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Energy efficiency scheme leads to ₹ 37,685-crore savings for the country

CHENNAI, MARCH 22:  
The ‘Perform, Achieve, Trade (PAT)’ scheme, run by the Bureau of Energy Efficiency, has brought in savings of ₹37,685 crore, according to a press release issued by BEE.
The first cycle of the scheme, or PAT-I, saw investments of ₹24,517 crore in energy efficiency measures, says BEE, which is a part of the Ministry of Power. The scheme resulted in saving of energy equivalent to 8.67 million tonnes of oil, exceeding the target of 6.86 million tonnes by 30 per cent.
The scheme

Under the PAT scheme, ‘designated consumers’, (typically, factories), are given a baseline energy consumption. Then the DCs invest in energy efficiency measures. If their actual consumption at the end of the ‘cycle’ is lower than the baseline, BEE awards them ‘energy savings certificates’, or, ESCerts. The DCs are primarily benefited by saving energy costs, but the additional money they make selling the certificates sweetens their investments in energy efficiency.
The first cycle, which involved 478 DCs from eight sectors, got over last year. BEE, after verifying their energy consumption, issued 38 lakh ESCerts last week. These certificates are trade-able on the two energy exchanges of the country — IEX and PXIL. Trading is expected to begin as soon as the Central Electricity Regulatory Commission comes up with rules, says Rajesh Mendiratta, Director, IEX.
The ESCerts will be bought by those DCs whose energy consumption was higher than the baseline. Thus, the universe of buyers and sellers comprises only the 478 DCs.
Chetan Adhikari, Vice-President at the consultancy REConnect, feels that there is likely to be a huge oversupply of ESCerts — demand for around 14 lakh certificates, compared with the supply of 38 lakh. He estimates the prices to range between ₹1,226 and ₹3,464 a certificate. Unlike in the case of ‘renewable energy certificates’ (which are given to wind, solar and biomass companies if they do not sell their electricity at a preferential tariff) there are no floor and ceiling prices for ESCerts.
Meanwhile, the second PAT cycle has begun. BEE has named 621 DCs from 11 sectors. This cycle will end in 2019 and certificates will be awarded to those who better their baselines. It is expected that the consumption norms will be tighter in this cycle.
Many DCs are likely to ‘bank’ their ESCerts and carry them over to the second cycle. This will help them set-off against any shortfall in meeting the consumption norms, says Chetan Adhikari. Conversely, if the prices fall steeply, DCs might find it cheaper to buy the certificates rather than invest in energy efficiency.
(This article was published on March 22, 2017 in The Business Line)

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