Economic growth has unleashed an enormous appetite for home appliances among the Indian middle class. At their current level of energy efficiency, these products can seriously threaten the energy security of the country. There is a way out. Move on to super-efficient appliances-now
A distinctive feature of a modern house is an array of electrical and electronic appliances in it. Sunil Sinha, a banker in Meerut, remembers the days when his house had a modest four ceiling fans, six lights, a refrigerator and a colour TV, and he considered them enough of possessions to boast about. That was in the 1990s when Indian economy had just picked up pace. Since then he has added multiple appliances—computers, geysers, mixer, water purifier, air-conditioners, two more TV sets and an extra fridge—lapping up modern urban lifestyle. But all these conveniences have come at a cost. “Monthly electricity usage those days hardly ever crossed 250 units. Nowadays even after our children have moved out we rarely use less than 1,000 units of power in a month,” says Sinha. Today, the 400-million-strong Indian middle class, with growing disposable incomes, has made consumer electronics and appliances a Rs 45,000-crore industry, according to the Consumer Electronics and Appliances Manufacturers Association. A report prepared by the association this year shows the Indian consumer electronics market grew at a compound annual rate of 13 per cent during 2003-13.
Even though the appliance penetration of India is lower than the global standard, its energy consumption is already high and will increase. Indian appliance ownership is at a stage where China was two decades ago (see ‘Much ahead’).
Indian families are yet to buy 70 per cent of the appliances they will own by 2030, according to Daljit Singh, senior research fellow at Pune-based non-profit Prayas, which works on energy among other issues. However, domestic energy consumption in India has increased from 80 terawatt hour (TWh, or a million megawatt hour) in 2000 to 186 TWh in 2012, and constitutes 22 per cent of the total energy consumption, as per the 2013 report of the Central Electricity Authority. If the commercial sector, which includes offices, malls and shops is added, then the total energy consumption by domestic and commercial sector goes up to 257 TWh-or 30 per cent of total electricity consumed in India. At this rate, with rising incomes and urbanisation, the domestic consumption may increase to 1,600 TWh in 2050 if nothing is done to improve the energy efficiency of the appliances, shows a study done by the Ahmedabad-based Centre for Environmental Planning and Technology University for the Global Buildings Performance Network.
About 40 per cent of the energy expenditure and a third of CO2 emissions in the world, as per the United Nations Environment Programme, are attributed to operation and maintenance of buildings, with home appliances contributing a major share.
Prayas’ 2008 calculations show just nine appliances account for almost all the electricity used in Indian houses (see ‘Hungry nine’). Of these four kinds of appliances—lighting fixtures, ceiling fans, TV sets and refrigerators—account for 80 per cent of the electricity consumption. Another estimate in 2010 by the Bureau of Energy Efficiency (BEE), a statutory body under the power ministry, shows that fans use about 34 per cent of the electricity, lighting 28 per cent and refrigerators 13 per cent in a typical house. Air-conditioner (AC) is the biggest energy guzzler but this is not reflected in national averages because very few houses have one (see ‘Slay the guzzler’).
The government took the first step towards energy efficiency by notifying the Energy Conservation Act in 2002. The Act sought efficiency measures and a legal framework to implement them throughout the country. In 2006, BEE introduced star rating of appliances to influence consumer choice and push the market towards improving the energy efficiency of products. Under its Standards and Labeling programme, BEE defined the minimum efficiency performance benchmark for various appliances and decided the bandwidth to award five-star ratings to products. It also made it mandatory for all manufacturers of ACs, refrigerators and tube lights to put BEE ratings on the product, which meant that products with efficiency lower than BEE’s minimum benchmark could not be sold in the market. BEE revises the minimum benchmark every two years and the last revision happened in January 2014.
While the star rating has encouraged a shift towards more efficient models in the case of some appliances, for many others people still buy less expensive but inefficient models. For example, in 2009-10, almost 90 per cent purchases of labelled frost-free refrigerators fell in the four- or five-star category, according to a 2010 report of the National Productivity Council, an autonomous body under the commerce and industry ministry. However, in the case of room ACs, only 14 per cent of the purchases were rated four or five stars, while 55 per cent were rated one or two stars. The sale of five-star ACs has not picked up because they are substantially more expensive than ordinary ACs and are not easily available in the market. In contrast, the average efficiency of refrigerators sold in India before the Standards and Labeling programme was already three-star by standards, which meant the higher efficiency-refrigerators were marginally more expensive. Appliances for which labelling is not yet mandatory, a large fraction of purchases is of unlabelled models. Besides, the energy consumption thresholds for labelled products have not been raised at a desired pace. Experts say one reason for this is the resistance from manufacturers, particularly in the unorganised sector, who may find it difficult to improve manufacturing technologies.
As a result, even eight years after the launch of the star-rating programme, Indian efficiency standards lag behind global levels. Saurabh Diddi, energy economist at BEE and project officer for the programme, thinks the comparison is unfair because the conditions for testing efficiency vary among countries leading to different results. “Additionally, we cannot push the minimum standards drastically higher overnight as it will make the products unaffordable and force many local manufacturers to shut shop,” says Diddi. “We have to be considerate towards the local industry and the purchasing power of the average Indian when deciding the efficiency standards.” Nikit Abhyankar, senior scientific engineering associate at the California-based Lawrence Berkeley National Laboratory, which has an India-specific energy programme, does not agree. “The spike in prices is momentary. We have analysed the Indian market and found that prices of ACs and TV sets in India in absolute terms have fallen since the introduction and subsequent tightening of minimum efficiency standards,” he says.
Cost sensitivity of the Indian market and stiff competition have a way of making manufacturers adjust and innovate to keep prices low, he adds.
Room for super efficiency
Industry is already ready with several super-efficient products, which use much less power than even the five- star-rated ones. These products, which can easily be called seven- or eight-star, can go a long way in improving the energy security of the country. To get the measure of what super-efficient products can do take the government’s rural electrification scheme. Under this, the government is providing families with solar panels of 40 Watt capacity and a regular electric bulb which pretty much uses up the entire 40 Watt of power. “Today we can operate an LED colour TV, a table fan, two LED light fixtures, a phone charger and a digital radio-cum-watch with 40 Watt of electricity, which is the same power a single incandescent bulb consumes,” says Abhyankar (see graph ‘40 Watt is a lot’). “All the products are commercially available in major markets, including that in Africa, but not in India as policies are not pushing for them.”
The challenge is to create incentives for super-efficient products, while quickly upgrading the star rating system to push the baseline. This will remove inefficient appliances from the market and encourage long-term energy savings. This can also be achieved with the cross subsidy mechanism, under which lower efficiency products can be charged higher and the differential utilised to subsidise higher efficiency products, suggests Delhi-based non-profit Centre for Science and Environment (CSE). “For the manufacturers the excise duty should be made inversely proportional to the star rating of the product,” adds Piyal Sengupta, product manager, air conditioners, Godrej Appliances.
Let us look at how three major appliance markets-ceiling fans, lights and air-conditioners-can make the transition.
Look to the ceiling
New scheme targets doubling energy efficiency of ceiling fans
Almost every house with electricity in India has at least one ceiling fan. Yet they are rarely mentioned in discussions on energy efficiency. The Bureau of Energy Efficiency (BEE) has a rating programme for fans—the five-star-rated fans use 50 Watt (W) as compared to the conventional 75-90 W. A 2012 report by Pune-based energy policy group Prayas found that although 70 per cent of this appliance market is in the organised sector, five-star-rated fans have not taken off. The bulk of the 25 million ceiling fans sold in the country in a year remains inefficient. Since fans are rarely replaced, this “locks” in options and may drain energy for decades.
The opportunity, then, lies in phasing out inefficient fans and ensuring that new fans are even more efficient than the five-star-rated. In January 2014, the Union Cabinet cleared a programme to provide incentives for the production of 35 W ceiling fans, which are twice as efficient as the conventional fan. The Super-Efficient Equipment Programme (SEEP) is designed to provide upstream benefits to manufacturers, who meet the BEE technical specifications for super-efficient fans. There is a two-way process: the star rating of fans would be made mandatory to push up the floor of performance, while SEEP will provide financial incentives to companies so that they can pull up the ceiling level.
At present, two manufacturers, Versa Drives in Coimbatore and Luxaire in Bengaluru, supply super-efficient fans in India. But these fans are much more expensive, so consumers do not buy them. Super Fan of Versa Drives is four times more expensive than the unlabelled fans.
“The primary objective of SEEP is to achieve rapid market transformation to super-efficient variants of appliances. The aim is not to simply introduce the most efficient ceiling fan, but to strike the best balance between cost and efficiency,” says Daljit Singh, senior research associate at Prayas who co-authored the 2012 report on the development of SEEP for fans.
The programme is now ready to take off. “BEE has finalised the commercially feasible efficiency performance parameters with the corresponding costs. The proposed timeline for the project is three years and the number of fans covered in the first phase would be about 2 million,” says Ashok Kumar, BEE economist and project in-charge for SEEP. “A 70 per cent market penetration of 35 W fans would be more desirable than a 1 per cent penetration of 10 W fans, therefore, specifications for these fans were framed keeping in mind the manufacturing capabilities of producers in India,” he says.
BEE has also addressed the problem of “air delivery” in its specifications for the super-efficient fan. One of the reasons people have not switched to five-star fans is they find the air delivered by them to be less than what conventional ones deliver. The conventional fans have air delivery of 250 cubic metre per minute (cumm) against five-star fans, which have air delivery of 210 cumm.
In its specifications for super-efficient fans BEE has proposed that these must provide a higher air delivery at 230 cumm, which will increase acceptability among users. In addition, the fans have to have low noise and must be suitable to the Indian conditions and Indian pocket.
Better technologies are available. Induction motor improves performance, while brushless DC technology and improved blade design give greater efficiency. And with just eight brands—Bajaj, Crompton-Greaves, Havells, Khaitan, Orient, Ortem, Polar and Usha—controlling 70 per cent of the market, it should be possible to bring about a rapid improvement in efficiency.
LED is projected to be the future of lighting but faces challenges
Lighting provides the biggest scope for saving energy as it accounts for nearly a third of the electricity consumed by appliances in Indian houses. Today, tube lights and incandescent bulbs dominate Indian homes, with CFLs (compact fluorescent lamps) slowly gaining a foothold, thanks to a government scheme.
In February, 2009, the Bureau of Energy Efficiency (BEE) launched Bachat Lamp Yojana for replacing incandescent bulbs with CFLs. It raised consumer awareness of energy savings from CFLs through an aggressive campaign, spurring sales to cross 340 million units in 2011. In comparison, 755 million units of incandescent bulbs were sold that year, according to industry estimates. The scheme also subsidised the price of CFL (Rs 80-100), bringing it on a par with an incandescent bulb (Rs 15) in project areas.
The lighting fixture market in India is likely to grow at the compound annual growth rate of 17 per cent during 2013-18, according to Reportlinker, a global market research organisation. It is already witnessing an influx of energy-efficient products like LED (light emitting diode). There are 400 million lamps in Indian houses, mostly incandescent bulbs, consuming 70 million MWh annually.
The penetration of super-efficient lights in this sector can reduce household electricity demand for lighting by 30 per cent, according to BEE.
There seems to be a linear progression from incandescent lamps to CFLs to LEDs but the transition to a more efficient future is not going to be as straightforward.
Which one is the most efficient?
Picking up the best option from available and emerging technologies requires weighing them on a number of parameters. One is Watt, which denotes the amount of energy a lamp uses, and another is lumen (lm) per Watt, which indicates the amount of light produced by a lamp for every Watt of electricity it consumes. Lumen per Watt is a better tool for comparison because the light output of lamps with same wattage can vary. Life and cost are other parameters.
Incandescent bulbs produce 10-17 lumen per Watt, which is much less than what other technologies that are now readily available give. However, technologies are evolving both in terms of efficiency and cost. The lumen-per-Watt range for linear fluorescent lamps is 30-110 lm/W, but as one goes towards the higher end of the range the cost rises. CFLs and LEDs both begin at 40 lm/W and go up to 70 lm/W and 100 lm/W respectively (see ‘… And how much light they cast’). LEDs are expected to have the longest life. Some laboratory tests show their life could be as high as 50,000 hours but such claims have not been proven yet. It is also clear that the actual life of the LED bulb will be affected by other components as well, especially the quality of the AC-DC transformers. The more specialised companies, which offer LED bulbs in the Indian market, run lighting directly on DC power to give better life and quality. For instance, Alien Lighting, a company, which supplied light fixtures for the Planning Commission building in Delhi, claims life of 50,000 hours for its product and offers a “limited life-time” warranty. Its product is expensive.
Most other companies, like market leader Philips, offer lower-end and cheaper options. But as the Bureau of Indian Standards and BEE have not set standards for LED, companies are getting away with vague information of their product. For instance, Philips claims its products have a “Long life of 15 years with 15,000 hours life”, while Wipro touts “Long life up to 10 years”. The disclaimer in the case of Philips, however, reads: “Life in years is calculated based on 1,000 hours of usage per year, which is about 2.7 hours per day across 365 days.”
Only the Electric Lamp and Component Manufacturers Association (ELCOMA) of India has developed specifications, which set the rated life of the complete LED fixture for focus lights at 35,000 hours, for the regular LED lamps at 25,000 hours and for street lights at 50,000 hours. Yet ELCOMA specifications require manufacturers to provide only a two-year warranty on their “long-life” products.
The Ministry of Urban Development has sent an advisory to all state governments to replace all street lights with LED bulbs. This follows a survey by BEE that showed about 80 per cent of street lights in India are haphazardly installed. BEE has also prepared a guideline for municipalities to understand the right way of installing street lights. The Central Electricity Authority of India reports that 1 per cent of the total electricity consumption in India, or 6.7 TWh, in fiscal year 2010-11 went into providing public lighting. Energy Efficiency Services Limited (EESL) replaced 200 halide lamps of streetlights on the East Coast Road in Puducherry with LED fixtures. This saved energy up to 50-55 per cent, says Saurabh Kumar, managing director, EESL. A 2014 study by California-based Lawrence Berkeley National Laboratory found the savings potential for currently available technologies to be 36 per cent, or 4.8 TWh, in 2020 with LEDs. With efficient tube lights savings could be 38 per cent or 5 TWh.
Overcoming barriers to LED
A BEE report of 2010 identified the key barriers to the market penetration of LEDs in India as: limited product availability in the country; high initial cost; absence of national technical standards for LEDs, leading to the import of substandard devices; lack of testing protocols and laboratories; and lack of incentives for major LED firms to make them in India.
Shyam Sujan, secretary general, ELCOMA, says the government should actively support LED. “Government is the biggest consumer of luminaries. If it undertakes bulk purchase and retrofitting, there will be good demand and prices will decrease. It also has to reduce duties and VAT,” says Sujan.
BEE has worked out a model for promoting LED bulbs together with the Energy Efficiency Services Limited (EESL)-a joint venture of four Central power sectorPSUs-and electricity distribution companies. Under this model, EESL procures LED bulbs in bulk and sells them to families at Rs 10 instead of the market price of Rs 400. The electricity distribution companies then repay EESL over a period of five to eight years from the savings that accrue due to the use of energy-efficient lights. “We have projected that the electricity distribution companies will save 85 per cent electricity consumed in household lighting. They will pass on 30 per cent of that saving to EESL every year for the next five-eight years,” says Saurabh Kumar, managing director, EESL.
EESL has completed several projects to retrofit streetlights with energy-efficient LED lights as well as a 750,000 LED bulb replacement project for houses in Pudhucherry. This bulk purchase reduced the cost of an LED bulb from Rs 400 to Rs 310. Recently, after signing an agreement with the Andhra Pradesh government, EESL completed the process for procuring 2 million LED bulbs. “Almost the entire lighting industry participated in the bid and the lowest quoted price was Rs 204 per LED bulb,” says Kumar.
“We have estimated that there will be a demand worth Rs 5,442 crore for LED in the retrofitting sector in 2013-16, almost a quarter of the estimated demand for LED luminaries in India,” says Sujan. But simply retrofitting current lighting fixtures with LEDs might not give the desired visual comfort. William Sullivan, a retired social worker in Puducherry, noticed the difference in the quality of light when he replaced all lighting fixtures in his room with LEDs a couple of years ago. “The light was drastically less. The light from LED just does not illuminate the regions of the room where I wanted it,” he says. “I was forced to use multiple lights to get the same visual comfort which negated the savings.”
LED light is focused and does not spread like light from other sources. It is best suited for task lighting, such as spotlights, to produce concentrated light. It is not a good choice for general or ambient light as was Sullivan’s requirement. To effectively utilise LEDs for interior lighting one needs to redo the interior layout to facilitate task-lighting. “Most unfortunate thing happening with LED products is that they are being modelled to mimic existing bulbs and tube lights so as to facilitate retrofitting,” says Sahiba Hameed, designer with real estate firm Emaar-MGF in Gurgaon. “The biggest drawback of tube lights is they throw half the light they produce on the wall on which they are mounted, which is outright wastage. Same is happening with LEDs.”
LED, like CFL, requires careful handling. While CFL contains mercury, researchers at the University of California have found the presence of heavy metals like lead, arsenic and nickel in LEDs. “Very few municipalities are equipped to deal with this dangerous waste,” says Krishna Rao Jasim, a green architect in Bengaluru.
Different functions require different types of technology. Policies should set ambitious minimum efficacy levels for light fixtures which should be met by all the technologies.
Slay the guzzler
Mandatory rating for ACs is not enough, raise the standards
An air-conditioner is the most energy-intensive appliance a family can own. When all devices—two ceiling fans, two incandescent bulbs, four tube lights, one TV and one refrigerator—are switched on in a house, a one-tonne AC alone will consume twice as much electricity as all the others put together use (see graph ‘Biggest energy guzzler‘).
India is still not a big AC consumer but with growing prosperity, aspirations and the need for comfort, this will change. The only estimation of the number of ACs in the country comes from India’s official submission to the Montreal Protocol that provides financial assistance to phase out coolants in the machine. According to this, there were some 17 million AC units of below-3-tonne capacity in the country in 2008. Extrapolating this figure on the basis of 10-year average sales, it would be safe to assume that India had 25 million units in 2013 in homes and offices. The annual sale of ACs is pegged at 3.6-4 million units and growth at 15-20 per cent.
Given this scenario, researchers at non-profit Centre for Science and Environment (CSE) have estimated that the current stock of ACs consumes 75 TWh of power. In 2013, the total electricity consumed in the domestic and commercial sectors (offices, malls, shops and institutions) was 257 TWh, excluding private generators. Based on this estimation, ACs already consume 25-30 per cent of the electricity used in these two sectors.
Electricity consumption is only going to grow—and exponentially. Even at the current growth rate, the number of ACs sold in 2030 will be 40 million units. By then electricity consumed by ACs alone would double to 450 TWh in the domestic and commercial sectors. This is equal to the electricity produced by 65 power plants of 1,000 MW each.
This is assuming normal improvements in efficiency. “If India can drastically improve efficiency of this high-energy guzzling equipment, we can do much more with much less,” says Chandra Bhushan, deputy director-general of CSE.
It is also clear that India, being hot and humid in most parts, has a high need for space cooling. The Lawrence Berkeley National Laboratory (LBNL) in a paper, titled “The 100 power plant question”, has estimated that there is a 40 per cent difference in the afternoon peak and 60 per cent difference in the evening peak in cities like Delhi because of electricity demand by ACs. In other words, these cities would use 40-60 per cent less power if they did not have ACs. There is, therefore, no question that improvement in efficiency standards for this sector will be a game changer for the country.
Since 2010 star rating for energy efficiency has been made mandatory for ACs in India. The standards are set in terms of the energy efficiency ratio (EER). The higher the ratio the less the energy use.
Beginning in 2012, the one-star labelled machine had an EER of 2.5, which was revised to 2.7 in January 2014. Under this rating scheme, all ACs with EER of 3.5 and above are labelled five star.
These levels are significantly lower than that of other countries, including China, points out Nikit Abhyankar, senior scientific engineering associate at LBNL. He has found that India’s current average—between the lowest and the highest rated AC—is equivalent to China’s minimum EER requirement. China’s highest rated AC has an EER of over 6 and the best commercially available technology currently sold in Japan has even higher EER of 6.67 (see graph ‘India v China v the best’).
The question is: why can’t India move faster to better technology? The key answer is cost. Energy analysts are quick to point out that people do not buy even the current five-star ACs because they are expensive. New standards that drive up price will only mean fewer sales. It is also said that technology for super-efficient ACs is not available, at least, in India.
But this reasoning does not reflect the reality. First, with the price of electricity going up each day, people look to save money through efficiency.
The question for them is how long it will take to pay back the extra cost. Secondly, technology is available because global players, who make more efficient ACs for other markets, dominate the Indian AC scene. Today LG and Samsung together hold nearly 60 per cent of the Indian market share. In fact, only five companies are responsible for almost 90 per cent of the ACs sold in India.
Indian companies deny they are pulling down the efficiency standards in the country. C Haridas, senior general manager of Indian manufacturer Blue Star, told Down To Earth his company supports ratcheting up of standards as long as a level playing field is provided for Indian makers. But this market leader has no five-star AC model in the category of three- to five-tonne capacity.
Cost is also not a barrier, shows LBNL analysis. They have estimated the global average manufacturing cost and retail price against the retail price of ACs sold in India. Their conclusion is that ACs with EER of 4.21 are cost-effective in Indian conditions with a payback period of five years. This is assuming a residential tariff of Rs 4.5 per unit. If the tariff is higher, which is increasingly the case, the payback period would be less.
That is the nub of the matter. India is a price-sensitive market, so it is the price of electricity in houses that will help drive the change towards efficiency. What is needed is an aggressive programme that incentivises manufacturers to leapfrog to the best available technology today. This would need a super-efficient appliance programme for this sector—provide fiscal incentives to manufacturers and simultaneously increase the efficiency standards.
Improve standards, leapfrog
At a BEE workshop on space cooling efficiency enhancement held in June this year, Sanjay Goyal, country head, sales and marketing, Daikin Airconditioning India, said the AC market globally is shifting to super-efficient inverter technology. “All the ACs sold in Japan and half in China are inverter ACs, while in India the share of this technology is just 5 per cent,” says Goyal.
What is an inverter AC? The standard fixed-speed AC has a single-speed compressor motor that switches off when the desired temperature is reached and on again when the temperature rises to a set level. Inverter technology uses a variable-speed compressor motor that slows down and speeds up as needed. This provides a more precise room temperature and is, therefore, about 30 per cent more energy efficient than fixed-speed ACs.
The inverter AC technology costs more but the Indian star rating system does not recognise the extra edge it provides. It awards five stars to all ACs with efficiency higher than 3.5 EER, so there is no way to differentiate that the inverter technology AC, with EER of 4 and above, is better than most others.
Transitioning to a super-efficient appliance future will also require a high order of technical scrutiny by standard-setting organisations. Currently, the Indian rating system is not as rigorous as the rating system in the European Union, USA and even China (see graph ‘Energy efficiency standards …’). In India, appliance efficiency is rated in laboratory conditions but in real life appliances do not function at test conditions, therefore, they always use more energy.
Energy Star, which is the rating followed in the US and Europe, also factors in varying climatic and temperature conditions, bringing the rated values closer to actual. BEE is reluctant to take up the tedious process of changing testing standards. What it is doing is exploring ways to adopt a seasonal metric to measure efficiency in different climatic conditions. “We have collected climatic and performance data from 40 cities, and will hopefully launch this soon,” says Saurabh Diddi, energy economist at BEE.
A complementary step in saving energy is to lower the demand for air-conditioning. Improve the design of buildings so that they withstand heat and then set higher tariffs for high-energy users.
The solution is clear. Now the question is: what will it take for the government to ensure that India leapfrogs to super efficiency and energy security?
With inputs from Kundan Pandey and Jitendra.