UJALA: India’s LEaDer of Energy Efficiency Programs

Article is by Suresh Krishna and Vikas Argod

There are two interdependent, and confusing issues with Indian power generation: Power plants are, on an average, running between 60% to 70% capacity. Power outages are widespread across the country. Former point shows that we are in a power surplus state while latter point says otherwise. Coal availability was an issue for lower capacity utilization, but it is no longer the case for the most part. Rather the lack of demand is the main reason. What does then explain power outages?

There are many reasons behind this conundrum. Peak deficit (higher than 100% capacity of power plants), the unwillingness of state governments (or DISCOMs) to buy more power, dilapidated distribution infrastructure (causes power loss, and equipment failures) are top three reasons. For a new Power Minister of the Union government, solving last two points is complex as both of them involves persuading state governments on their budget priorities. Higher peak usage is in the evenings when more people are home, and also streetlights are running. Hence this issue had the potential to be addressed as a demand side problem. Reducing peak load by increasing energy-efficiency by using LED lights was the main idea. To be fair, there was a program by previous government to distribute energy-efficient CFLs (as a part of National Action on Climate Change). However, the scale and speed of implementation of LED program have surpassed any similar programs of the past.

The best part of LED is that it decreases consumer’s electricity bill along with the reduction in the need for capital intensive generation capacity increase projects. A simple calculation shows less than four months payback for an LED bulb.

A simple calculation to show short payback period

In January 2015 PM’s office in the South Block saw the first official launch of this program by replacing existing bulbs with LED bulbs. Domestic Efficient Lighting Program (DELP) was born with a single goal of replacing incandescent (“the normal bulb”), and CFLs (Compact Fluorescent Lamps) with LED bulbs. When this flagship scheme was launched, a 14 CFL was at ~₹100, the “normal” bulb was ~₹10, and LED bulb of similar capacity was little over ₹300. Refer the payback calculation table, with ₹300 per bulb, it would have been almost impossible to convince households to replace their bulbs. Thankfully, Ministry of Power knew better to learn from past projects. Bachat Lamp Yojana was a scheme (2009 to 2013) to replace incandescent with CFLs. This project was implemented by Energy Efficiency Services Limited (EESL), a joint venture of four power companies — NTPC, REC, PFC, and Power Grid, and is promoted by Ministry of Power. BLY missed the target mainly due to the complexity of distribution and funding (combination of budgetary allocation, and sale of Certified Emission Reduction Units under the Clean Development Mechanism of Kyoto Protocol). On a positive note, BLY proved the effectiveness of volume procurement by EESL to reduce input cost.

Procurement Cost Decrease in 2.5+ years

Learning from BLY’s outcomes, DELP was designed as a no-subsidy program rather entirely run by EESL. Funding would come from state DISCOMs based on actual savings over five years. In May 2015, the program was relaunched (or shall we say, re-acronymed :-)) as Unnat Jyoti Affordable Lighting for All (UJALA).

The goal was to replace up to 77 crore bulbs throughout the country with LED to reduce installed load by 20,000 MW. This replacement would results in an annual savings of over ten crore kWh or around ₹50thousand crores in electricity bills. The implementation quickly increased the scale with a massive procurement of LED bulbs. Distribution was planned via retail networks (including e-commerce sites), special kiosks (location of which is available in Ujala website), and institutional networks. While the retail network has flourished, institutional network has left much to be desired.

Timeline of Recent Energy Efficiency Programs from Government of India

Currently, an LED bulb which is available at ₹65 to ₹70 per piece through the scheme; if purchased from the market, it costs ₹120 to ₹130, almost 100% more! EESL’s procurement costs have dropped over 80% since the program launched. When launched, LED bulb procurement cost was ₹310 whereas in Aug 2017 it is at ₹54. With the ministry strongly behind EESL to increase the distribution, the costs will only decrease further. Such massive scale procurement is growing the market’s manufacturing capacity of LED bulbs ensuring lower prices for many more years to come Government of India is planning to distribute ~77 crores by April 2019, whereas count today is 25.5 crore. EESL has also started replacement of old lighting in street lights with LED, which again has tremendous potential in energy saving.

The dynamic dashboard (http://www.ujala.gov.in) was created to track the distribution, and this has led the way to many such dashboards in Ministry of Power’s activities. This dashboard also provides savings accrued so far and effective CO2 emission reduction. Had Clean Development Mechanism was active today, this would have been a glory.

My experience with the program has been mixed. In Karnataka, bulbs are available easily (up to 10 bulbs per connection) at designated outlets (address of these outlets all over India is readily available at dashboard). Even the replacement was provided for a failed bulb immediately without any questioning by showing the purchase bill. Similar was the experience in Maharashtra as well. However, in Kerala, distribution of these bulbs was through institutions Kerala State Electricity Board (KSEB) & Railways. KSEB provided only two bulbs per connection and those who did not get in the first lot issued could never get so far. There was no significant difference in quality as reputed leading manufacturers manufacture all these bulbs.

Buoyed by the success of UJALA scheme, the ministry has now launched similar system for the distribution of energy-efficient fans and LED tube lights. Also, various distribution systems have been tried by a different organization to promote energy efficiency. The latest development in this area is, Ministry of Power & Ministry of Petroleum has come together to set up distribution kiosk at over 55,000 Petrol pumps owned by HPCL, BPCL, and IOCL in the next six months. This is a good move and will further accelerate the distribution. One of the recommendation is to use Post Office networks to distribute the LED bulbs.

UJALA has shown that it is possible to achieve energy efficiency without announcing subsidies by the government but by paying from the potential savings. Power generation companies save by cost avoidance of new capacity, and DISCOMs save due to lower transmission and distribution losses. Also, civic bodies save by lower electricity bills for lighting the streets, and of course, consumers save in their electricity bills every month (hence LED bulbs are becoming default choices in the market). All these results in a massive reduction of CO2 emissions too.

Often, programs termed ‘win-win’ are riddled with hidden ‘losses’. But UJALA is one such flagship program which has wins from all the directions. The implementation with transparency, successful institutional partnerships, and exploiting economy of scale gives us much-needed hope.