Market-Making for Low Carbon Technologies / The Ujala Scheme in India
The UJALA (Unnat Jyoti by Affordable LEDs for All) programme was initiated by the Indian Ministry of Power in 2014 to reduce national energy consumption (and thereby CO2 emissions) by increasing the market penetration of energy-efficient LED bulbs. To stimulate demand for LED bulbs, the Indian public sector company Energy Efficiency Services Ltd (EESL) took measures to make them more affordable. One key step was procuring LED bulbs in bulk, which enabled EESL to buy them at a significantly lower cost, the benefit of which they passed on to consumers to make the bulbs affordable and increase residential users’ uptake.
The initiative has been largely effective in achieving its objectives. As of February 2018, UJALA has deployed nearly 290 million LED bulbs (UJALA Dashboard 2018), driving down the procurement price of LEDs by nearly 90% from the start of the programme (PIB, 2016). This impacted the market retail prices too, falling by around 70% from an average price of around INR 600 (USD 9.2) (Motilal
Oswal Securities 2016)1 to an average of INR 150 (USD 2.3) today2. Emission reductions amount to more than 30 million tonnes of CO2 per year.
In 2016, EESL expanded UJALA coverage to ceiling fans and LED tube lights, which are the most common appliances used in Indian homes, and has already distributed over 4.4 million LED tube lights (National Tubelight Dashboard 2018), and 1.4 million energy efficient fans (National Pavan Dashboard 2018). All this is realised through a zero-subsidy model.
The programme design includes stringent quality control measures, including after-sale and warranty servicing, transparent reporting with real-time data available on a public dashboard, and robust MRV processes, which have built trust in the programme and further enhanced its deployment and impact.
UJALA has sold nearly 300 million EE products to the residential segment since its launch in 2014. This has significantly impacted the manufacturing and consumer segments, the energy sector and India’s climate change mitigation targets. increased confidence in energy efficient technology and stimulated demand. UJALA is a successful example of making a technologically advanced and green product affordable and easily accessible to all consumer segments of the market.
REDUCED EMISSIONS SIGNIFICANTLY: The success of UJALA resulted in a large-scale deployment of EE technologies in the residential segment of the Indian market, resulting in significant emissions reductions, which currently amount to over 30 million tonnes CO2 per year (UJALA Dashboard 2018).
AVOIDED PEAK DEMAND: To date, UJALA’s various initiatives have led to an avoided peak demand of over 7,400 MW and achieved energy savings of over 37,000 million kWh per year (UJALA Dashboard 2018). In India, the share of coal in total power capacity is about 62%, but the share in generation is about 80% (The Hindu 2017). Against this background, UJALA could already be said to have led to a significant contribution to avoided coal capacity.
REDUCED ENERGY BILLS: The UJALA scheme is a success as it has been able to bring about notable cost reductions in household electricity bills by transitioning to LED lighting and EE appliances. This frees up households’ disposable incomes which can then be utilized for other essential needs.
SPURRED MARKET DEVELOPMENT IN THE LED SEGMENT AND EE TECHNOLOGY SECTOR: EESL’s initiatives, including UJALA, aim to spur market development. With multiple rounds of procurement and deployment, as already done for LED bulbs, EESL was able to signal continued demand to manufacturers and incentivize the creation of capacity among manufacturers for the production of EE products. UJALA’s operations contributed to raising the share of the LED lighting segment by value from 6% in 2010 to 54% in 2016, with demand increasing 50 times from 2014 to 2017 (Prayas 2017). This led to an increase of 3-5 times in manufacturing capacity (ELCOMA 2018). Heightened demand for energy efficient products is sparking stronger R&D investment in EE technology, and increased manufacturing and sales in the sector.
MINISTRY OF POWER is the nodal government body which plans and coordinates India’s EE efforts through the NMEEE. Under the NMEEE, the government leverages the institutions of BEE and EESL to design and implement various programmes and initiatives to achieve EE goals.
BUREAU OF ENERGY EFFICIENCY (BEE) is the nodal agency for implementing the NMEEE. Within the overall framework of the Energy Conservation Act 2001, the agency assists in developing policies and strategies with the primary objective of reducing energy intensity of the Indian economy.
ENERGY EFFICIENCY SERVICES LTD (EESL) was established in 2009 as a public sector ESCO to address some of the key barriers to scaling-up EE programme implementation. It is a joint venture between four Public Sector Undertakings – National Thermal Power Corporation (NTPC), Power Finance Corporation (PFC), Rural Electrification Corporation (REC), and Power Grid Corporation of India (PGCIL).
EESL partners with STATE ELECTRICITY DISTRIBUTION COMPANIES (DISCOMS) for the implementation of UJALA in each state.