annual benefit from saving of
6.1 MU/annum
(Rs. 164.7 lakh)
Annual Saving
retained (70% Rs 114 lakh)
MSEDCL
Special DSM fund
approved by MERC
(Rs.706 lakh)
Annual support of 141.24 lakh
Operating Expenses for 5 years
Avg. annual
Interest Payment
(Rs. 28 lakh)
Avg Annual R&M
(Rs. 34.60 lakh)
Payback – 4
years
M&V result for Energy Savings
Table 1 : Summary of actual energy savings achieved
Feeders
No. of Pumps
Old Pumps
Average kW
Average Flow , m³/hr
Avg Efficiency, %
Baseline Consumption kWh
New Pumps
Avg Voltage , V
Average kW
Average Flow , m³/hr
Average Efficiency, %
Consumption with EEPS, kWh
Energy Savings kWh
% Savings
Bhose
Borale
Brhamapuri
Nandeshwar
Kharatwadi
339
672
266
500
Total
432
2209
6.74
6.39
19.02
22.45
3554719
5.83
22.35
22.89
6425034
7.29
22.27
20.51
3179556
7.16
17.11
21.85
5871124
7.05
19.89
22.31
4996986
384.61
4.75
23.50
40.67
350.03
4.37
26.96
41.47
376.05
5.52
25.87
33.62
356.82
5.24
21.21
39.99
368.55
5.25
24.23
39.46
2639190
4818461
2409001
4293686
3721595
915529
25.76%
1606574
25.00%
770554
24.23%
1577438
26.87%
1275391
25.52%
Table 2 : Expected energy savings considering normalization factors
Particulars
Baseline Energy Consumption of old pump sets
Actual measured Energy Savings by installation of EEPS
Energy Savings considering Voltage improvement (415V)
Energy Savings considering excess water flow (reduced operating
hours)
Total Estimated Savings considering Voltage improvement and excess
flow
Total (in MU)
24.0
6.14
6.49
% Savings
9.3
38.75%
9.66
40.21%
25.58%
27.04%
22
24027420
5.03
39.04
17881934
6145485
25.58%
Barriers / Challenges in the pilot project
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Ownership verification process and change in ownership name took considerable time.
Farmer’s reluctance to enter into an agreement for pump.
Pump ownership with 2 – 3 families is one of the biggest hurdles.
Farmers fear that metering of the pumps power consumption will be later billed to
them.
Farmers bypasses the energy meter post installation of the new pump and energy
meter.
Farmer’s are reluctant to have their pump HP reduced.
Frequent shift in location of pumpsets at the river bed.
Low voltage issues, voltage and water level variations at several installations.
Difficult terrain at few locations.
Very old and rusted GI pipes used and lower diameter pipe used in Bore wells.
At several locations, it is imperative to replace at free of cost all pump set accessories
with new ones in order to achieve desired results of replacement with efficient pump.
25% pump sets are less than 5 years old and farmer’s report good performance with
low maintenance, hence reluctant to install new EEPS pumps.
Few farmer’s are reluctant to give back the old pumps as replacement.
Significant rise in project cost as compared to initial estimates.
Scaling up by EESL
Sl. No. Name of Electricity Distribution
Company
Nos. of pump sets
Estimated
Investment
1
Hubli Electricity Supply Company Limited
(HESCOM), Hubli, Karnataka
11013
(Rs. Crore)
55
2
Chamundeshwari Electricity Supply
Company (CESC), Mysore, Karnataka
1337
5
3
Bangalore Electricity Supply Company
(BESCOM), Bangalore, Karnataka
100,000
500
4
APEDCL
3,000
15
5
APEDCL, APSPDCL
30,000
225
6
MSEDCL
500000
Institutional Barriers
National Level
•
Limited policy dialogues at national and state level on power and water sector reforms to
develop an integrated energy and water “demand side management” (DSM) framework
for agricultural sector.
•
Limited synergy between departments and ministries related to agriculture, irrigation,
water and power.
•
Unsuitable energy pricing policy and no water pricing policy for agricultural sector
•
Lack of fiscal incentives for DISCOMs to initiate DSM investments
•
Weak institutional set-up for encouragement to R&D institutes for developing super
efficient technologies
•
Limited to no tax structure promoting manufacturing and sales of energy efficient
appliances
Institutional Barriers
State Level
• Limited involvement of state designated agencies (SDA) in promoting Ag-DSM program
• Often the state electricity tariff policies for agricultural sectors do not reflect the marginal
cost of electricity
• No notification by SERCs/ DISCOMs mandating purchase of energy efficient pump-sets for
availing new electricity connection under agricultural tariff
• No policy to encourage energy efficient purchase behavior.
End users/ farmers
• Limited to no knowledge of energy efficient pump-sets/ technologies
• Fear of loss of control, productivity and comfort
• Perceived risk in adopting new technology
• Limited financial resources
• High first cost and limited returns due to subsidized electricity tariff
• Unavailability of local technology/ service provider for energy efficient products
• No financial commitment by end users under ESCO mode means limited ownership
• Ignorance and disbelieve regarding DSM.
Institutional Barriers
ESCOs/ Private organizations
•
•
•
•
•
Apprehension about recovery of investment
Limited usage of ESCROW account in India
Availability of capital to invest in Ag-DSM projects
Delayed recovery of capital
Low Voltage Distribution System (LVDS) results in frequent burnout of the EEPS thereby increasing the
O&M cost for the ESCO/DISCOMs investing in the project
• Diminishing water table due to inefficient usage of water increases the head required for pumping.
Higher head means bigger pumps reducing energy saving.
DISCOMs
• Inability to maintain power quality in agricultural feeders
• Limited resource available especially at local level to execute Ag-DSM projects.
• Lack of appropriate DSM culture and know - how
• Limited coordination with other departments like irrigation, agriculture etc
• Apprehension of a negative rate of return
Way ahead…
Goals to accelerate saving potential in Agriculture sector
• Establishment of a robust enforcement mechanism at the
state levels to ensure use of Star Rated pumps sets for
every agricultural connection.
• Reduction in intensity of energy use in existing agricultural
pump-sets through upgradation programs under Public
Private Partnerships projects.
Way ahead…
Key interventions to achieve goals
• State government to play a key role in implementation and enforcement of Ag-DSM
programmes. This includes establishment of specific cells within the DISCOMs for
ensuring enforcement of various DSM activities under agriculture sector.
• Differential taxation structure for energy efficient pump-sets in order to encourage
farmers for adopting them.
• Link Ag-DSM programme to Deen Dayal Upadhaya Gram Jyoti Yojana.
• Provision of resources for incentives for manufacturing of energy efficient pumpsets through National Clean Energy Fund.
• Infrastructure status and priority sector lending for Ag-DSM projects.
• EESL to enter into contracts with state electricity distribution companies for
changeover to energy-efficient pump-sets on a performance-contract model; also
to encourage other ESCOs to enter the market.
• Regulations and separate DSM funds to enable and require electricity distribution
companies to implement pump-sets demand-side management programmes.
Way ahead…
Key interventions to achieve goals
• Business model for large scale upgradation program like DELP
• Robust M & V, which will be acceptable to all stakeholders
• Use of star labeled EE pumpsets in all center and state schemes
• Capacity building of DISCOMs, LSPs and other stakeholders
• Metering of agriculture feeders/pumps & release of subsidy through DBT
• Dedicated & HVDS feeders
• Outreach campaign to sensitize consumers about opportunities for energy savings.
Comments/suggestions to address the
barriers