Saurabh Kumar's eyes light up the moment one starts talking to him about his favourite passion, energy efficiency. An Indian Revenue Service (IRS) officer of the 1992 batch, Kumar took charge as Managing Director of the Energy Efficiency Services Ltd (EESL) in May 2013. In an exclusive interaction with INFRASTRUCTURE TODAY's Pratap Padode and Manish Pant, Kumar outlines the broad strategy that they, as providers of diversified energy-efficiency services, are implementing to radically alter the way energy is consumed in India and globally.
How would you describe EESL?
I would say that EESL is an innovative finance company. We add value by creating an innovative business model and doing things right. Implementation has been our forte; if we have a deadline, we meet it.
What is the strategy that has made EESL a household name in the country?
It is basically the business model that has incentives for all stakeholders. Let's start with the very simple example of the Unnat Jyoti by Affordable LEDs and Appliances for All (UJALA) scheme. At the heart of the model is the concept called 'pay-as-you-save.' If you are replacing a CFL in Delhi or Mumbai, you save Rs 13 to 15 per month, and if you are replacing an incandescent bulb, then it is three to four times that number. When a consumer buys the bulb at Rs 10, a line atom will get inserted in his electricity bill, and every month the distribution company (discom) will collect and pay us Rs 10.
Nothing changes for the consumer as he has not paid anything upfront. This way, discoms help consumers manage their load, albeit in a small way, especially between 6 and 10 PM when the demand peaks, and it has changed the relationship that they have with consumers. Finally, and importantly, discoms do not have to pay for anything. Which means, we procure, distribute and give them all the data. This has incentives for everyone. We started our first project in Pondicherry in February 2014.
The cost of the LED bulb was Rs 310 at that time. We procured six lakh bulbs.
Honestly speaking, it was a calculated risk that we took because it was important to demonstrate that energy efficiency works. Again, we chose the bulb because it is a visible product, as the problem with energy efficiency is that it is not visible. The moment this project happened, it had a political capital around it because you were giving out something to people at no cost to the exchequer.
Andhra Pradesh sent a team to Pondicherry and that six lakh order became a 60 lakh order, and the price of a bulb dropped from Rs 310 to Rs 149. Thereafter, a few other states started coming in and we procured 1.6 crore bulbs. All this happened in about seven months' time. The price of one bulb dropped further to Rs 100 and our lock-in period became three years. Presently, the bulb is being sold at Rs 70 everywhere in the country. In the year ending March 2017, about 13 crore bulbs were distributed by EESL, while private sector distributed 27 crore bulbs. Today, LED contributes to about 45 to 50 per cent of the lighting market. Such fast-paced growth has never happened and we have the best technical specifications and perhaps the lowest price in the world. Now we have started a similar exercise in LED tube lights and fans. In October 2014, in the aftermath of Cyclone Hudhud, we were asked by the Minister of Municipal Administration and Urban Development of Andhra Pradesh if we could replace all street lights with LED in four weeks. Before that, the maximum number of lights that we installed in an urban local body was 250. We managed it in six weeks, and that gave confidence to the Andhra Pradesh Government to ask us to replace five lakh lights in the entire state. We have completed work in Rajasthan, Andhra Pradesh, Himachal Pradesh, Tripura and Gujarat to make them 100 per cent LED. They are saving more than 55 to 60 per cent of their energy costs. Today, we are doing 20,000 street light installations every day.
Did the government play any role in the expeditious decision-making at EESL?
There is no government involved, there is a board. I have not taken a single paisa from the government.
I have equity from the four promoters, all of which are government companies. In fact, I dislike subsidy because, simply put, it curtails many sectors from scaling up. Solar rooftops and solar pumps are prime examples. The moment you blend in subsidy, I will have to wait for the government to buy the product for Rs 90 before I give it to you for Rs 10. But energy efficiency pays for itself. If there are requirements, they are about developing capacity, technical assistance and, maybe, the business model.
So, your mandate was to venture into areas of energy efficiency across the board?
Anything that saves energy has an inherent business model. For example, in your office, you may not have the time or the expertise to do an energy audit or the patience to procure items. So, we come in and say that you let us do the audit, make the presentation on energy savings and make the investment, while you repay me over a period of five years. That is our strategy for the buildings programme. We are doing 3,000 buildings in Maharashtra itself. It has really become a movement encompassing various sectors. Street lighting has become so much better today, as the central and state governments are able to get information on the exact number of lights, electricity consumed and billing. Our failure rate is 0.48 per cent.
Also, with norms such as building codes, working on buildings may involve retrofitting like, for example, fixing leakages in windows. How do you handle such aspects?
We try and keep things simple. There are two parts to making a building energy-efficient. One is carrying out civil works like placing insulation between walls. It is very difficult to standardise all these. You do not know of the kind of investment that is required and the impact of changes made. But we have limited ourselves to equipment because windows are non-standard. Again, disputes may arise. You might say that this window is not good and I would say that I spent Rs 1 lakh on it and need to recover my investment. Therefore, it is important to make a start. In any case, new buildings have an energy conservation code.
A few years ago, former Secretary of Energy for the US, Steven Chu pointed out that green buildings seldom perform near to their certified levels. One-time certification never really helps. That is why our model keeps us on toes and we have a dashboard for buildings based on the actual information delivered by smart metres. We cover that gap by putting ourselves in the public domain; if we do not perform, they do not pay us! We have just started the buildings programme and it will scale up as we move ahead.
- Manish Pant