As we all bid adieu to a year in which turbulence was the only stable (and ‘sustainable’) phenomenon, we foresee the following 7 key sustainability headlines holding center stage in the year ahead:
1) Water efficiency takes prominence:
With direct parallels to the Bureau of Energy Efficiency, a national Bureau of Water Efficiency will commence work in 2014. In parallel, regional authorities are also shifting their focus to enabling efficient consumption – a positive step for India. Some municipal authorities have planned pilots for grey/black water segregation and water recycling projects in 2014 to ease residential water woes. In other states, such as Maharashtra, mandatory industrial water efficiency, recycling and harvesting is being discussed and, common industrial effluent treatment and waste recovery business models may arise if legislation is affected.
Segments with potential to gain traction: industrial water auditing /efficiency SPs; electro-chlorination, ultraviolet, ozone technologies combined with solar.
2) Point solutions will proliferate as policy stalls:
Point solutions for introducing green energy and improving efficiency, such as those discussed here, will continue to gain traction through 2014. From our conversations, major industrial corporate groups such as the Tata Group are looking to increase renewable energy mix from 1-5% to up-to 10-15% in the medium term through captive generation. Most of the heavy lifting will occur in 2014 for MSME technology up-gradation programs and the National Innovation Fund projects for energy efficiency and product innovation, particularly in brass, steel and food factory units.
Top growth areas: rooftop solar, waste heat recovery, CHP, biomass, energy efficiency solutions
3) Nascent conversations on energy storage investment options will emerge:
Grid-scale storage is critical enabler in making the widespread use of solar viable. USAID predicts that energy storage infrastructure is likely to come online in 2015-16 in India. Meanwhile, mega solar parks have helped Indian solar industry to emerge closer on parity with fossil fuels, with bids of Rs.6.45/kW received in Rajasthan and a 20-year tariff of Rs. 5.45/kW set under Phase II of the National Solar Mission. Overall, solar is cheap, energy storage technology is on the horizon, and the scene is set to develop funding frameworks in place to catalyze the uptake of storage technologies as they become ready-for-market.
Top sectors affected: cold chains, automobile sector, smart grids
4) Moves afoot to enforce RPO and build confidence in REC markets:
The RPO-REC mechanism is, and will continue to be, the biggest driver of the uptake in renewable energy by states and downstream captive users. However, a lack of RPO enforcement caused both solar and non-solar RECs to crash to floor price in June 2013 and prices remain as such. Instead of forcing defaulters to buy RECs, some SERCs are allowing DISCOMs and obligated entities to ‘carry forward’ RE deficits to the next financial year. To reinstate confidence in REC markets, the Centre has called for all delayed RPO requirements to be fulfilled by March 2014. MNRE has also submitted a proposal to the Ministry of Power that a portion of government aid to state electricity boards should be conditional on achieving RPOs.
Top policy changes anticipated: aspects of aid conditional on RPO compliance, increased state level capacity building , to track RPO compliance, NSM Phase II support to states enhanced
5) Fleets will jump-start the electric vehicles market:
After being withdrawn in March 2012, and in response to a sluggish automobile market in the last year, GOI has announced that an electric vehicle subsidy will kick in April 2014. However, unlike 2012, where the focus was on consumer EVs and electric two-wheelers, the market has shifted its attention to four-wheel “people carriers” and transport fleets. While electric cars are still too pricey for individuals, and shifting from fuel to electricity makes no sense if most of the electricity is sourced from non-renewable sources, the EV subsidy may stimulate the emergence of electric fleet vehicles with small, predictable routes (a circuit of 5-6 kilometre). Unlike consumer EVs, fleet vehicles are not contingent on national coordination of charging infrastructure and could use captive renewable energy. This approach could tip the case for electric vehicles and the likes of Tata and Maruti, are contemplating to join Mahindra and Mahindra in this market.
6) Preparation for 2nd cycle ushers PAT revamp:
The roll-out of the second cycle for PAT is due in early 2015 – where the scope of PAT will increase to potentially include aviation, railways, power transmission and distribution companies Encouraging uptake of PAT and securing a sustainable supply of ESCerts will be crucial in 2014. Stakeholders and regulators are also discussing how to ensure players, who are investing in long-term energy efficiency initiatives, are not penalized in any given year of PAT. Further, we expect in-scope industries to focus heavily on measurement & verification of efficiency benefits, potentially catalyzed through specialist industry bodies like AEEE.
Critical activities anticipated in 2014: pilots of energy-efficient technologies, new sectors added, clear sector boundaries announced, enforcement mechanisms to foster ESCerts trading.
7) Sustainable agri-infrastructure to unlock food exports:
Overall, the food processing industry is growing at AAGR 8.6% – faster than agriculture (4%) or manufacturing (8%). However, economies of scale through processing parks or clusters are needed to attract capital and use technologies that enable Indian food exporters to meet stringent environment and safety standards in export markets, to develop new products from low-value or low-grade fresh foods, and to reduce product wastage –In June 2013, the National Mission on Food Processing (NMFP) was approved. Even more critically, GOI quickly called for 12 more Mega Food Parks in addition to 30 ongoing projects; 75 new Cold Chain Projects in addition to 74 already approved in 2013.
This cluster/park based approach will entail captive energy generation (most likely renewable or waste to energy based) as an absolute pre-requisite to make cold storage infrastructure & processing in India affordable and scalable without driving up the cost of food.
To expect: experimentation in cold chain financing models, increased traction in energy efficiency & captive renewable energy solutions as food parks come on-board.
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