6 - Dr. Ashok Kumar - PAT for CERC Memebers at IIT Kanpur 18-19 Oct. 2012

7/28/2019 6 - Dr. Ashok Kumar - PAT for CERC Memebers at IIT Kanpur 18-19 Oct. 2012

http://slidepdf.com/reader/full/6-dr-ashok-kumar-pat-for-cerc-memebers-at-iit-kanpur-18-19-oct-2012 1/30

10/11/20

Department of Industrial and Management Engineering

Indian Institute of Technology Kanpur

5th Capacity Building Programme for

Officers of Electrici ty Regulatory Commiss ions

Forum of Regulators

18 – 23 Oct., 2012

MARKET FOR ENERGY EFFICIENCY:IMPLEMENTING THE PAT SCHEME

Ashok Kumar, Ph.D.Bureau of Energy EfficiencyMinistry of Power

India Primary Energy Demand

1 500 t o e

Other renewables

250

500

750

1 000

1 250 Biomass

Hydro

Nuclear

Gas

Oil

Coal

WEO-2009 Total:

01980 1990 2000 2010 2020 2030

Total primary energy demand in India grows at 3.1% per year on average in 2008‐2035, an

overall increase of 127%

Source: WEO 2010



10/11/20

India’s Oil ImportHistoric expenditure on net imports of oil as a share of GDP

at market exchange rates (with a projection for 2011)

0%1%2%3%4%5%6%7%8%

9 7 1

9 7 6

9 8 1

9 8 6

9 9 1

9 9 6

0 0 1

0 0 6

0 1 1

India

China

OECD average

2%

3%

4%

5%

6%

7%

8%

1 1 1 1 1 1

0%

1%

1971 1976 1981 1986 1991 1996 2001 2006 2011

Source: WEO 2010

Energy Profile - India

Energy Intensity - Industrial Sector

145

150

155

160

165

170

175

180

185

190

3.05

3.1

3.15

3.2

3.25

3.3

1403

2004-05 2005-06 2006-07 2007-08 2008-09

Energy Intensity of industry sector (mtoe per Billion Rs. GDP)

Commercial energy consumption in Industry (in mtoe)



10/11/20

India – CO2 Emission Reduction

Efficiency 51%

Renewables 32%

Biofuels 1%

Nuclear 8%

Share of cumulative abatement

between 2010-2035

CCS 8%

Source: IEA

NATIONAL MISSION forENHANCED ENERGY EFFICIENCY (NMEEE)

•T e Nat ona Act on P an on C mate C ange wasreleased by Honorable Prime Minister of India in June2008

•The Action Plan Outlines 8 Missions including NationalMission on Enhanced Energy Efficiency (NMEEE)



10/11/20

Chronology of NMEEE•30th June 2008 : Hon’able PM releases the NationalAction Plan of Climate Change

•24th August 2009 : PM’s council on Climate Changeapproves NMEEE in principle

•May 2010 : Cabinet approves the financial outlay

•Amendment to EC Act, 2001 passed in both houses of parliament for operationalization of this mandatoryscheme

MISSIONS UNDER NAPCC

•

• National Mission for Enhanced Energy Efficiency• National Mission on Sustainable Habitat

• National Water Mission

• National Mission for Sustaining the Himalayan Ecosystem

• National Mission for a Green India

•

• National Mission for Strategic Knowledge for Climate Change



10/11/20

THE MISSION GOALS

•Market-based approaches to unlock energy efficiency, . ,

•By 2014-15:

• Annual fuel savings in excess of 23 million toe

• Cumulative avoided electricity capacity addition of 19,000 MW

• CO2 emission mitigation of 98 million tons per year

NMEEE – FOUR INITIATIVES

Stimulate Funding Energy Intensive Industriesfor ESCOs

Targets for Mandatory Energy Saving

PAT EEFP

NMEEE

Fiscal Instrument for EE

PRGF

VCF

Public Procurement

Energy Efficient AppliancesBLY

SEEP

DSM

FEEEDMTEE



10/11/20

Perform, Achieve & Trade (PAT) Mechanism

• The market based mechanism to enhance the cost effectiveness in improving the Energy Efficiencyin Energy Intensive industries through certification of energy saving which can be traded

Penalize under

Administrator

•S et target and compliance period

Designated Consumers

•8 s ectors T hermal PowerPlant, Steel, Cement, Fertilizer, Pulp &Paper, Textile, Aluminium, Chlor-alkali

Auditing Agencies

•Independent•Monitor, verifyand certify

Market Place

•Transaction of energy efficiencyinstrument

Reward over

achiever

performer

S t a k e h o l d e r s

Market Based Mechanism

Set Targets

•Setting targets on the basis of

current specific energy consumption•Set compliance period•May take into accountLocation, Vintage, Technology, rawmaterials, product mix etc.

Monitoring & verification of targetsby Designated Energy Auditors

(DENA)

•Check if designated consumer has

achieved targets•Underachievement: Obligations tobuy ESCerts or pay penalty

•Overachievement: Issuance of ESCerts for banking for later use ortrade

Trading of ESCerts

•Participation by Designated

consumers on platform provided byPower Exchanges

•Symmetrical flow of information

P r o c e s s e s

I n v o l v e d

PAT steps

Constituted PATPrepared PAT

Conductedstakeholder

Steering committee

Draft Mechanism foroverall structure for

PAT

Collected BaselineData

document

consultationworkshop

Developed rules forimplementation of

PAT based onconsultationworkshops

Approval of NMEEEincluding PAT scheme

by Cabinet

Constituted Sector Technical Committees

for the formulationtarget settingmethodology

Notified rules andtargets for Designated

Consumers



10/11/20

Getting Information Through Base Line

Format Data Compilation/

Evaluation Target Setting

[Declaration of Base

Year, Target Year ]

PAT Activity Flow Sheet

Communication toDesignated Consumer

Preparation Performance

Assessment Document (PAD or Form A)

Communication to BEE and SDA

Baseline & Target Setting (based on last three years)

(Annual

submission

but the

target

compliance

Verification of PAD through DENA

(Form B) Check Verification of PAD (Form C) through DENA & submission of compliance

doc (Form D).

Issuance of ESCerts after successful M&V

Market for Trade

for three

years)

PAT Scheme : Background & Scope

•Covers 478 designated consumers in 8 sectors

•All DCs consume about 165 mtoeenergy

• Targets would be given to all DCs to achieve the samewithin a time frame

• Achievement >Target ECScerts

• Achievement < Target Purchase ECScerts / Penalty

•National Target = 6.6 mtoe at the end of 1st PAT Cycle(by 2014-15)





10/11/20

Approach for Setting Targets Depends upon

the Objective of the Scheme

SN Sector

o. o Identified

DCs

epor e Energy

Consumption

are o Consumpti

on

ppor one Energy

reduction (MTOE) (%) (MTOE)

1 Iron & Steel 74 28.25 44.99% 1.588

2 Cement 84 14.50 23.09% 0.815

3 Fertilizers 29 8.20 13.06% 0.461

4 A um n um 10 7.73 12.31 0.435

6 Paper & pulp 31 2.09 3.33% 0.117

6 Textile

90

1.17

1.86% 0.069

7 Chlor‐Alkali 22 0.85 1.35% 0.048

Sub Total 340 62.79 100% 3.53

8 Power (Thermal) 140 104.56 100% 3.10

Total 480 167.35 100% 6.63

Target Calculation Methodology



10/11/20

BaselineIssued Escerts Penalty

Concept of Target, Compliance, ESCerts

& Penalty

Target

Target

SEC

Achieved SEC

Compliance

Scenario 1 Scenario 2

Escerts

Trading of ESCerts



10/11/20

Trading of ESCerts

Specific Energy Consumption

• As the SEC is calculated on a Gate-to-Gate concept, the definition of plantboundary plays an important role.

23

PROCESS

Electricity (KWH)

FO (Ltr)

NG (SCM)

Coal (KG)

Others (KG or Ltr)

Product (Kg)

All forms of Energy

E P

=

Baseline SEC

Target SEC

Reduction in SEC

Year 1 Year 2 Year 3

S E C



10/11/20

General Rules for Establishing Baseline

•Definitions:

• -

• Baseline Production (Pbase) : Avg. of 2007-8, 2008-9 & 2009-10

• Baseline SEC (SECbase) : Avg. of 2007-8, 2008-9 & 2009-10

• Baseline CU% (CUbase) : Avg. of 2007-8, 2008-9 & 2009-10

• Target SEC (SECtarget) : SEC as estimated in 2014-15

• Target : % reduction from SECbase

•Estimation of Energy Saving (MTOE) :

P base ( SEC base – SEC target )

Grouping of DCs

* Captive Power Plant



10/11/20

•Covers units using about

Target is Plant Specific …… Less for Energy Efficient &

High for Energy Inefficient Plant

165 mill ion toe/year • Gate-to-gate specific energy

consumption, collectively, tobe about 5.5% less in 2013-14 than it wasin 2008-09

• Less efficient units havelarger SEC %-reduction targets– so that the collective SECreduction is 5 5% .

• Energy Savings Certificates (and

penalties) would be based on

difference betw een the achieved SEC& the target SEC and the base year

Production

Major Points

• Target: In % of Specific Energy Consumption

•For ESCerts or Penalty:

• (Baseline Production) x (% change in SEC)



10/11/20

Example

•SEC in baseline: 10 toe/unit of production

• Target: 4% reduction in SEC

•SEC at the end of 2014-15: 9.6 toe/unit prod

•For ESCerts or Penalty:

• Reduction requirement: 4000 toe

• Case1 (Achieved SEC =9.8): -2000 toe (Penalty)

• Case2 (Achieved SEC =9.4): +2000 toe (ESCerts)

Market Design

•ESCerts are issued

•

• With 1 mToE =1 ESCert

• Banking of ESCerts allowed during each cycle

• 1st cycle ESCerts to 2nd cycle

• 2nd cycle ESCerts to 3rd cycle



10/11/20

Advanced ESCerts

• Baseline, SEC(b) =10 toe/t

• Tar et, SEC (t) =7 toe/t

• Achieved after year 1, SEC (a) =8.5 toe/t

• Production =10000t

• AFTER YEAR 1

• ESCerts =[(SEC(b) – (SEC (b)– SEC (t))/3) – SEC(a)] x 80% x prod

=((10 – (10-7)/3) – 8.5)) x 0.8 x 10000

=(9-8.5) x 8000 =4000 ESCerts

Revised Target =SEC(t) – (ESCerts/Prod)

=7 – (4000/10000) =6.6 toe/t

Penalty Calculation

P = Wc x Pc + Wo x Po + Wg x Pg + We x Pe-

P =Price of one metric ton of oil equivalent(1mtoe);

Pc=Price of F-grade coal declared by Ministry of Coal;

Po=Price of fuel oil as declared by Ministry of Petroleum & Natural Gas;

Pg=Price of gas as declared by Ministry of Petroleum & Natural Gas;

Pe=Price of electricity;

Wc=Weightage of coal;

Wo=Weightage of oil;

Wg=Weigtage of gas;We=Weigtage of grid electricity

The value of per metric ton of oil equivalent of energy consumed is

Rupees 10154 for the year 2011-12



10/11/20

Market Design

•Designated Consumers are obligated to improve energy

•Energy Efficiency Targets are %-age reduction in SECexpressed inAbsolute Savings terms• Various plants in an industry clustered on the basis of different parameters

like technology etc

• Each DC will get anenergyefficiency improvement percentage target

• The targetwouldbe converted into absolute energy saving target(in mToE

• The absolute energy saving target (obligations) would be applicable for a

compliance periodof threeyears•Designated consumer canmeet target by

• Undertakingenergy efficiency measures themselves

• Buy ESCerts fromsomeoneelse

Market Design

• Compliance andReporting

• Total compliance period of3 years (march2015)

• Designated Consumers would undertake energy efficiency measures andsubmitannual reports

• If submitted annual reports show over-achievement, ESCerts to be issuedfor level of over-achievement

• Provision of annual reporting along with penalties in case of non-compliance

• After period of 3 years, a complete gate-to-gate measurement to beundertaken for verifying SEC and plant capacity for each DC

•

• DENAs wouldbe organizations,whichmeetminimumcapability norms

• DENAs would beaccreditedand empanelledbyBEE

• BEE will initiate compliance checks on dip-check basis on both DC andAccredited EnergyAuditor

• In case of non-compliance State Designated Agencies to levy penaltieson DC



10/11/20

Institutional Design

BEEMarket Regulator & AdministratorMoP

SDA DENADesignatedConsumers

(DCs)

Updatedlist of DCsand DENA

Any BaselinesImprovement

AuditedResult of DCs

Any BaselinesImprovement

Audit

Apply forESCerts

through PATAssessmentDocument(PAD)

Issuance of EScerts

Regular

updates

E-filingApply forEmpanelment

PADInformation

Central Registry Trading ExchangeUpdated Obligation

of DCs: Deficit orSurplus

UpdatedESCerts

Account Info

SettlementDetails

ESCerts

Trading

Regular Checks & Levy Penalties in case of

defaults

NORMALIZATION FACTORS



10/11/20

Normalization Area

Input Primary Energy

[Fuel]

Input Secondary

Energy [Electricity]

Technology &

Environment Standard

Product

PAT

Normalization

Capacity Utilization or

PLFNatural Disaster

Input Primary Energy[Fossil Fuel]

•Use of Biomass and Waste Fuel

•Non Availability of Fuel

•Re-Cycling

•By Product used as Fuel

Plant has to maintain the relevant documents to justify their cause



10/11/20

Input Secondary Energy[Ex: Electricity, Steam]

•Purchased from Grid

• Through Waste Heat Recovery

•Export to Grid

•Renewable Energy

Capacity Utilization and PLF[Poor Performance]

•Fluctuation due to Scheduling

•Non-availability of fuel or Raw Material



10/11/20

Raw Material & Product[Quality, Output Type]

•Quality of Raw Material

•Production Semi-finished Product

• Input Semi-finished Product

Environmental Standards and Natural Disaster[Govpolicy]

•Change in Standards

•Natural disaster

•Rioting or social unrest



10/11/20

IMPLEMENTATION PHASE

Stakeholders

Nodal Statemns ra or

MoP/

Central

Agency

Bureau of Energy

mpemener

Designated

Administrator

StateDesignated

er er

AccreditedEnergy

Govt. c ency gency u or



10/11/20

ROLE OF DC

1. Preparation of scheme for implementation of efficient use of energy and its conservation

Every Designated Consumer, within three months (30th March,12 - 30th

J une,12) of the issue of notification under sub-rule (6) of rule 4 shallsubmit a scheme to State designated agency with a copy toBureau, which mayinclude: -

Action Plan contain ing inter- alia, a br ief descr iption of identified energy saving measures to comply energyconsumption norms and standards by the target year.

The estimated cost of each identified energy savingmeasures.

Implementat ion plan to achieve energy consumption normsand standards through implementation of energy savingmeasures or through purchaseof energy sav ings cer tif icates .

Role of DC

2. Procedure for Monitoring and Verification

• re aration and maintenance of uarterl and earl data reports by the designated consumers forfollowing:• on the performance of plant and production processes;

•on the outcome of internal field audits of plant andproduction processes

• regarding a year-wise reporton production achieved, energy

consumed, and specific energy consumptionachieved, specific energy consumption reductionachieved, measures adopted for energy conservation andquantityof energysaved



10/11/20

Role of DC

3. Assessmentof Performance• Every DC within three months of the conclusion of the target

year from the baseline year shall submit to the SDA with acopy to the Bureau, the performance assessment document(PAD) in Form ‘A’, duly verified together with certificate in Form‘B’given bytheAccredited EnergyAuditor (AEA).

• The DC within 3 months after the end of first or second year of ‘ ’

BEE for issuance of proportionate energy saving certificates

covering the performance for a period not less than one yearfromthe date of notification specifying the energy consumptionnorms and standards duly verified together with form ‘B’ givenbyAEA alongwith documents mentioned in sub-rule(1).

Role of AEA for verification of Form ‘A’

•Shall assess the correctness of the information providedb the designated consume regarding the compliancewith energyconsumption norms andstandards.

•Shall report the results of assessment and his opinionalong with the supportingdocuments.

• ,BEE shall consider thatall the requirements with regard tothe compliance with energy consumption norms andstandards, entitlement about issue or liability to purchaseenergysavings certificate have been met.



10/11/20

Role of SDA

•After submission of duly verified Form ‘A’ by designated,

comments, if any, on Form ‘A’ to the Bureau within fifteendays of the last date ofsubmissionofForm‘A’

Recommendation for issue of energysavings certificates

•

verification report, and check-verification report, whereversought by it, send its recommendation to the CentralGovernment, based on the claim raised by the designatedconsumer in Form ‘A’, within ten working days from the lastdate of submission of said Form ‘A’ by the concerned statedesi nated a enc , fo issuance of ener savin s certificates.



10/11/20

Procedure for issue of ESCerts•Central Govt. after receiving recommendation from Bureauissue ESCerts of desired value to DC within 15 working days.

•ESCerts shall only be in electronic form

•1 ESCerts= 1 toe

• The DC who has been issued energy savings certificatesmay sell them through the power exchange.

•ESCerts issued in current cycle shall remain valid till.

•ESCerts purchased by DC for compliance shall after their

submission to Bureau stand expire.

Accredited Energy Auditor forVerification and Check Verification

Registered under Partnership act 1932 or Company act 1956 or anyother legal entity competent to sue or to be sued shall be entitled toun er a e ver ca on or c ec ver ca on process :

oHas at least 1 AEA

oHas 3 energy auditors

oHas expertise of field studies

oHas minimum turnover of 10 Lakh rupees in at least one of previous 3years or in case of newly formed organization, a net worth of 10 Lakh

.

• Bureau shall invite applications fromthe firms for the work of verificationandcheck verification

• Selected applicants shall be issued a certificate of empanelment andunique identification number.



10/11/20

Obligation of AEA

•AEA shall constitute a teamcomprising teamhead andothermembers including experts.

•A person who was employed in DC within previous 4yrs shall notbe eligible

•Any firm or company or other legal entity who wasinvolved in energy audit in any DC within previous 4yrs shall notbe eligible forsuchDC

•

free of potential conflictof interest

•AEA shall have documented system for preparing theplan for verification or CV which should contain thetask required to carried out in each type of activity, interms of man days.

Obligation of AEA

• The name and Bio data of team members shall be

• Team shall be provided by AEA with concerneddocuments indicating their full responsibilities withlimitations to concerned DC

•AEA shall ensure the confidentiality of allinformation & data obtained or created during

ver ca on o c ec ver ca on•AEA shall submit the check verification reporttogether with certificate in Form-C to Bureau.



10/11/20

Check Verification

The Bureau may on its own or receipt of a complaint within 1y from date of submission of compliance report o within sixmonth from the date of issue of ESCerts whichever is latershall initiate action for review of compliance report whichincludes:

a) Issuing a notice to DC and AEA asking for comment within

10working days.

,shall after taking into consideration the said

comments, decide to undertake or not to undertake reviewand the Bureau shall record the reasons in writing for itsdecision;

Check VerificationIf Bureaudecides totake review:

• it shall appoint an AEA who has not perormed the veri ication unctions withrespecttothe concerned DC toconductthe check-verification.

• on a complaint, the said check-verification shall be carried out at the cost of the complainant.

• The said accredited energy auditor shall assess and verify that the activitieserformed b the DC for com liance with the ener consum tion norms and

standards are in accordance with these rules.

• The DC shall furnish full and complete data, provide necessary documentsand other facilities required by the AEA for the purpose of performing thefunctionof check-verification under these rules.



10/11/20

Check Verification• The AEA in-charge of check-verification function shall report the

results of his assessment ina check-verification reportto BEE.

• If he has a positive opinion, it shall be concluded that all therequirements have beenmet.

• If he has a negative opinion the effect of such opinion on the energyconsumption norms and standards, issue or purchase of energysavings certificate, the liability of the AEA giving the verification report

verification report shall be calculated by the AEA conducting the

check-verification.

• The AEA in-charge of check-verification shall submit his report withdue certification in Form ‘C’ to the Bureau and the concerned StateDesignated Agency.

Amount Payable by DC

•Value of amount payable by DC shall be as worked out inre or PLUS 25% o such value because of unfai racticeused by DC

•Amount of toe of energy specified because of unfair gain

•Cost of check-verification



10/11/20

Details provided by Bureau to SDA

•No. of ESCerts wron full obtained b DC

•No. of ESCerts which DC was liable to purchase for non-compliance

•Details of misrepresentation & unfair gain due tomisrepresentation.

•Cost of check verification

Penalties Proceedings (After CheckVerification)

Within2 month fromdata of receipt of FormC

shall initiate:

•Action to recover from DC the loss to central Govt. by unfairgain

•Penalty proceedings against persons mention in report underintimation to BEE

•Re iste com lain fo unfai ain i DC doesn’ a enalt &loss to exchequer inspecified time



10/11/20

Timeline & activity chart of DC

Mandatory Voluntary

Submission of Form 1 Oncein a 30th J une NA NAyear

Submission of Form A(Performance AssessmentDocument)

Once in 3years

30th J une2015

BeforeComplianceyear

30th J une

Submission of Form B(Verification by DENA)

Once in 3years

30th J une2015

BeforeComplianceyear

30th J une

ssuanceo ers nce n ayear

ug e oreComplianceyear

ug

Submission of Form D(Performance ComplianceDocument)

Once in 3years

30th Nov2015

NA NA

THANK YOU

Documents

6 - Dr. Ashok Kumar - PAT for CERC Memebers at IIT Kanpur 18-19 Oct. 2012