The Government of India, Energy Efficiency Services Ltd (EESL), and the World Bank have signed a $220-million loan agreement and a $80-million guarantee agreement for the India Energy Efficiency Scale-Up Program.
The program, to be implemented by EESL, will help scale up the deployment of energy saving measures in residential and public sectors, strengthen EESL’s institutional capacity, and enhance its access to commercial financing, a release from EESL said.
The investments under the program are expected to avoid lifetime greenhouse gas emissions of 170 million tonnes of CO2, and contribute to avoiding an estimated 10 GW of additional generation capacity. This would be over 50 per cent of the National Mission for Enhanced Energy Efficiency target of 19.6 GW indicated in India’s Nationally Determined Contributions (NDCs) under the Paris Accord.
Under the program, EESL will deploy 219 million LED bulbs and tube lights, 5.8 million ceiling fans, and 7.2 million street lights, which will be supplied by private sector manufacturers and suppliers.
The key components of the operation include: creating sustainable markets for LED lights and energy efficient ceiling fans; facilitating well-structured and scalable investments in public street lighting; developing sustainable business models for emerging market segments such as super-efficient air conditioning and agricultural water pumping systems; and strengthening the institutional capacity of EESL. Moreover, the Program will help to increase private sector participation in energy efficiency, including through private sector energy service companies, the release noted.
The $220-million loan, which will come from World Bank associate International Bank for Reconstruction and Development (IBRD) has a five-year grace period, and a maturity of 19 years. The $80-million IBRD guarantee will partially cover re-payment risks to commercial lenders or investors, to enable EESL to raise funds for its program.
As an integral part of the operation, the first-ever IBRD guarantee in India will help EESL access new markets for commercial financing in line with the Bank’s approach of maximizing finance for development. The guarantee is expected to leverage some $200 million in additional financing, to help EESL with its growing portfolio and future investment needs.
Featured photograph showing LED street lights is for illustration only
