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The Indian Energy Efficiency Market

Opportunities and Strategies for Australian


Companies

INDIA a major global economy

US$ 1.7
Trillion
economy

11th largest
global
economy,
poised to be
the 3rd largest
by 2030

Australias 3rd
largest and
fastest
growing trade
partner

Home to a
number of the
worlds
leading
corporates

Rapidly
expanding
domestic
market of 1.2
billion people

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Clean Tech Market Snapshot


The Indian market for Low Carbon & Environmental Goods & Services over
the next decade is valued at US $310 billion (UKTI 2011)
Worlds fourth largest clean tech opportunity (US, China and Japan) with a
6% share of the global market (EY 2011)
The projected market potential for green building material and technologies
is estimated to be US $100 billion (Green Building Association 2012)
In 2012 Energy Efficiency is estimated to be a US$ 16 billion opportunity,
and the Bureau of Energy Efficiency forecasts expenditure of $148 billion
throughout the next decade.

The water and wastewater market was valued at $4 billion in 2011, and is
growing at a rate of 10-12% every year (TERI)
Over 160,000 MT of municipal solid waste is generated daily, driven by
rapid urbanisation, with 500m people projected to move from rural
communities to cities by 2020.
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Key Market Drivers


Energy security and water scarcity are national priorities
Water and waste management challenges due to rapid industrial
growth and urbanization
Abundance of untapped renewable energy resources such as solar,
wind, biomass and water
Escalating costs of conventional energy sources with depleting fossil
fuel reserves
Supportive government policies
Increased investments by global corporations to reduce climate
change risks and pursue new products/service opportunities

A$ 1 trillion investment in infrastructure - 2012 to 2017

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Sectors with Momentum


Energy Efficiency at plant and building level
Water and waste water management, particularly biological treatment
Smart grid technologies and distributed power generation
Environmental goods and services
Waste management
Green building products and services
Clean coal technologies

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Energy Efficiency - Attractive


Business Opportunities in India

We intend to cover

Increasing Investment in Energy Efficiency in India

Driving Forces for Increasing Energy Efficiency in India

Market Transformation towards Enhanced Energy Efficiency


Building Sector
Industries

Business Implications & Opportunities

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Increasing Investment in Energy Efficiency in India


Indian energy efficiency market evolved rapidly over the last 5 years due to government
initiatives and investment from large players (domestic and global). Few cases are as
below:

New entry - Indian EE business

In 2009, Schneider Electric, acquired


Bangalore-based Conzerv Systems, an
INR 700 million company providing energy
efficiency solutions in the Indian market.
No transaction details were disclosed. [1]

EE business volume in India

[3]

In December 2009, the global energy


services major Dalkia acquires Indian
premier energy services company, DSCL
ESCO for an undisclosed amount. [2]

Indian IT giant Wipro invested in energy


efficiency and clean tech market by starting
Wipro Eco-energy.

[1] http://www.business-standard.com/india/news/schneider-electric-acquires-conzerv-systems/63762/on
[2] http://www.aeee.in/node/44
[3] http://www.abb.com/cawp/seitp202/1e92ba88d982559585257a5900492539.aspx

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Century cement India has given ABB an


order worth around USD 18 million to
increase productivity and energy efficiency.

TERI and Dalkia Energy won contracts


from SIDBI for providing energy efficiency
advisory solutions for MSME sector in five
identified cluster. Maximum project value of
about USD 4.5 millions.

Driving Forces for Energy


Efficiency in India

Climate change the global


response

Page 9

Drivers of Growth of Enhanced Energy Efficiency in


India
Over the last 20 years, primary energy
consumption in India has increased
from 1.02 x 108 MTOE per year to 6.15
x 108 MTOE per year

Energy
Demand

Source: US Energy Information Administration

Competitive
Advantage

Sustainability
Driving Energy
Efficiency

Regulatory

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Climate
Change

Energy Efficiency Integral to Indias Climate Change


Responsibilities

Internal target
under NAMA and
other regulations
Objective Low
Carbon Growth
Achieve 20-25%
reduction of GHG
Intensity by 2020
(Voluntary)

Carbon tax

Energy Conservation
Act, 2001,
Amendment 2010

Building Energy Efficiency


Designated Consumers (DC) &
Industries
Energy Efficiency Audits & ESCO
Labeling of Appliances

Electricity Act, 2003

Demand Side Management (DSM)


Smart Grid
Open Access

NMEEE (National
Mission on
Enhanced Energy
Efficiency)

Energy Conservation
Building Code
(ECBC)

Energy
Efficiency

National Urban
Transport Policy
2006
National Mission on
Sustainable Habitat
(NMSH)

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Perform, Achieve and Trade (PAT)


Market Transformation on Energy
Efficiency (MTEE)
Financing for Energy Efficiency
Power Sector Technology Strategy
Low energy design concepts
Minimum energy efficiency standards for
commercial buildings
Encourages energy efficient buildings/
retrofit of buildings
Emphasizes the greater use of public
transport and non-motorized modes of
travel.
Sustainable urban infrastructure

Energy performance of buildings


Energy efficient construction

Few Financial Schemes Strengthening Energy


Efficiency Market in India
SIDBI (Small Industries
Development Bank of
India)

SIDBI and BEE are working as co-implementing agencies for preparing a World-Bank funded
project titled Financing energy efficiency at MSMEs
SIDBI Financial Scheme for energy saving projects in MSME sector under JICA (Japan
International Corporation Agency) Line of Credit
Scheme for energy savings projects- Nationalized banks

MoMSME (Ministry of
Small Scale Industries)

Credit linked capital Subsidy scheme (CLCSS)

IREDA (Indian Renewable


Energy Development
Agency) Grants

Incentives offered by state/ central governments


80% depreciation in the first year on the specified energy efficiency equipment and
concessional excise and customs duty on notified energy conservation equipment to promote
energy efficiency
Concessions/ Rebates and Special Provisions from IREDA

Petroleum Conservation
Research Association
(PCRA)

Energy Audit Subsidy


Scheme for setting up of Energy Audit Centre/ upgrading energy auditing facilities

Industrial Development
Bank of India
(IDBI)

Energy Audit Subsidy Scheme


Equipment Finance

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Market Transformation towards Energy


Efficiency

Climate change the global


response

Page 13

Energy Consumption in India Sector wise


Aggregate Investment Potential in Energy
Efficiency Sector in India amounts to
USD 9.8 Billion (Source: WRI Report, 2008)

Industry (46%) is currently the


largest energy consuming sector
Commercial building segment
consumes around 8% of total
energy consumption
Railway, 2%
Public Water
Works & Sewage
Pumping, 2%

Public Lighting,
1%

Agriculture, 18%

Miscellaneous,
2%
Industry, 46%

Energy
Saving
Opportunities
Potential Energy Savings
in Industrial Sector is
around 6.99%

Domestic, 21%

Commercial, 8%

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Potential Energy Savings


of up to 30-50% in
Indias commercial
sector

Source: BEE, 2009

Energy Intensive Industries in India (Designated


Consumers)
DCs contribute to 25% of the
nations GDP*

Aluminium
Iron &
Steel

DCs account for 45% of industrial


energy use in India*
Wide variance in process energy
efficiency among DCs indicating
large potential of energy savings.
(Source BEE study)

Major Drivers - Economic growth


and competing energy demand

Chlor-Alkali

Cement

Designated
Consumers (DC) 8
Energy Intensive
Industries

Power
(Thermal)

Thermal power will continue to be


Indias main source of electricity
for decades to come
Infrastructure development and
automotives drive cement, iron
and steel growth

*http://geda.gujarat.gov.in/pdf/Designated%20Consumers%20(DC).pdf

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Fertilizers

Textile

Paper &
Pulp

Energy Efficient Opportunities in DCs


National Targets of Energy Savings
Aluminium

Cement

Power
(Thermal)

Fertilizers

Opportunities for Energy Savings


Primary Aluminium - Alumina Refining,
Aluminium Smelting
Secondary Aluminium - Primary heating,
Electric Motors, Pumping Systems

Opportunities for Energy Savings


Grid & Power Management
Power from waste heat recovery
Use of alternate fuels

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

7.73

0.455

11.87

0.698

Opportunities for Energy Savings

Air and flue gas cycle


Steam, feed water and condensate cycle
Fuel and ash cycle
Electrical & Lighting system
ECW & ACW System
Compressed air and HVAC system

Opportunities for Energy Savings


Fuel Switch
Cogeneration & Renewable energy
Improved products and services

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

101.14

3.10

7.86

0.462

Source: BEE, India

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Energy Efficient Opportunities in DCs


National Targets of Energy Savings
Paper & Pulp

Textile

Chlor-Alkali

Iron & Steel

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Opportunities for Energy Savings


Chemical recovery and cogeneration units
Capacity utilization & technology
Waste heat recovery facilities

Opportunities for Energy Savings


Spinning
Weaving
Wet processing
Opportunities for Energy Savings
Switch from Mercury Cell to
Membrane Cell Technology
Improved Products and Services
Opportunities for Energy Savings
Smelting reduction
Top gas recycling blast furnace
Use of charcoal and waste plastic
Molten oxide analysis
Waste energy recovery
Coke dry quenching
Advanced wet quenching

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)
Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

Reported energy
consumption (MMTOE)
Apportioned expected
energy reduction
(MMTOE)

2.09

0.123

1.62

0.095

0.84

0.049

28

1.647

Source: BEE, India

Energy Efficient Opportunities in Commercial Building


Sector
Electrical energy consumption
46,685 GWh (2007-08)

Heating, Ventilation & Air Conditioning


(HVAC)

Source: General Review 2009, Central Electricity Authority

Lighting Systems & Control


Energy consumption distribution in
commercial buildings, BEE

Energy efficient building management


system (eBMS)

Others, 5%
Internal Loads,
15%
Lighting, 25%

Construction Materials, Building Facades,


Paints, Insulation

Heating
Ventilation & Air
Conditioning
(HVAC), 55%

Opportunities
Identified for
Energy Efficiency
in Buildings
Building Energy Audits
Energy Benchmarking
Building Design & Planning

For Building with electricity demand >500kW.


Total Energy Consumption: 9.92 Billion kWh
(2007-08)
Source: National Productivity Council (NPC)

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Electrical energy saving potential through


energy efficiency: 1.92 Billion kWh (2007-08)

Business Implications &


Opportunities

Climate change the global


response

Page 19

Business Implications of Energy Efficiency in Indian


Market
Among sustainability issues, energy efficiency has been driven to the top of the business agenda due to its
impact on business performance

New business
challenges

Energy efficiency has introduced many new business


implications

New business challenges addressing cap and trade


(PAT compliance) costs, calculating value at stake,
assessing strategic risks
New market opportunities transforming business
processes, changing buying patterns for procurement and
consumers focus on energy efficiency, creating new
markets and industries through innovation
New regulatory environment addressing recent and
anticipated regulations and policies, reassessing directors
responsibilities
New risks managing new risks: the threat of climate
change, was ranked as the number 4 business risk in the
Ernst & Young 2009 business risk report
New technology smart grid, cleantech, carbon capture
and storage, and others

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New market
opportunities
New
technology

Energy
efficiency

New risks

New regulatory
environment

Energy efficiency is an issue with


direct economic implications that will
transform business

Opportunities for Australian Companies in Indian Market


Opportunities in Indian energy efficiency market estimated at 148 Billion USD

Non-ferrous metals
(Aluminium)

Energy performance
contracting (EPC)

Mapping technology/ solutions offered


by Australian companies against
Indian energy efficiency market

Smart Grid

Energy efficiency and


energy management
solutions

The Indian energy efficiency market creates significant business and


investment opportunities for the Australian companies

* Estimated in NMEEE

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OpportunitiesEnergy Performance Contracting (EPC)


Avenues of energy efficiency

Market potential in India

Energy performance contracting is an financing


technique offered by ESCOs that uses cost savings
from reduced energy consumption to repay the cost
of installation of energy conservation measures
Another model practiced under EPC is Energy
Performance Guarantee. Under this scheme, the
ESCOs guarantee the energy savings that may be
achieved by implementing energy efficiency
measures
Both models are marketed in India with second
model mostly practiced by OEMs

As policy and demand converge, considerable growth potential for energy


efficiency and the ESCO market
The industrial sector , which includes small, medium and large industrial
enterprises offers a good opportunity to save 49 Billion kWh of energy
per year, with an investment potential of 3 Billion USD.*
Increasing price of fuel, inclusion of 477 energy intensive large scale
industries across sectors within first PAT cycle (2012- 2015), global
competition created by open market policy, large scale programs
introduced by Global Environmental Facility (GEF) for promoting energy
efficiency in MSMEs would drive increased implementation of energy
efficiency in industrial segment

Major players in India

Opportunities

Siemens
MITCON Consultancy Services Ltd
Thermax India Ltd
Johnson Controls (India) Pvt. Ltd.
Honeywell Automation India Ltd
Transparent Energy Systems Pvt. Ltd.
Feedback Infrastructure Ltd.

The policy environment of the country is aligning itself towards a host of


energy efficiency initiatives
Installing cogeneration and captive power plants could spur demand in the
industry
Competition in the ESCO industry remains low because of the high
growth trajectory coupled with the small number of firms
Knowledge and experience in efficiency technologies and their
implementation pose the biggest barriers because of the technical risks
that ESCOs assume
Swiss challenge may be explored by new entrant in this segment
* Powering Up, The Investment Potential of Energy Service

Page 22

Companies in India, WRI, 2008

OpportunitiesEnergy Efficiency and Energy Management Solutions


Avenues of energy efficiency

Market potential in India

Defining energy reduction goals


Developing energy strategy
Base-lining, benchmarking, formulation of action
plan
Setting appropriate reduction targets
Energy audits
Energy data analysis
Identification, evaluation and development of EE
opportunities, including business case, design,
manufacture, implementation, commissioning and
monitoring

The end use energy efficiency potential in industry and building sector alone
is of the order of INR 100 Billion and INR 20 Billion per year respectively*
Projected market potential for energy efficiency in India reported by different
organizations like BEE, USAID, WRI, GIZ indicate encouraging growth trend
for energy efficiency
Energy audits in several sectors indicates energy saving potential of 23%46% in end uses such as lighting, cooling, ventilation, refrigeration etc

Major players in India

Opportunities

Honeywell
Emerson Climate Technologies
KLG Systel
HCL
TCS

Accelerating economic development has prompted Indias energy demand to


double by 2030 due to which there is a critical need for energy efficiency
The opportunities available in the mid cap segment may be initially explored
by Australian firms because it is fast growing and has limited in-house core
competence in energy efficiency
Attractive opportunity for Australian companies to participate in statesupported initiatives in India (in programs funded by the Indian Government
or international funding agencies like UNDP, GEFA, DIFID, JICA, GIZ etc)

* Electricity Demand Side Management (DSM) in India, USAID, India

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OpportunitiesSmart Grid
Avenues of energy efficiency

Market potential in India

Networking platforms enabling conversion of


electronic devices into smart devices
Back-end smart-grid management software
Home area networking (HAN) devices and
systems
Networked solutions for distributed generation and
street lighting

The market in India today is at a nascent stage. However, it is estimated that


the country will install 130 Million smart meters by 2021
The current smart- grid market in India is estimated to be 1.1 Billion USD
with a 16.3% CAGR forecast between 2011 and 2015*

Major players in India

Market entry strategy

HCL Infosystems
Echeleon Corporation
CISCO
General Electric
Telvent
Siemens
IBM
Capgemini

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Implementation of smart grids projects in India is currently at pilot phase to


evaluate best possible frameworks and business models
Though Indian utility companies understand the benefit of smart grid, the
poor financial strength of the DISCOMs and other socio economical
conditions posts challenges in the implementation of smart grid in India
This market segment may be driven in near future through Government
initiatives; hence Interested partners for Smart Grid may join India Smart
Grid Forum to remain updated about future plans and policy initiatives

*Per market insights cited by CMR India, Energy & Utilities Practice, January 2012 and Global Smart Grid Federation,
October 2011.

Favoring Growth of Australian Companies in Indian


Energy Efficiency Market
Population growth and
economic development in
India will increase the
demand of new technologies
in India

70% of buildings are yet to be


developed till 2030 displaying
a crucial need of energy
efficient technologies and
products and energy service
contracts

Global commitments of energy


reduction targets is increasing
the policy intervention in India

Energy efficiency- A
key selling point

Utilities are playing a key role


in deployment of energy
efficiency programmes
favoring possibility of tie-ups
with the utilities

In India, DCs account for 25%


of the GDP and 45% of the
commercial energy. With
increasing government
intervention, technology
change would happen at a
faster rate driving technology
up gradation

Analysis of Australian company energy efficiency offerings suggests that there is a huge growth
opportunity in the Indian market by collaborating with local players/ government in India

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Thank You

Climate change the global


response

Page 26

India: Suggested Market Entry Approaches


Tapping large corporates for niche product offerings in Energy
Efficiency, Environmental management solutions, Waste Water
solutions

Local manufacturing in a JV - the most appealing way to seize


market opportunities
Technology Transfer (Licensing) or project specific technology
provider
Exporting through local distributor- suitable for specific niche
products and services not available locally or available in
insufficient supply
Targeting Multilateral agencies' (UNDP, IFC, World Bank, ADB)
projects
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Tips on Doing Business in India


28 States with different business practices, regulations, opportunities,
languages and culture
India is a highly competitive market
a priority for leading companies from across the world

Research and due diligence are critical


shop around and do your homework before entering into agreements

Know your strengths and focus on key opportunities


The size and scale of business potential can be overwhelming

Indian bureaucracy is legendary


Be prepared for longer time frames for decisions and success

Relationships are key


budget for regular travel, training and ongoing business development
does your potential partner have the right connections to succeed?

Leverage Austrades networks and expertise


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Live Commercial Opportunities from India


Water and waste water:
Doshion Ltd - seeking technology partnership for water distribution business
comprising of source intake facility, transmission networks, treatment, technology,
distribution, waste treatment, recycle, reuse and Zero Liquid Discharge (ZLD)
Energy efficiency:
Waaree Energies Pvt Ltd - seeking solar technologies such as solar thermal, water
heating, solar water purification and desalination units
Mamata Energy - seeking technology tie-up in solar concentrators, thermal power
generation and hot water systems
Environmental management / monitoring and control:
Uniphos Environtronic Pvt Ltd - seeking air quality monitoring systems and water
COD and BOD monitoring systems
Terracon Ecotech Pvt Ltd - seeking consultancy service in the area of ecological and
mining restoration
Waste management:
Shapoorji Pallonji - Seeking technology provider for JV in solid waste treatment for
converting municipal waste to diesel
Vocational training in Cleantech:
Tata Quality Management System - seeking courses in the area of climate change
capacity building for the group companies such as Tata Motors, Tata Steel, Tata
Chemicals etc.
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Successful Australian companies in India

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Austrades Market ActivitiesPotential Lauchpad


Oct 12

Energy Efficiency workshops in India to potential customers to showcase


Australia capability looking for Australian industry speakers

Oct 12 through to March 2013

Clean technology, energy efficiency and green building missions to India


organised by State Governments

Nov 12

Australian Innovation Forum

May 13

Indian Government mission to Oz Water, Australia


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Indian network

Jinendra Khara
Vijay Kumar

Kylie Bell
Trade and Investment Commissioner

Ramakrishna Dastrala

Malini Dutt

Australia Unlimited

Contact us for assistance:


Vijay Kumar
Austrade, New Delhi (India)
T: +91 11 4575 6226
E: vijay.kumar@austrade.gov.au

Sectoral
Malini Dutt
opportunities
Austrade, Mumbai (India)

T: +91 22 6116 7133


E: malini.dutt@austrade.gov.au
Kylie Bell
Austrade, Mumbai (India)
T: +91 22 6116 7117
E: kylie.bell@austrade.gov.au