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Green Business Ideas – Applying Solar OPEX model on Green Buildings will make Grid parity easy.


The Economy is on a slowdown due to negative growth in all sectors in India. Some of it can be attributed to the Global mayhem. To be honest, it could be seen as  a good news. Especially for the Environment and advocates for Sustainable living. World over, humans follow one simple rule. When the going is good, why bother to stop and listen to saner voices ? However, post the Stern Review & SREX report, thing seem to be going towards a better direction. The road to Rio+20 may turn out to be a happy one, should this downtrend in economy continue till the Rio summit, as more and more Economists would advocate to overhaul the present Crony Capitalist model and turn it into Eco-Capitalism and the benefits of Green Business would come to fore. Although the RET (renewable energy technology) industry would wish me luck, most trade guru’s would laugh at my opinion. It would be challenging to prevent a roll back on gains made till date, at Rio+20. As because this is precisely the argument which would come forth -‘The World economy can not afford to go Green’, would be their argument laughing at any new idea brought forth. But they were also laughing at various other predictions of world-class economists and other saner voices before the Lehman Brother episode. It is the most foolish presumption and many, far more intelligent than me, would also agree.

The World Economy needs a review. A fresh approach, when unprecedented Climate change threatens all; institutions like CAN-International, Green Peace, WRI  and all others must grow and spread their influence of good-sense across Nations.  In the UNFCCC‘s Durban summit their stellar performance was evident in getting something out of nothing at all.

America has come up with a new way of conducting Business – ” Benefit Corporation“; I loved the word and the meaning therein – A company for profit of self through Sustainable practices benefiting the environment and  thus the community as a result. And Europe; when unprecedented economic hardships threaten the fabric of society they have come of with wonderful thoughts like  OPEX -Solar. With German and French companies leading the way. Their presence in India will be felt soon.

In my avatar as a Energy Efficient Building consultant, popularly known as Green Building consultant, (and fashioning my firm as a “benefit corporation” henceforth) crossing that last hurdle of having Renewable Energy or Green Power installed, which is not Solar Thermal but Solar PV always proves to be a challenge. While exploring potential in other RE formats, other than wind, has not truly taken off yet.  This led me towards a Green Business Idea. Solar PV in OPEX RE format in all  Certified Green Buildings projects .

India practices two certification programs. One is GRIHA, born out of the NAPCC’s  Mission on Sustainable Habitat and guided by the international think tank TERI. The Eight stated missions of NAPCC is the best hope of India standing tall in the Climate change negotiations at UNFCCC. GRIHA takes into account the Union governments commitment to sustainable habitat across all sections of society both Urban and Rural.

The other is by the business people for the people. CII’s  indigenous version of USGBC’s LEED. Guided by IGBC from its headquarters in Hyderabad, India’s first LEED Platinum Certified building, various certification programs have been dished out.

Both rating system have many common goals but with divergent approach. Let us first identify the common ground each rating possesses with regards to RET   ( renewable energy technology ).

Under Green Rating for Integrated Habitat Assessment one requires –

Commitment: Meet energy requirements for a minimum of 10% of the internal lighting load (for general lighting) or its equivalent from renewable energy sources (solar, wind, biomass, fuel cells, etc). Use renewable energy sources in buildings to reduce the use of conventional/fossil-fuel based energy resources.

Commitment: Ensure that a minimum 50% of the annual energy requirement for heating water (for applications such as hot water for all needs, like for canteen, washing, and bath rooms/toilets, except for space heating) is supplied from renewable energy source.

Under Indian Green Building Council we have many subdivisions, but energy from RET is more or less common, let’s briefly look at the various certification programs and what they say on RET under LEED.

LEED India NC Rating :

7.5%  RE onsite Assess the project for renewable energy potential including solar, wind, geothermal, biomass, hydro, and bio-gas strategies. When applying these strategies, take advantage of net metering with the local utility.

Green Power Demonstrate that the company has installed green power equivalent to 50% of the total energy requirement of the building, anywhere in the country. This investment should come because of the rated building and should be 50 % of the building consumption.

LEED India CS Rating:

1 -35% RE onsite Engage in at least a 2-year renewable energy contract to provide at least 35% of the core & shell building’s electricity from renewable sources, as defined by the Center for Resource Solutions’ Green-e Energy product certification requirements. Supply a net fraction of the building’s total energy use (as expressed as a fraction of annual energy cost) through the use of on-site renewable energy systems. Use on-site renewable energy systems to offset at least 1% of the building energy costs. Substantiate the project’s compliance on this aspect by expressing the cost of energy produced through renewable sources as a percentage of the building’s total energy cost, annually.

Green Power Demonstrate that the company has installed green power equivalent to 50%of the total energy requirement of the building, anywhere in the country. This investment should come because of the rated building and should be 50 % of the building consumption.Estimate the energy needs of the building on annual basis. Install green power plants in the country, which meets the 100% of the total energy requirement of the building. Green power is derived from solar, wind, geothermal, biomass, or low-impact hydro sources.

Green Homes Rating:

On site RE Install renewable energy systems for at least 5% of the total connected load of the building.

Green Township Rating:

On Site RE Install renewable energy systems to generate power through solar, wind, bio-mass, bio-gas, biodiesel or any other forms of renewable energy so that their installed capacity is at least 20% of the annual energy consumption in areas under the developer’s scope.

Green Power Demonstrate the project has invested in off-site green power for at least 50 % of the total annual consumption in areas under developer’s scope. Estimate the energy needs of the project on annual basis. Install off-site green power plants which meet at least 25 % of the total energy requirement of the project. Green power can be derived from solar, wind, geothermal, biomass, or low impact hydro sources.

Green SEZ Rating :

On Site RE Install renewable energy systems to generate power through solar, wind, bio-mass/ bio-gas, or any other forms of renewable energy for at least 5% of the annual consumption (in  developer’s/ co-developer’s scope).

 Green Power Demonstrate the project has invested in off-site green power for at least 25% of the annual energy consumption in developer’s scope for at least 2 years. Estimate the energy needs of the building on annual basis. Install green power plants offsite which meet the 25 % of the total energy requirement of the building. Green power can be derived from solar, wind, geothermal, biomass, small hydro power plants, etc.,

Green Co Rating :

 On Site RE both Electrical & Thermal To develop concrete action plan for increasing the share of renewable energy generation / utilization of the company. Install on-site renewable energy systems to generate electrical energy through solar, wind, biomass, bio-gas, bio-diesel, or any other forms of renewable energy and / or generation of thermal energy (expressed as an equivalent of electrical energy) to cater to the total energy requirement of the company. Availability of renewable energy resources is to be assessed and feasibility studies conducted before deciding on on-site installations. Green power can be sourced from solar, wind, bio-mass, bio-gas, bio-diesel or small hydro sources or any other accepted sources of renewable energy.

As one can see, the potential of bringing in RET was enshrined, it was only the crazy economics we all follow that makes RE unaffordable. Frankly I could never understand this business of applying RoI selectively. I have argued this in my earlier post in detail, so I will concentrate more on the Green Business Idea here.

English: PS20 and PS10 in Andalusia, Spain

In OPEX -SPV or operational expense on solar photo voltaic; the RESCO (renewable energy service company) is contemplating  to sell the power generated, directly to the client instead of routing it though the established Energy distribution companies as was mooted in the NVVM Scheme . Although the generation through SPV is still costly, the RESCO are looking at covering part of their expense via the REC Schemeand raise money through standard market driven investments. Hoping to breakeven through economy of scale. A bold move which needs to be lauded, yet treated with caution.

Lets now examine the advantages and pitfalls the model has.

OPEX Solar would create the economy of scale which any venture requires. This  I recommend, should happen by attempting to pick up the lowest hanging fruit. That is by becoming the Utility provider to the Green Buildings which are already registered in India. As shown above almost all the certification types require RE or Green Power. As the commitment is already made to build green and with the criteria already in place, the RESCO’s  effort remains only to do the math and give a viable PPA model.

As the rating covers almost all sectors the foot-print is huge. However, in each of the ratings there would be possibilities and problems unique to it.

Let us start with Green Homes –

Residences are the lowest hanging fruit. Already a firm  “Mera Gao Power” providing roof-top model at a very economical rate to rural India which the large power utilities find unfeasible. {Large Hydro dams and Thermal Power  plants are set up displacing 100’s of villages; that they find the very same villages resettled ( if at all ) beside it, to be too remote to be provided power with, is perhaps a unique Indian policy many of us with low intelligence find hard to understand.} However what has been the curse now can be a boon to the villages and RESCO’s especially the ones which can provide power in OPEX model. Simply because the Carbon Credit it would generate over and above the REC would not only make this system of business viable, it will create a resurgent India. Perhaps this can be done in other countries too.

Now what if this is brought into the residential blocks within town & cities?Many face power-outages during summer. It would work perfectly against the diesel abatement policy India has in place.  But if roof-top Solar is provided in OPEX model, the problem could be administrative. How would the RESCO collect the tariff, should a housing society not pay its utility bill on time, or a member fails to pay his/her utility bill ? Would the RESCO have the authority and immunity from harm / legal persecution the Municipal authorities have, to initiate disciplinary action? The same problem could be from commercial centres too.

Further, large housing societies need high amount of power, however the present solar PV modules have low plant efficiency thus require large amount of space and are heavy too. Therefore the required amount of power may not get generated via-roof top and off-site green power may be needed.

In this the problem is open access to the grid, which the state owned power utility companies find difficult both in business model and technically to provide. In some states like Gujrat it has been allowed, others are to follow soon.

The problem of electrical transmission over long distance is the “drop” it faces, ie., some power is lost in transit, due to simple laws of physics. Whereas this loss can be calculated and that much extra power fed at the supply end to compensate it in case of traditional power supply, for Solar PV it becomes a problem because currently the technology is dependent on Sunshine and therefore erratic to precisely pin down how much power would be generated per minute. This creates problem for evacuation and  steady stream of transmission. Perhaps when grid parity does take place, the investors could use the model devised by Gemasolar in Spain to store the extra  power and compensate the loss in transmission. Or other innovations would make this possible.

The other problem is should a RESCO sell a PPA model to a client which is off-site and wheels the power to the client, during planned load-shedding by the Municipal authority / State power company; the transmission would not happen. Banking that power is a economic solution but not technically sound because the client had agreed to the PPA ( power purchase agreement ) precisely to avoid power outages and avail the benefits of Diesel abatement.

Another issue is the time frame. Not many would like to sign a PPA of 25 years for roof-top models or even offsite because all business policies are dynamic in nature. Requirements change over time. Planing for 10 years can be done with reasonable permutation combinations, but not having flexibility for 25 years would be a non-starter for some sectors. Next, vintage of technology. No one would like especially when the investment is not theirs to be stuck with an asset which does not perform optimally with time. When I wrote another article on Solar PV, as how to make cheap solar power, I was just learning about OPEX solar, but some of the ideas given there could come to the rescue for OPEX solar.

Overall OPEX Solar model is here to stay and I already have plans to propagate it as much as possible to make this World a better place to live in.

Note: Courtesy to the owners of the images posted in this blog.

 

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Green Business Ideas : India should promote NSM & NMSH to make NMEEE a success


The Prime Minister of India had launched The National Action Plan on Climate Change (NAPCC) on 30th June 2008.It outlines a national strategy that aims to enable the country adapt to climate change and enhances the ecological sustainability of India‘s development path. It stresses that maintaining a high growth rate is essential for increasing living standards of the majority of people of India and reducing their vulnerability of the impacts of climate change.

Eight National Action Plan were mooted -representing multipronged, long term and integrated strategies for achieving key goals in the context of climate change. The National Missions are to be institutionalized by the respective Ministries  and will be organized through inter-sectoral groups. The first 3 are already operational.

The National Missions are –

National Solar Mission,
National Mission on Enhanced Energy Efficiency, (1)
National Mission on Sustainable Habitat,
National Water Mission,

National Mission for Sustaining the Himalayan Eco-system,
National Mission for a Green India,
National Mission for Sustainable Agriculture and
National Mission on Strategic Knowledge for Climate Change.

In this article we shall talk about the second action plan – National Mission on Enhanced Energy Efficiency (2)(NMEEE). And how we could look at it from a completely different perspective. However, let us first understand this beautiful instrument created to combat Climate change and offer economic opportunities.

The Eleventh Plan Outlay for Energy Conservation & NMEEE schemes was Rs 8.6 billion to promote energy conservation measures in the country. The Union Cabinet had approved the implementation plan of the National Mission for Enhanced Energy Efficiency (NMEEE) with a budgetary support of Rs.23.54 billion required for implementation of the Mission with effect from 2010-11. It also approved the creation of two new posts of Deputy Director General (Joint Secretary level) in the Bureau of Energy Efficiency. The NMEEE initiatives will avoid capacity addition of about 19,598 MW. It would result in fuel savings of around 23 million tonnes of oil equivalent (MTOE) and reduction in Green House Gasses (GHG) emissions of 98.55 million tonnes. The National Mission seeks to create and sustain markets for energy efficiency in the entire country which will benefit the country and the consumers. If one reads the detailed paper on NMEEE, it focus is more on Demand Side Management ( DSM ) of 9 Energy Intensive Industries Identified to be known as Designated Consumers (DCs) – Power (Thermal) 104.1 MTOE ; Integrated Steel 28.0 MTOE; Cement 11.87 MTOE;  Fertilizer 7.86 MTOE; Textile 1.62 MTOE; Aluminum 7.73 MTOE; Paper 2.09 MTOE; Chlor-­Alkali 1.06 MTOE; which totals to  164.15 MTOE (Million Ton of Oil Equivalent ) in energy. The implementation plan of NMEEE seeks to upscale the efforts to create the market for energy efficiency, and is estimated  about Rs 7,500 billion.

NMEEE can be divided into   PAT; MTEE; EEFP & FEED .(3)

a) A market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries. The trading of energy saving certificates would facilitate this process { Perform Achieve and Trade        ( PAT) }.

b) Accelerating the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable. {Market Transformation for Energy Efficiency (MTEE) }.

c) Creation of mechanisms that would help finance demand side management programs in all sectors by capturing future energy savings. {Energy Efficiency Financing Platform (EEFP)}.

d) Developing fiscal instruments to promote energy efficiency namely Framework for Energy Efficient Economic Development (FEEED)

The overall idea of NMEEE is to achieve the following –

• Protecting the poor and vulnerable sections of society through an inclusive and sustainable development strategy sensitive to climate change.
• Achieving national growth objectives through a qualitative change in direction that enhances ecological sustainability, leading to further reduction in emissions of GHGs.
• Devising efficient and cost-effective strategies for end-use demand-side measures.
• Deploying appropriate technologies for both adaptation to and mitigation of the adverse effects of emissions of GHGs extensively as well as at an accelerated pace.
• Engineering new and innovative forms of market, regulatory, and voluntary mechanisms to promote sustainable development.

While all these are superlative and having met the core team of NMEEE at Chennai, during one of the stake-holders meet and  have immense respect for there depth of knowledge and dedication; let us look at what are the issues small consultation companies or independent Energy Auditors are facing to implement NMEEE and what can be done to popularize it.

The mainframe of NMEEE is PAT, which is focused at  Specific Energy Conservation (SEC), and this is complex to map;  because the energy usage pattern varies widely in industries of a particular sector due to various diversities like -Scale of Production (Installed Capacities); Use of Raw Material; Process Technology; Vintage of Technology; O & M Practices; Type of Product Output etc. While this is a great idea and business potential, barring the very large industries which find it feasible to adopt the PAT mechanism, the Small & Medium Scale industry of the same sector are not yet showing much enthusiasm. Primarily because even with the MTEE & EEFP, industry can not overnight stop production and upgrade technology.  So while the potential energy saving in the industrial sector is 98 billion KWh with a business potential of Rs. 2,400 billion; this target which we are thinking will be achieved by 2014 is a little difficult  to meet, more so in the current economic situation.

Further, Energy Audits of commercial and industrial facilities require a large amount of time to gather data and process them to offer the solution required.  All types of utility bills needs to be collected, for a period between one to three years, for analysis of pattern of use in different seasons, and  then certain benchmark need to be found. The performance of the any facility depends on various factors such as changes in weather, occupancy  or production levels and  this needs to be compared with design intent and similar type of facility which is used for comparison, to identify any error which is then used as clues for further analysis. Major energy loads are identified and analyzed and sometime spot data logging or sub-metering is required for specific energy loads or equipment to gather more data. For more advanced analysis, computer simulation analysis of the building and load patterns may be involved.

Trained and experienced engineers are required for much of this analysis, which further increases cost. Small consultancy companies  and independent energy auditors therefore find the going tough to convince industry owners to do an energy audit and more so where some of  the medium scale industry owner seeks a performance guarantee on the solutions which the consultants can provide, even before an audit is commenced.

Therefore to continue the course that has been set under NMEEE, the smaller independent auditing agency one must  look at the lowest hanging fruit that is Buildings & Lighting. One must focus at Lighting – 70 billion KWh translating to Rs. 400 billion (source- BEE); Buildings – 3.52 billion KWh ( source ADB )  which  Rs. 120 billion in business opportunities. Now if we add to it the administrative blocks of the 9 core DC identified, the business opportunity expands and Roof-top or captive solar and Green Building norms can get inducted. Because here is something which perhaps the policy makers have not looked into, that is, every industry big or small have an administrative block, which  falls under the Building sector. Although  this finds a mention in NMEEE but is not a core focus area yet. And all large facilities have lighting which independently mapped is a large segment.

It would make a great Green Business Idea should the authorities make mandatory 10% reduction in energy across all sectors and not limit the first 10% to come from the SEC in the large DC’s but be mapped from their building and lighting.  Especially Baseline energy consumption and emissions from commercial buildings, data centers. In fact Primary stakeholders for energy efficiency are  Commercial and residential buildings, which also form a part of large DC’s. For example if we take any of the “Navratna” ( nine gems ) industry, say Iron & Steel Plant, it has administrative blocks within the boundary walls of the plant, along-with  a whole residential township set up for its employees whose power consumption only in lighting and buildings could rival that of any Tier -II & III cities. In fact they are mini cities themselves. It would give impetus to two other missions under the NAPCC, namely the National Solar Mission and National Mission on Sustainable Habitat.

If the core idea of the National Mission is to bring in Enhanced Energy Efficiency, it must allow and support the Green Building criteria sooner than later and let it get the advantages of  EEFP & FEED enshrined in the NMEEE.

Courtesy: All images displayed are from the internet. Thanks to all who have created them

 

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Climate Change and Finance in India: Banking on the low carbon Indian economy


In January 2009, a roundtable discussion for CEOs of financial institutions, convened by The Climate Group, concluded that there was an imminent need for engagement with the Indian Banks’ Association (IBA) and a larger cross section of banks to raise awareness on climate change. This report emerged from a meeting in late 2009, when The Climate Group initiated dialogue with the banks operating in India to discuss the most effective ways to tackle climate change.

The Climate Group and the IBA agreed to produce a report outlining best practice in the finance industry in India and recommend action that banks can take to accelerate a low carbon economy. Working with PricewaterhouseCoopers, a survey was carried out to gather this information.

Amongst the report’s most important conclusions are:

  • A small number of banks are initiating change
    There is a small group of banks in India that are leading the sector in tackling climate change and that recognize the commercial advantage this will provide. Energy efficiency is one key focus, with an estimated market worth more than US$15 billion by 2015.
  • Taking advantage of policy
    The action being taken by banks is no longer limited to reducing operational emissions – it is focused on taking advantage of domestic and international climate change policy and frameworks, such as the Clean Development Mechanism (CDM) and India’s National Action Plan on climate change, to open new markets.
  • Success means tackling climate change
    Four banks rated climate change as ‘very important’ and in the ‘Top Ten Priorities Critical to Success’. However, public sector banks are less involved in voluntary initiatives and appear to be postponing action until regulation is in place.
  • Leadership role
    Seven of the eight banks believe that commercial lending banks in India can play a leadership role in the business community in addressing the challenges of climate change. Banks indicate that integrating sustainable development into the organization’s policies and management approach improves morale of employees and provides a strong and confident long-term relationship with stakeholders.
  • Financial incentives
    Banks are increasingly aware of the opportunities that are available to stimulate investment – such as through low carbon funds. However, the correct financial incentives are essential to make this a reality and the banks need to proactively engage with the Government in India to ensure that the right incentives are in place.

This report is intended as a resource for illustrating the existing scope of climate change activities by banks.

Courtesy: theclimategroup

 

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GRIHA: the Indian answer to Climate change.


India has in its Parliament declared that 25% of GHG will be reduced by the efforts of the Government by year 2020. The Government of India under the under the Leadership vision of the PM set about its task of formulating Eight action plans to combat Climate change. The National Missions are to be institutionalized by the respective Ministries and will be organized through inter-sectoral groups. The National Action Plan for Climate Change  ( NAPCC )are;

National Solar Mission,
National Mission on Enhanced Energy Efficiency,
National Mission on Sustainable Habitat,
National Water Mission,
National Mission for Sustaining the Himalayan Eco-system,
National Mission for a Green India,
National Mission for Sustainable Agriculture and
National Mission on Strategic Knowledge for Climate Change.

On this page we shall discuss the National Mission on Sustainable Habitat.

The Government of India, entrusted the formulation of a  National rating system to The Energy and Resources Institute {TERI} a research and policy organization, which does original work and provides professional support in areas of energy, environment, forestry, biotechnology and the conservation of natural resources to government departments, institutions and corporate organisations world wide.

Under the able leadership of TERI’s Director General,the brilliant and famous PADMA BHUSAN  Dr. Rajendra K. Pachauri; who, having immense experience in various field like Economics, Agriculture, Renewable Energy and currently Chairman of IPCC ( Intergovernmental Panel on Climate Change, which was established by the World Meteorological Organisation and the United Nations Environment Programme in 1988 ) and supported by a stupendous dedicated team at its’ Sustainable Habitat Division, head by divisional Director Ms.Milli Mazumdar studied all the rating systems in the world currently in practice and then decided to establish a rating system so brilliant that even a simple citizen of Rural or Tier -III town can have his building rated and certified, built on the experience of local Masons.

This simplicity and grass root upward approach  of  Sustainable Building Certification was aptly named – GRIHA ( Green Rating for Integrated Habitat Assessment ). Today GRIHA is promoted by  Association for Development and Research for Sustainable Habitats ( ADaRSH ) under the secretariat of MNRE.  GRIHA is in compliance with Energy Conservation Building Code (ECBC), Environment Impact Assessment (EIA), National building Code (NBC), Bureau of Indian Standards (BIS), Central Pollution Control Board (CPCB) guidelines and thus compliments the National Action Plan perfectly.

The Government of India to is promoting GRIHA by making it mandatory for all Central Government & Public Sector Unit projects to follow GRIHA and achieve 3- star rating minimum. In the 12th JNNURM Jawaharlal Nehru National Urban Renewal Mission,  a massive city modernisation scheme launched by Government of India; it would be mandatory to achieve GRIHA rating. The Reserve Bank of India ( RBI ) through its wholly owned subsidiary the National Housing Bank  ( NHB ), is contemplating an instrument by which 0.25% of interest subsidy would be given by all Banks, to loan taken for projects undergoing GRIHA compliance. The State Bank of India  in already providing this rebate. The Ministry of Environment and Forest ( MoEF ) has announced that it would come out with a ruling whereby EIA will not be mandatory for projects under GRIHA rating.

The Ministry of New and Renewable Energy ( MNRE )  too has its own bouquet of sops for project going for GRIHA rating.


 

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