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Move to save energy

New Delhi, Aug 26: The power ministry has asked the newly created Bureau of Energy Efficiency (BEE) to speed up the authorisation of energy service companies (Escos) in major cities and follow it up in smaller towns. As part of its initiative, 10-15 government and private buildings will be identified where the energy conservation exercise will begin. The government will then notify them as designated consumers and investment grade energy audit will be conducted to fix baseline consumption and establish their energy savings potential.

“The BEE will invite the Escos to undertake project implementation based on performance contracting and shared savings with the government. The payback period for the investment made by the Escos will be about three to four years. We will also ask banks and financial institutions to participate in this exercise,” power secretary R. V. Shahi said.

“We have suggested a formula for investment and pay back. This involves investment by the banks and financial institutions. The profit earned after repayment will be shared between the Escos and the building owners,” he added.

Once a building owner identifies an Esco, the company undertakes a study, identifies areas of improvement and finally enters into a contract with the building. Both the owner of the building and the Esco then prioritise the areas where energy can be saved or equipment needs to be replaced.

An assessment is made and a base line for energy consumption is accepted between the two. An agreement for action and sharing of revenue is signed that will include the amount to be taken from financial institutions.

If the two parties are successful in implementing the agreement to reduce energy consumption, then 60 per cent savings will be retained by the Esco and the remaining 40 per cent will go to the building owner after paying back the investments made by FIs. The Escos will have to take out their savings share out of the 60 per cent, as well as their investment on equipment and the service charge for maintenance during the agreed period of not less than three years.

After the three-year period, the building owner can continue the contract with the Esco or can retain them with an annual maintenance and pay service charges for the same.

Thermax (a Pune-based company), DSCL (of Shriram Group) Intesco Asia Ltd (set up by SRC International in Bangalore) and Saha Sprague (promoted by Manoj Saha of Ahmedabad) are a few leading Escos that are waiting to undertake the projects.

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