The Global Environment Facility (GEF) along with Energy Efficiency Service Ltd has launched a revolving fund for three efficiency areas. Besides, GEF would also be funding EESL’s district energy initiative in Bhopal, Pune, Coimbatore, Thane and Rajkot.
The major portion of GEF financing, amounting to $200 million, for the revolving fund would come from the Asian Development Bank (ADB). It would receive a composite funding of $454 million comprising the GEF grant of $20 million and co-financing of $434 million in the form of loans and equity, including the ADB loan.
In an interview with Business Standard, Naoko Ishii, chairperson and CEO, GEF, said the fund would be based on an innovative model under which, savings from the efficiency programmes will be ploughed back into the fund for scaling up energy efficiency efforts to achieve country’s INDC goals.
GEF-6 fund, launched on Wednesday, would support two projects – ‘Creating Markets for Energy Efficiency’ and ‘District Energy in Cities’.
Energy Efficiency Revolving Fund (EERF) will boost four of EESL’s existing technologies, involving street lighting, domestic lighting, five-star rated ceiling fans and agricultural pumps, said Bhawanjeet Singh, chief general manager (technical) EESL. Additionally, the funding will help EESL will promote three new technologies such as super-efficient ceiling fans, tri-generation and smart grids, meters.
Through GEF, many technical and financing partners including United Nations Environment (UN Environment), ADB and Kreditanstalt für Wiederaufbau (KfW) would come together.
According to David E Rodgers, senior climate change specialist, GEF, a significant portion of the funding would be in technical assistance and advisory services. “GEF is the grant-making organisation and a portion of the resources will be flexible. This allows the government of India to direct resources where they are more catalytic,” he said.
EESL’s district cooling systems aims to reduce energy demand for cooling by up to 50 per cent. EESL has partnered with UN Environment’s District Energy in Cities Initiative, which has identified $600 million of projects across five cities in India.
Saurabh Kumar, Managing Director, EESL said, “Global partnerships such as these will accelerate our efforts in mitigating climate change and provide hope for a better future for the coming generations.”
GEF is an international partnership of 183 countries, international institutions, civil society organizations and the private sector that addresses global environmental issues. Ishii said, “Supporting innovative approaches for energy efficiency financing by domestic financial institutions has become a trademark added value for the GEF.”
The EERF mechanism will be to support the ‘proof of concept’ investments for the new technologies of super-efficient ceiling fans, tri-generation technologies & smart grid-applications, and ultimately scaling up energy efficiency financing and program development to help cover initial investment costs of identified energy efficiency programs in the country. This unique model will help in addressing the upfront risks of new technologies. Further, the accrued savings from these technologies can then be used to finance additional projects, which would allow capital to revolve as a sustainable funding mechanism.
According to the World Resources Institute (WRI), India accounted for about 6.7 per cent of global carbon emissions in 2012. The energy sector accounts for 71 per cent of the country’s total greenhouse gas (GHG) emissions, mainly carbon dioxide (CO2). Energy efficiency programmes are aimed at reducing this. The overall size of energy efficiency market in India is estimated to be $22.81 billion.