Exploiting Energy Efficiency Potentials in the Indian …...Significant scope for improving energy and environment performance High chances of replication Desperate need for outside

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Exploiting Energy Efficiency Potentials in the Indian MSME sector

Somnath BhattacharjeeInstitute for Industrial Productivity

11 December 2018, New Delhi


1. Why MSMEs-Setting the context

2. Salient features of the Indian MSME sector

3. Barriers and Drivers in promoting EE

4. Factors important in designing MSME interventions

5. Cluster approach for making transformational impact: Case study of Steel re-rolling and Foundry cluster

6. Multiple benefits of improving EE in the MSME sector

Presentation Contents


Industry (Including

feed stocks)52%

Transport22%

Household12%

Agriculture9%

Others5%

Commercial Energy Usage in India-Sectoral Break-up

Manufacturing sectors important from EE viewpoint

• Energy intensive large scale industries (Cement, Iron and Steel, Chemicals, Textiles, Aluminium, Pulp and Paper, Refinery) and

• Vast number of highly inefficient Small and Medium Enterprises (SMEs)


8 % of the Gross Domestic

Product

45% of industrial production

40% of direct exports

Employs 60 million

Contribution of MSMEs to India’s Economy


SMEs-Salient features

A major stakeholder in India's economy

Lack of off-the-shelf packages for technology up gradation

Significant scope for improving energy and environment performance

High chances of replication

Desperate need for outside support

Offers enormous co-benefits


Barriers and Motivation in Promoting Energy Efficiency

Barriers Drivers

Lack of awareness/knowledge and perceived risks

Weak delivery systems

Regulatory pressures/Judicial intervention

Conflict of investment priorities

Proliferation of Profit hunters

Absence of off-the-shelf technologies

Lowering of Operating Cost

Improved product quality/ Access to better markets

Improved workplace environment

Lack of benchmarking and potential assessment Reducing the cost of clean up

Regulatory pressures/Judicial intervention

Lack of awareness/knowledge and perceived risks


SME- Factors to be kept in mind before designing any EE interventions

Establishing a delivery system is as important as finding solutions

Need to design a good bundling model to reduce transaction cost

Demonstrating better option does not necessarily mean that the technology will pick up on its own

Lack of access to finance is not always the biggest hurdle

Ease of operation and better product quality and co-benefits must be accorded a high weightage

Strong need to quantify and monetize all benefits

Knock down state-of-the art technology packages seldom work


SME- Adopting an Industrial Cluster/Hub approach

For example in India…….

An estimated 350 SME clusters

In addition, about 2000 artisan based rural clusters

90% of clusters have developed naturally

Most of the energy intensive natural clusters have great deal of commonality (e.g. glass, foundry, forging, steel re-rolling, pottery, brassware, brick manufacturing )


……… Which implies Substantial scope for technology up gradation (cluster

saturation)

Potential to develop standard solutions

Better chances of up-scaling

……… Which demands A bottom up participatory approach

Adapting the state of the art design to local conditions for cost-effective solution

Sustained hand holding period for mainstreaming

A model that demonstrates intelligent bundling opportunity (project anchoring, delivery chain etc.)


Steel Re-Rolling Sector

• Approximately 2600 units of which

1167 are registered

• Main fuel source: Pulverised coal

• Outmoded design of reheating furnaces

• Mostly located in clusters

• Significant scope for energy efficiency improvement

• Significant scope for reduction in scale/oxidation losses

Foundry Sector

• Around 4500 units

• Main Fuel source: Coke

• Located in clusters

• Existing furnace design - Conventional Cupola

• High energy and material savings potential

• Environmental Compliance is marginal

Sector overview


80% rolling mills are small (2 to 10 tph)

20% are medium to large (11 to 30 tph)

Present production capacity: 24.5 MMT

Growth rate 8.5% per annum

• Capacity of the unit: 4 tpd

• Average daily production : 40t

• Specific coal consumption (old): 110kg/t of product

• Specific coal consumption (new): 80kg/t of product

• Reduction of oxidation losses: 3%

• CO2 saving/t of product (on coal savings): 0.060t

• CO2 saving/t of product (on material saving): 0.081t

• Total CO2 savings per tonne of product: 0.141t

CO2 Mitigation Potential in Steel re-rolling Mills

0

2

4

6

8

10

12

14

16

18

2010 2015 2020 2025 2030

Year

Steel Re-rolling

GHG Mitigation Potential (Million Tonnes)


• Annual production: 4000t

• Specific coke consumption (old): 136kg/t

• Specific coke consumption (new): 80kg/ t

• Reduction of melting losses : 5%

• Coal savings per t of product: 56 kg

• CO2 savings/t of product (coal savings): 0.101t

• CO2 savings/t of product (material Savings): 0.135t

• Total CO2 savings on account of improved furnace: 0.236t/t

CO2 Mitigation Potential in Cast Iron Foundry

0

2

4

6

8

10

12

2010 2015 2020 2025 2030

Year

FoundryGHG Mitigation Potential (Million Tonnes)

Present production capacity: 9.5 MMT

Assumed to be 100% from cupola furnace

Changeover from Conventional to Divided Blast


Welfare of the workforce

Energy efficient technologies

Improved workplace

environment

Increased profitability

and growth

Access to better markets

Safety in workplace

Sustenance of the industry

Overcome business threats

Reduced negative health impacts

Stable employment

Energy and material

savings

Better environmental conformance

Energy Efficiency - Direct & Co-benefits

Improved product quality

Welfare of the workforce

Improved workplace

environment

Increased profitability

and growth

Access to better markets

Safety in workplace

Sustenance of the industry

Overcome business threats

Reduced negative health impacts

Energy and material

savings

Better environmental conformance

Improved product quality


Lets make a difference-Skyline of a Glass cluster

Sharing best practices for the low carbon future


Somnath BhattacharjeeInstitute for Industrial Productivity IndiaTel: +91 11 26691318 (Direct), 26691325 Website: www.iipinetwork.orgEmail: [email protected] us on Twitter and LinkedIn

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Exploiting Energy Efficiency Potentials in the Indian …...Significant scope for improving energy and environment performance High chances of replication Desperate need for outside