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India Launches Energy Conservation Fund, Aims At Saving 25,000 MW

The Indian government has launched a new fund aimed at providing state governments with financial help to promote energy efficiency. The Energy Conservation Fund will be formed by contributions from the state governments which can later request for grants to promote energy conservation programs.


State governments will have to make a initial contribution of INR 2 Crore (more than $440,000) to the fund. Assuming that at least 25 of the 28 state governments make the contribution the fund could up to $11 million. Although the quantum of initial contribution is quite low, the contributions are expected to increase as the government brings in stricter energy efficiency regulations and state governments realize the advantages of energy conservation projects.

The Indian economy has been growing at a handsome rate of 7 to 9 percent in the recent few years. The government wants to push the GDP growth into double digits as it plans to counter the Chinese economic growth. India is heavily dependent on coal for energy generation and other energy-intensive industrial and manufacturing process. However, with poor quality of domestic coal and dwindling reserves India must look explore other options. Imported gas and nuclear fuel are the obvious options but securing significant and consistant supply of these is a serious strategic hurdle which India has so far failed to clear.

The government aims at generating 100,000 MW energy by 2017 in order to meet the ever rising energy demand. It also aims at saving 25,000 MW energy through various energy efficiency initiatives and stricter laws preventing power theft and reducing transmission and distribution losses which amount to about $6.5 billion losses for the power companies.

India has ambitious renewable energy targets like the National Solar Mission which aims at installing 20,000 MW of solar energy systems in the country in the next decade or so. The credit supply needed for such an enormous project runs into billions of dollars. Therefore it is important for concentrated research and development efforts so as to reduce the production costs of solar energy equipement thus making them more affordable and attractive to the industrial and domestic users. And while the government comes out out with financial incentives for the solar energy and other renewable energy sector, it must also concentrate on efficient use of energy.

Commendable efforts has been initiated in this regard by announcing the sector-wide trading of energy efficiency certificates which would work in a manner similar to the trading carbon credits. The government would identify more than 700 of the most energy intensive sectors and would mandate energy efficiency guidelines for them. Any industry falling short of its energy efficiency target would have purchase energy efficiency certificate from the industries which have achieved their assigned targets. The government intends to launch this program by next month and hopes to save 10,000 MW power every year.

India’s energy demand will increase at a tremendous rate in the future and with the problems of carbon emissions, poor quality of domestic resources and no easy access to foreign energy resources, the Indian government must take energy efficiency and conservation seriously and bring in stricter regulations in order to achieve the tough goals it has set.

via Hindu

Photo Credit: donjd2 at Flickr (Creative Commons)

The views presented in the above article are author’s personal views and do not represent those of TERI/TERI University where the author is currently pursuing a Master’s degree.

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Mridul currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.


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