For India, an investment of $10 billion in energy efficiency improvements could result in gigantic energy savings, a new World Resource Institute (WRI) report states. According to Powering Up: The Investment Potential of Energy Service Companies in India, the energy service company sector (ESCO) could help the country save from than 183.5 billion kilowatt hours, while turning a profit. According to WRI:
Chandan Singh, one of the authors of the WRI report, added, “Our cross-country comparison and market analysis show that the investment potential of the ESCO industry in India going forward is tremendous, especially for debt investors.”
The majority of ESCO efficiency projects have payback periods of less than two years, and ESCOs save clients an average of 20 to 25 percent of baseline energy costs.
For example, the large and energy-intensive Lilavati Hospital in Mumbai hired Sudnya Industrial Services, an ESCO, to undertake an analysis. The results showed that the air-conditioning system comprised 60 percent of the hospital’s energy usage and that an upgrade was necessary. The entire investment of the hospital to do this upgrade was US$12,000, the annual savings are US$17,000, and the payback time was nine months.
For the report, the researchers at WRI surveyed more than 90 percent of the ESCOs in India, and interviewed investors, government officials and ESCO clients. WRI is currently taking their findings to banks throughout India to create financial products that will help build investments in the ESCO’s energy related projects.
Image credit: Lawrence Berkeley National Laboratory
This finding is a fantastic start -- but saving money due to these efficiency improvements wins only half the battle. To have any meaningful impact in the fight against climate change, the savings need to be invested in a bright green future (say, a rooftop garden, water harvesting, and 'green' pharmaceuticals for the hospital in question) and NOT in purchases (say, a second air-conditioner) that end up increasing the net amount of energy used and emissions produced.