Reena:

How would you describe the way things have changed in the last 10 years in terms of public awareness and public policy on matters related to energy efficiency?

Padu:

There is no question that public awareness of energy efficiency has grown by leaps and bounds in the last 10 years. Energy awareness is a decentralized issue involving thousands of decisions and actions taken individually by housewives, drivers, industry owners and farmers, among many, many others. It is clear that, to all of them, in varying degrees, the message has gotten through. One area where there has been significant accomplishment is the setting of standards and labeling for efficient appliances and energy consuming equipment so consumers can make informed choices and governments can enforce quality standards among manufacturers. Another area is training. Some areas of public policy continue to be problematic, especially the setting of cost-reflective tariffs, where much more needs to be done.

Reena:

Estimates of India’s supply-demand gap range from about 10% to 30% for peak capacity and total energy, respectively. How much of the gap could realistically be met by improved energy efficiency?

Padu:

I would like to think that the current shortage in both in capacity and energy could be closed through the use of energy efficiency techniques, technologies and practices. In one landmark study that USAID sponsored in 1992 sponsored, the potential for energy efficiency in India was estimated at 20% of the country’s generation capacity. That coincides quite nicely with today’s gap in both peak demand as well as energy. So to answer your question, I think energy efficiency can be a powerful tool to help bridge the gap between supply and demand.

Reena:

One of the unique energy efficiency challenges is the link between electricity consumption and water consumption. Could you explain what the water-energy nexus means and why it’s so important?

Padu:

The technical and financial performance of India’s power sector, particularly in the large agricultural states, is intimately linked to how water used, priced and managed. About 35-40% of total electricity consumption is used for a single end-use application — the pumping of groundwater. Groundwater accounts for 55% of total agricultural water usage and agriculture water usage, in turn, accounts for 85% of total fresh water demand in the entire country.
Thus, about 45-50% of total water consumption is used in farming and 35-40% of total electricity consumption is used for agricultural water pumping alone. These concentrations of resources into a single end-use area make the water-energy nexus an imperative challenge for the future of India.

Reena:

The Green Business Center (GBC) established a global best-in-class example of how to build an energy efficient commercial building. It’s a model for other new buildings but industry has been slow to incorporate these techniques on a broad scale. What can be done to accelerate the adoption rate of energy efficient building techniques?

Padu:

The Green Business Center is a partnership between USAID, the Government of Andhra Pradesh and the Confederation of Indian Industry. This partnership sponsored the Green Business Center as the first green building in India. The time spent studying the best techniques of other green buildings in other countries paid off when it was awarded the LEED (Leadership in Energy and Environmental Design) Platinum award from the U.S. Green Business Council in 2003. Since then, more than 40 buildings in India have received certification and three additional buildings were awarded the coveted LEED Platinum award.
[Editor’s Note: LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality.]
 
There are several ways to accelerate the market for green buildings. One is the promulgation of standards, including energy conservation building codes such as those that were recently announced by the Government of India.
Another would involve the use of innovative financing to ease the impact of the high “first cost” of a green building. A green building costs 10% to 15% more than a conventional building, but the total life cycle costs of green buildings are much lower. Even so, many are put off by the initial cost hurdle, especially when buyers are trying to squeeze as much as possible from their investment dollar.
The benefits of green buildings accrue to all of society, not just the owner, but over the life of the building, which is usually a relatively long time frame. But the initial investment decision often emphasizes the short term, especially if the owner / occupant is not sure s/he will remain for the life of the building. That sets up a dilemma that pits the long-term benefits of green buildings against the exigencies of the immediate.
Innovative financing techniques could help to mitigate the effect of the higher first cost through the creative use of subsidies, grants, tax abatement or low interest loans. The intelligent application of such techniques could lower the threshold and promote the adoption of green building techniques.

Reena:

Could clean energy become the defining element of India's energy strategy or is the emphasis likely to remain on the conventional wisdom of building greater numbers of ever larger power plants?

Padu:

I would like to think that green energy would be a major part of India’s energy strategy. The reality in India, however, is much the same as in other countries. We will have to work on both sides of the energy equation. We must work on the supply side to provide the right portfolio of optimized technologies and fuels to satisfy India’s booming economy. At the same time, we need to work on the demand side to lower the balance point between supply and demand while providing a cleaner and more sustainable mix of energy sources.
Since the 1950s India has done reasonably well as far as capacity additions are concerned. From a small base of 1,000 MW it has grown to over 120,000 MW today. But this was all achieved through an exclusive focus on the supply side of the energy equation. The challenges on the supply side are many but three issues are of especially problematic. One is the huge amount of capital required to build new capacity, which is about $1 million per Megawatt. The second is the environmental impact of power development where, as we all know, there is a very strong relationship with climate change. The third important fact is the sub-optimal performance of supply side assets. This last point has significant financial consequences.
Solving these fundamental problems will require transformational solutions. The three dimensions of the required solutions include management, technology and finance. These solutions must include advances in energy efficiency and the implementation of renewable energy in a manner that is unprecedented. India has substantial and largely untapped resources of solar energy, biomass, wind and hydro but policies, programs and investment strategies must be developed to encourage the wider use of these non-traditional renewable energy sources.

Reena:

If there was one thing you pick to be done right now, what would it be?

Padu:

That’s a tough question to answer because there is so much to do. But if I had to pick one and only one thing to work on, I would work on the development of a sustainability code for Indian industry in the use of water and energy. The goal would be to set high standards, educate owners and managers on the benefits of being efficient and to motivate Indian industry to improve business processes to adopt global best practices in the use of precious and increasingly scarce water and energy resources.

Reena:

Padu, Thank you for taking the time to share your thoughts with us.

Padu:

Reena, My thanks to you and PA. It was a pleasure to talk about energy efficiency and its importance to India and the rest of the world.