New Mechanism Feasibility Study For Energy Savings …gec.jp/gec/en/Activities/fs_newmex/2011/2011newmex16_eJRI_India... · ＜1＞ New Mechanism Feasibility Study 2011 – Final

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New Mechanism Feasibility Study 2011 – Final Report

New Mechanism Feasibility Study For Energy Savings Through Utilization of LED Lighting at Office Buildings

in India

Japan Research Institute, Ltd.

1. Study Administration • Contractor: Japan Research Institute, Ltd. • Subcontractor: Panasonic Corporation: Measurement of power consumption by

LED lighting and related work • Subcontractor: ANCHOR Electricals Pvt. Ltd.: Replacement and restoration of

lighting • Subcontractor: Evalueserve Pvt. Ltd: Research on LED lighting market in India • Partner: Sumitomo Mitsui Banking Corp.: Financing planning research and

related work 2. Project/Activity Summary 1) Project/Activity Description The project consists of installing LED lighting in India while utilizing “Bilateral Offset Credit Mechanism”(BOCM), measuring reduction effects through demonstration testing of the LED lighting, and verifying eligibility as “BOCM” for achieving reductions in power consumption and greenhouse gases. Large-scale power sources are being developed to address India's chronic power shortage, but they are chiefly coal-fired thermal plants or use other fossil fuels, a primarily factor in increasing the country's greenhouse gas emissions. To limit this increase, it is necessary to consider both supply-side and demand-side measures, and promoting energy conservation is one demand-side measure. Replacing lighting, which accounts for 20-40% of power consumed by commercial buildings, with energy-efficient lights (with LED lighting specifically) has been cited as one type of energy-saving measure. Converting to LED lighting will help limit power consumption and reduce greenhouse gases. Japanese-made LED lighting in particular leads the world from a technical standpoint, but due to the emphasis in India on initial investment, it does not have an adequate presence on India's LED lighting market, so the project will facilitate understanding of the medium- and long-term cost reduction benefits, help popularize Japanese-made LED lighting in India under “BOCM” and obtain greater energy savings and greenhouse gas reductions. An LED lighting installation model will be verified based on actual lighting installed at a model facility (commercial building of approx. 150-200 square meters) in Delhi, where many commercial and industrial buildings are located, which will facilitate installation of LED lighting at commercial and industrial facilities in the city and contribute to

2011 New Mechanism FS - Report

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widespread adoption nationwide. 2) Situation in Host Country (1) Approach of Host Country to “BOCM” India is not necessarily taking a positive stance to “BOCM”. The Indian government did express a positive stance toward “BOCM” at the Japan-India summit held in October 2010, stating, for example, that it would reaffirm the importance of strengthening bilateral discussions regarding climate change, including the creation of bilateral cooperative frameworks, but Dr. Ajay Mathur, Director-General of the Bureau of Energy Efficiency, which is the Indian governmental body responsible for making proposals related to climate change programs, and a member of the government's advisory committee on climate change, has not expressed clear support for “BOCM”. In order to promote “BOCM” in India, which has not necessarily taken a positive stance toward them, it will likely be necessary to build the technical side of schemes with the relevant ministries and government bureaus in India and then hold discussions with the Ministry of Environment and Forests, the final decision-making body. Also, it will be necessary to show clear evidence of practical utility compared to current schemes and to clarify creation of “BOCM” for the scheme overall as well as the scheme's international positioning, etc. (2) Information Related to Conditions in the Host Country, Including Government Policy The Indian government's policy on energy conservation can be traced back to the 1970's. However, it really entered the picture as government policy in the 1990's, and since 2000, related activities have been concretely established. Focus should be placed on the Energy Conservation Act 2001, which was established with the country's 9th Five Year Plan, and the Bureau of Energy Efficiency (BEE), which was established under the Ministry of Power as the promotional body for the act. The Energy Conservation Act and the BEE currently play a central role in India's energy conservation policy. Since the 10th Five Year Plan, India has started to place priority on specific energy conservation policies. The Integrated Energy Policy 2006 created by the Planning Commission compiles energy policies that had been promoted separately by various government agencies and lists related policy items to be implemented on a medium- and long-term basis. This policy includes proactive initiatives in the area of consumer goods as well, including making purchases while considering life cycle costs of electrical products.

(3) Policy Relationship Between Energy Conservation and Climate Change India announced its National Action Plan on Climate Change in 2008, a voluntary plan addressing climate change, and climate change policies are being promoted under this plan. The medium-term target submitted to the UNFCC in 2010 after COP15 calls for emissions reduction of 20-25% per unit GDP compared to 2005 levels. In India's National Action Plan on Climate Change, there are eight national missions, and energy conservation is one of them. One of the specific priority measures in the area of energy conservation is the Perform, Achieve and Trade (PAT) certification scheme for energy-savings achievement. The scheme is particularly focused on


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energy conservation in the industrial sector. In addition, as a part of Jawaharlal Nehru National Solar Mission, which derives from the National Action Plan on Climate Change, the Ministry of New and Renewable Energy announced the development of "solar cities" in 60 cities around the country. Installing LED lights is encouraged as a part of this mission.

3) Eligibility as a New Mechanism Due to future economic growth, it is estimated that market size of light fixtures of the Indian country in 2020 is going to be more than three times in 2010. Looking at the breakdown, despite the incandescent lamp accounted for 79% of all light fixtures, LED is less than 1% (based on quantity). In India, low-efficiency lighting fixtures are widely used. (Source; Industry Report on General Lighting, Electrical Components Manufacturers Association) Indian government agencies such as Bureau of Energy Efficiency (BEE) have been implemented energy conservation program. On the other hand, measures specialize in lighting equipment do not exist. For this reason, in the lighting accounts for 20 to 40% of electricity consumption in commercial buildings, LED lighting conditions with a large initial investment compared to the general lighting equipment to spread rapidly is hard to believe. Therefore, considered this project will spread the LED lighting manufacturer in Japan, in order to achieve emission reductions GHG power consumption in India, it has eligibility as “BOCM” with an objective viewpoint. 4) Policies For Widespread Promotion of Project/Activity The project will measure reduction in power consumption at commercial buildings and reductions in greenhouse gas emissions. In India, it is assumed that there are many buildings that use low-efficiency lighting, so it is believed that proposing use of LED lighting, which can reduce power consumption and utilize “BOCM”, backed by actual reduction data will facilitate widespread promotion of the project in India. 3. Study Description 1) Study Issues

• Conditions surrounding climate change in the target country and overview of government policy Government policy on energy conservation and specific activities for

commercial facilities Policy related to energy conservation Initiatives of government agencies in India Regulatory trends related to energy consumption at commercial

buildings Positioning of LED lighting in energy conservation policy Current state of power in India and future projections

• Market for the technology/product, etc. and overview of related policy, etc. Lighting market in India Size of LED lighting market Growth prospects for LED lighting market


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Major LED lighting products, prices, etc. LED lighting supply chain Major suppliers in LED lighting market Recent trends in LED lighting market

Related government policy LED-related projects in the public sector

• Local site for demonstration testing Summary of existing facilities, etc. at candidate sites for demonstration

testing Methodology for demonstration testing

2) Study Content (1) Conditions surrounding climate change in the target country and overview of government policy

i. Government policy on energy conservation and specific activities for commercial facilities In the National Action Plan on Climate Change, focus is placed on the industrial sector in particular; including, for example, a Perform, Achieve and Trade (PAT) certification scheme for energy-savings achievement. The Energy Conservation Building Code has been established for newly constructed commercial buildings, and energy conservation measures are promoted.

ii. Positioning of LED lighting in energy conservation policy As a part of Jawaharlal Nehru National Solar Mission, which derives from the National Action Plan on Climate Change, the Ministry of New and Renewable Energy announced the development of "solar cities" in 60 cities nationwide. Installing LED lights is encouraged as a part of this mission.

iii. Current state of power in India and future projections According to data from the Central Electricity Authority, India as a whole has a power shortage of 92,848 GWh as of 2010. The shortage is projected to grow to 1,914,508 GWh by 2021.

(2) Market for the technology/product, etc. and overview of related policy, etc.

i. Lighting market in India India's lighting market in 2009 was ¥124.7 billion, with outdoor lighting accounting for 70% of the total and indoor lighting accounting for 30%. In terms of light types, HID lights have the largest share of the lighting market.

Size of LED lighting market

– LED lighting market in 2009 was ¥3.79 billion – LED lights largely used in street lamps and outdoor lighting; indoor

lighting accounts for around 5% – 60% of LED indoor light use is in the hospitality sector; the office

sector is only roughly 10% Growth prospects for LED lighting market

– Average annual growth from 2011 to 2015 projected at 48% – Factors promoting growth are lower prices from technology


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improvements and lower taxes on consumer goods, establishment of domestic testing facilities and quality standards, and increased recognition from LED light promotions

Major LED lighting products, prices, etc. – Innovation leads to a price reduction of lighting LED, lighting

equipment and the existing gap is shrinking. Currently, the illumination LED : the existing lighting = 1:5 but it has been forecast in 2015 is going to be 1:2.5.

LED lighting supply chain – Almost all Indian companies that manufacturer LED lights do not

import finished products; they assemble imported components in India.

– Finished LED light products have quality confirmed at domestic and overseas testing facilities and go to end users through distributors.

Major suppliers in LED lighting market – Philips Lumileds

• Operating company of Philips Electronic • LED light sales of $7.20 million (2009) • Partners with Future Lighting Solution (operating company of

Future Electronics), which manufactures LED light components • Products are not manufactured or assembled in India; finished

products are imported and sold through Future Electronics – OSRAM

• LED light sales of $5.10 million (2009). 60-70% of sales is revenue from customers in the hospitality industry, including ITC Hotels and Taj Hotels.

• Products are assembled in a domestic plant with LED chips imported from a company-owned plant in Malaysia. 99% of sales are through distributors.

– Dixon Technologies India • Electronics manufacturing service headquartered in Noida • Merged with Lighting Science Group (US); LED chips made by

Lighting Science Group are assembled at a plant in Noida and sold domestically in India.

– Sujana Energy Limited • Operating company of Sujana Group, a major local corporation,

that provides environmental products and power generation technologies.

• Alliances with CREE (US), an LED manufacturer, and Nichia. LED chips imported from these two companies, and assembly done in a plant in Hyderabad.

– Bajaj Electricals – Kwality Group – MIC Electronics

Recent trends in LED lighting market – De Core Nanosemiconductors Ltd. established a semiconductor

chip factory with investment of approximately ¥18.0 billion by the end of 2011. Almost all the chips to be manufactured at the plant are expected to be used in LED lights, with 50% being exported to other countries. Of the 50% to be consumed domestically, 60-70%


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will be used in products for rural areas. – In February 2010, Schneider Electric launched the LED-based

"In-Diya" lighting system on the market. The system is targeted at India's rural areas, where power supply is unstable. External rechargeable batteries enable the system to be used for indoor lighting for 8-15 hours during power outages.

– Instapower has a contract with the Indian government for installation of LED lights at government facilities. The facilities include Apollo Hospitals, India Gate, New Delhi's main highways, the Presidential House, Safdarjung Hospital, etc.

– The non-profit Climate Group, which provides support for realization of a low-carbon society through partnerships with governments, municipalities and corporations in various countries, plans to install 314 LED lights in Thane, 273 in Kolkata and 290 in Haldia.

– Hyperion Green Energy India Private Ltd. will conduct a project to replace 10,948 street lights in Rajamundry, Andhra Pradesh with LED lights. It is expected to reduce energy consumption by 60%.

ii. Related government policy LED-related projects in the public sector

– Rajiv Gandhi Green Vidyutikaran Yojana (RGGVY) • Project started in 2005 to provide power free of charge to rural

households below the poverty line and bring electricity to rural areas

• As a part of the first phase of the RGGVY, CFL lights were installed for efficiency at all households below the poverty line

• In the second phase of the project, plans call for the CFL bulbs to be replaced by LED bulbs at a projected cost of ¥4.9 billion.

(3) Local site for demonstration testing

i. Summary of existing facilities, etc. at candidate site for demonstration testing • The site for demonstration testing is the office (111 square meters) in

southern Delhi. The office interior is described below. • Number of lighting units and total wattage are as follows. 44W × 40 units = 1,760W 88W × 10 units = 880W Total: 2,640W


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ii. Methodology for demonstration testing • The demonstration test will replace conventional light bulbs with LED lights on

(part of) one floor of a commercial building. • Measurement of power reduction conducted by installing a power meter on

the distribution board to measure power consumption by the conventional light bulbs and power consumption by the replacement LED lights.

4. Study Findings on Feasibility of New Mechanism Project/Activity 1) Emissions reduction through conducting the project/activity (1) Grounds/basis of emissions reduction and demonstration method In this project, lighting facilities, which it is said account for 20-40% of the power consumed by commercial buildings, are replaced with energy-efficient units, specifically LED lighting, to thereby reduce emissions of greenhouse gases. The project's emissions reductions are brought about by the high efficiency of LED lights and are demonstrated by measuring or estimating the amount of reduction in power consumption before and after the project is implemented. In this study, it was demonstrated that power consumption is reduced through demonstration testing at a commercial building in India. An overview of the test and results are provided for reference before.

i. Overview of demonstration test The following is an overview of the demonstration test. • Lighting in administrative area of commercial building replaced with

LED light to demonstrate change in power consumption • Lights before replacement: 40 sets of CFL (18W × 2) (80 units), and 10

Room View 1 Room View 2

Light Fixture 1 Light Fixture 2 Distribution board


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sets of FPL (36W × 2) (20 units) • Lighting after change: 120 units of LED lighting (model no. NNP71200;

8.3W) • When measuring power consumption, there was variance between the

scope of lighting change and the smallest unit measurable by the distribution board, so work was done on the distribution board.

ii. Results of demonstration test

The results of the demonstration test will be added in the table below following completion of the test. It is assumed that the text will demonstrate reduction in power consumption per hour.

Before lighting change

Testing period Feb 2012 Total lighting hours 9 hours Power Consumption (Rated) CFL: 36W + (Stabilizers 8W) = 44W

FPL: 36W + (Stabilizers 8W) = 44W Power Consumption (Measured)

CFL: 45.2W FPL: 90.3W

Number of units CFL: 40 units FPL: 10 units

Total power consumption 2,711W Power consumption per hour 301.2W/h

After lighting change

Testing period Feb 2012 Total lighting hours 9 hours Power Consumption (Rated) LED: 8.3W Power Consumption (Measured)

LED: 8.5W

Number of units LED: 120 units Total power consumption 1,020W Power consumption per hour 113.3W/h Power consumption gap per hour compared to the former situation

187.9W/h

Source; Measured data in Delhi (2) Methodology and required investigations, etc., into proving reduced emission effects The following two approaches were investigated as the methodology behind proving reduced emission effects.

i. Measuring the amount of electrical power consumed This approach involves measuring fluctuations in the amount of power consumed by the target lights before and after project implementation, and then calculating the emission reduction value by multiplying the results against a power-emission coefficient. The reduced emission value is calculated with the following equation as a basic principle.

Annual emission reduction = Electrical power carbon emission coefficient x (Annual power consumption before project implementation - Annual power consumption after project implementation)


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* We are planning on taking the effects of the power lost (annual transmission loss) during consignment onto the power grid into consideration when working on this in detail.

It is important for this approach to examine and establish methods in which the power consumption before and after project implementation can be accurately measured. However, we believe that there is a high possibility of commercial buildings in India differing between relevant measurement ranges and relevant measurement units, as can be observed in the building in which the verification experiments are to be carried out. We expect that the distribution boards will need to be modified to match them up with the relevant measurement range, but this will incur commensurate costs for the projector organizer, which leaves concerns that the incentive for implementing the project may be lost. Owing to this, we examined the possibility of going ahead with the following methodology which does not require any modifications.

ii. Measuring the amount of electrical power consumed from total light output (wattage) and operating time This approach involves recording the output (wattage) of the target lights before and after project implementation and then measuring the amount of power consumed from the total operating time. The reduced emission value is calculated with the following equation as a basic principle.

Annual emission reduction = Electrical power carbon emission coefficient x (Annual power consumption before project implementation - Annual power consumption after project implementation) However, Annual power consumption before project implementation = Light wattage before project implementation x Light illumination time before project implementation (for one year) Annual power consumption after project implementation = Light wattage after project implementation x Light illumination time after project implementation (for one year)

It is important for this approach to examine and establish methods in which the amount of time the lights are illuminated can be measured before and after project implementation. Methods for measuring illumination time are thought to occupy three main categories, which are 1) recording the illumination time with the use of light sensors or heat sensors, etc., 2) recording the illumination time manually in a log on a daily basis, and 3) presetting the illumination time in accordance with the normal operating hours of the commercial building in question. The main features of each of these methods are listed below.

1) This is basically thought to be the most accurate method, but the costs incurred by the project organizer are high, which leaves concerns about this hindering expansion of the project activities.

2) This is thought to be a superior method from the point of few that labor costs for the project organizer are not that great. However, as the project owner will be required to maintain the log manually, there is no accurate way of


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confirming that the actual illumination times were faithfully recorded. 3) This is also thought to be a superior method, as it offers the benefit of the

smallest labor costs for the project organizer. However, presetting the illumination time in accordance with normal operating hours requires the time to be set conservatively, which leads to concerns about cases in which emission reductions effects may not be able to be accurately observed. Also, it is thought that there will be discrepancies between being able to apply this method and not being able to apply it depending on the type of commercial building in question. (However, in the case of commercial buildings such as hotels and retail stores, the data based on the method may be reliable.)

We discovered the following points during interviews related to measuring

illumination time with the people concerned: With regard to method 1), there are very few results of measuring light

illumination time with sensors, and implementation will be difficult owing to the technological issues involved (by Panasonic Corporation.)

With regard to method 2), there are no specific problems involved in setting suitable illumination times. There is no necessity to stick strictly to normal business hours, and the time can easily be set to about one or two hours after normal business hours in consideration of probable overtime work. As it will be difficult to verify values effectively for each individual project, it is acceptable to establish a rational scenario beforehand and then apply this method in accordance with the business field and the conditions inherent with the building (by Naoki Matsuo, president of Climate Experts during an interview with an expert on the subject.)

Based on the results of these interviews, method 3) will be set as the fundamental selection owing to the fact that it was confirmed from interviewee responses that this method would require the minimal labor from the project organizer and because experts said there were no particular problems, and method 1) will be retained as a potential selection depending on the intentions of the project owner. Method 2) will be discarded because there is no way of confirming the contents of the project owner’s reports.

2) Reference Scenario and Project/Activity Boundary (1) Validity of Reference Scenarios for the Project and Related Activities It was decided that we would examine reference scenarios in light of the fact that LED lights are being adopted in India.

• Data of the direct sale of lighting equipment in India indicated that LED lights account for only a very small percentage. (Source: Industry Report on General Lighting, Electrical Components Manufacturers Association.) LEDs account for 2.0% of the monetary base and 0.1% of the volume

base. The products with the highest percentage are fluorescent lamps for

monetary sales (43%) and incandescent bulbs for volume sales (79%). • As the above data indicates that there is very little chance of LEDs being

selected when replacing lights, reference scenario = BaU (lighting facilities before project implementation) will be set. However, future restrictions on the sale and use of low-efficiency lighting


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(i.e., incandescent bulbs, etc.) can be expected. If the lighting fixtures targeted with these restrictions are used in scenario BaU, a reference scenario calling for the use of lights that provide a similar or greater level of luminance out of the equipment that enjoys the highest share of sales (on a volume base) will be used.

• On the other hand, the cost of LEDs is expected to fall drastically in the future, and this will probably lead to the rapid spread of LED lights. (Source: Industry Report on General Lighting, Electrical Components Manufacturers Association.) A forecast for the year 2020 indicates that LEDs will occupy a 46%

(monetary sales base) share and 19% (sales volume base) of the entire LED market.

• The widespread distribution of LEDs will mean that the concept behind the BaU reference scenario loses its validity, and adjustments can be made if the project is not established.

• The valid period of the project will expire when the market share of LED sales exceeds 50% on a volume basis (new registrations will not be carried out.) The market share of LEDs will be obtained from the latest edition of

statistical data published in India (by the Electrical Components Manufacturers Association.)

Two years will be required before results of market shares for each year become clear in statistical data. Owing to this, the results of market share for the most recent viable year will be used for reference purposes when registering each project, and decisions will be made on whether to go ahead with the project at that time.

Also, although it is natural under normal circumstances to observe the lighting market for office buildings in individual units as opposed to the entire lighting market, we will be using data from the entire lighting market because there are limitations on the statistical data available.

(2) Project and Activity Boundaries Distribution of LEDs is expected to differ between areas, so the ideal plan is to analyze the economic development of each individual area and then establish reference scenarios by region. However, reliable data that will help us understand the distribution of lighting equipment in the different areas of India does not exist, so we expect to be forced to use data covering the entire country for the project and activity boundaries. 3) Monitoring Methods and Plan We expect that the targets used for monitoring in this project will be the amount of electricity consumed before and after the project is implemented or the output (wattage) of lighting equipment before and after the project is implemented, together with the total amount of illumination time. Outlines of the methodology involved in this are shown below for each approach.

i. Approach involving the measurement the amount of power consumed

Monitoring Target Monitoring Method Units Frequency Amount of electricity consumed before

Installation of electric meters in the distribution boards of commercial buildings to measure the amount of

kWh/day Once/Day


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project implementation

power consumed for a specific period before the project is implemented (switch across to LEDs.) * The power consumption data is expected to be accumulated on a storage medium.

Amount of electricity consumed after project implementation

Installation of electric meters in the distribution boards of commercial buildings to measure the amount of power consumed for the entire period of project implementation.

Ditto Ditto

ii. Approach involving the estimation of the amount of power consumed calculated from light output (wattage) and operation time

Monitoring Target Monitoring Method Units Frequency Light output before project implementation

On-site surveys carried out in targeted commercial buildings before project implementation (switch across to LEDs) to record the output of all target lights.

W Once

Light output after project implementation

On-site surveys carried out in targeted commercial buildings after project implementation (switch across to LEDs) to record the output of all target lights.

Ditto Once/Year

The method used to monitor illumination time will basically involve establishing illumination times within the normal working days of the targeted commercial buildings. In this event, expected illumination times based on what is thought to be suitable in accordance with the actual use of each building will be preset, and this method will be used only for the targeted commercial buildings. The building uses and expected illumination times being considered at the moment are shown below.

No Usage Expected Illumination Time Zones and

Range Remarks

1 Offices Time Zone: Start of the working day until the end of that working day. Range: Lighting installed in offices, receptions, corridors and other public space in which full-time employees perform their usual jobs. * Excluding meeting rooms.

Checks to be made on time zones when lights are extinguished during working hours (lunchtime) and cases in which they are extinguished owing to sufficient light being available, etc., at the point of registration. * To be confirmed during verification procedures carried out through individual reports and by survey organizations, etc.

2 Retailers Time Zone: During working hours. Range: Lighting installed in areas when shop assistants serve customers.

Ditto

3 Hotels Time Zone: During working hours (24 hours.) Range: Lighting installed in the

Ditto


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reception and entrance lobby, etc. (areas in which lights are expected to remain illuminated for 24 hours a day.)

4 Hospitals Time Zone: During working hours (24 hours.) Range: Lighting installed in the reception and emergency lighting, etc. (areas in which lights are expected to remain illuminated for 24 hours a day.)

Ditto

There is a possibility that we will use light sensors, heat sensors or other sensors to record illumination time in commercial buildings that do match up with the above-mentioned usage criteria, in buildings in which the range of the targeted lights is to be expanded (lights in office meeting rooms,) and when so desired by the project owner in buildings that do match up with the above-mentioned usage criteria. The monitoring target in this event will be as follows.

Monitoring Target Monitoring Method Units Frequency Illumination time Light sensors, heat sensors and other

sensors will be used to automatically measure the illumination time per day. The data collected will be automatically accumulated on storage mediums.

Hour Once/day

As long as there are no major modifications to the prerequisite time illumination conditions before or after project implementation, either of the illumination times measured before and after project implementation will be assumed to be the other illumination time.

4) GHG Emissions and Reductions (1) Amount of greenhouse gas emissions during the project and related activities The amount of reduced GHG are estimated based on the following parameters owing to the fact that we have not yet obtained any results from the verification experiments. <Parameter Conditions>

• Light output before project implementation 2,711W

• Light output after project implementation 1,020W

• Total light illumination time after project implementation • 9 hours

• Total operating days per one year 200 days

<Estimated Results> Reductions in greenhouse gas emissions during the project and related activities

= Carbon emission coefficient for India x (power consumption before project implementation - power consumption after project implementation) x operating days

= 0.89 (t-CO2/MWh) x {(2,711W – 1,020W) x 9h} x 200 (days) ≈ 2.71 (t-CO2/year)


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(2) The potential of reducing emissions throughout the entire host country if the project and related activities are spread over a wider range Estimations were carried out based on the following parameters obtained from the amount of GHG reductions acquired from the results of the verification experiments. <Parameter Conditions and Concepts>

• It is thought that the individual emission reduction values that will be obtained on a nationwide scale will be of a similar level to the values obtained from the results of the verification experiments. It is thought that the same amount of reduced emissions will be obtained

for each LED unit. • A tentative scenario will be set in which 20% of the LED lights installed in

offices consist of those targeted by the project and related activities in the event of the project being spread over a wider range to cover the entire host country. The following values will be used to represent the volume of future LED

installation in offices in India. 2015: 19 million units. 2020: 165 million units. (Source: Industry Report on

General Lighting, Electrical Components Manufacturers Association, and the results of interviews by research institutes in Japan with light fixture manufactures who sell their products on the market in India.)

<Estimated Results> Annual emission reductions for each LED unit

= Estimated emission reductions for each unit during the verification experiments ÷ the number of units

= 2.71 ÷ 120 ≈ 0.023 (t-CO2/year/unit)

* 200 days tentatively set at the number of days a commercial building is operating during a year. Reduction potential for the entire host country (2015)

= 0.023 (t-CO2/year/unit) x 19,000,000 (units) x 20% = 85,784 (t-CO2)

Reduction potential for the entire host country (2020)

= 0.023 (t-CO2/year/unit) x 165,000,000 (units) x 20% = 744,970 (t-CO2)

5) MRV System for GHG Reductions (1) Overview of MRV methods We have decided to create a set of MRV methods based on the results of analyses on existing CDM methodology and AMS-II J. Details on analyzing existing methodology are outlined in this section. (i) Application Conditions This methodology can be applied if all of the conditions listed below are satisfied:

• The activity consists of replacing non-LED lighting with LED lighting at commercial buildings in India

• The LED lighting used in the project activity is not used in another project


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activity • The brightness of the replacement LED lighting is the same or more than the

total lumens of the lighting that is replaced; total lumens are determined based on domestic/international standards

• LED lighting to be used consists of LED lights of more than a certain efficiency based on LED energy efficiency standards scheduled to be released by India's Bureau of Energy Efficiency. Detailed standards will be determined in accordance with the publication of

the above-mentioned standards. (ii) Boundaries The project is limited to the buildings where the LED lights are installed. (iii) Additionality As mentioned earlier, the assumption as of the present is that barriers exist to more widespread adoption of LED lights in India due to the fact that LED lights have hardly penetrated the market at all, and not just commercial buildings (a volume base of just 0.1%,). Specifically, it is assumed that economic barriers exist (the fact that initial costs are higher so it takes longer to recover investment and the non-existence of financial schemes for lessening the burden of initial costs (lease schemes, etc.)). (iv) Emission Reduction Amounts

(a) Estimating the amount of power consumed from light output (wattage) and operation time The amount of power consumption reduced during project activities will be calculated in accordance with the following equation.

<With the deemed lighting hours for all lighting equipment in each targeted company at the same level>

)1()(P)(P1000

11

1 n

1PJj,

m

1BLi, Ｏ×

−×−

= ∑∑== jiTDyES

Symbol Definition Unit ESy Annual amount of reduced power consumption kWh/year TDy Annual transmission loss %

i Light ID number before project implementation m Light quantity before project implementation Quantity j Light ID number after project implementation n Light quantity after project implementation Quantity

Pi,BL Wattage of light i before project implementation W Pj,PJ Wattage of light i after project implementation W O Deemed lighting hours for the project Hour/year


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<With the deemed lighting hours for all lighting equipment in each targeted company different>

)2()O(P)O(P1000

11

1 n

1,PJj,

m

1,BLi,

×−××−

= ∑∑== j

PJji

BLiTDyES

Symbol Definition Unit ESy Annual amount of reduced power consumption kWh/year TDy Annual transmission loss %

i Light ID number before project implementation m Light quantity before project implementation Quantity j Light ID number after project implementation n Light quantity after project implementation Quantity

Pi,BL Wattage of light i before project implementation W Pj,PJ Wattage of light i after project implementation W Oi,BL Deemed lighting hours for light i before project

implementation Hour/year

Oj,PJ Deemed lighting hours for light j after project implementation

Hour/year

(b) Measuring the amount of power consumed

The amount of power consumption reduced during project activities will be calculated in accordance with the following equation.

)3(1000

11

1ji

××−

= －ＱＱnTDyES

Symbol Definition Unit

ESy Annual amount of reduced power consumption kWh/year TDy Annual transmission loss % Qi Power consumption before project implementation Wh/day Qj Power consumption after project implementation Wh/day N Number of days the relevant building is in operation Days/year

The amount of power consumption reduced during project activities will be calculated in accordance with the following equation for all of the above cases.

Symbol Definition Unit ESCO2,ELEC Electric power emission coefficient t-CO2/kWh

ERy Annual emission reduction t-CO2/year

With regard to the electric power emission coefficient, instead of calculating this coefficient as part of the project, it is possible to use the emission coefficient published by the country in which the project will be carried out, or the emission coefficient that is directly registered as having been used in the CDM project. The emission coefficient that can be used for individual businesses is the most recent emission coefficient published annually for the various credit periods that each company belongs to.


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(v) Credit period The start of the credit period is the date the LED lighting is installed. The end of the credit period is the date LED lighting installed for the project reaches 50% or more of its operating life. (vi) Monitoring Details on monitoring procedures are explained in 3) Monitoring Methods and Planning. (2) Analyzing Existing Methodology With regard to examining the MRV methodology applied to the financial aid scheme via the “BOCM” the most efficient method of doing this is to analyze the existing methodology established with CDM, adopt the parts that can be used while deleting the parts that can be deleted after rigorous consideration into the areas that are required according to CDM rules, and merge the parts that can be easily used into the MRV methodology. Large scale and small scale methods exist in the CDM depending on the size of the expected emission reduction, and these are utilized independently in the methodology. The small scale method has been created simply and designed with certain restrictions that can suppress the costs required with project registration. However, part of the small scale method is extremely complicated, and adopting the small scale method consequently does not mean that the MRV methodology will be simple and easy to use. The CDM methodology, which is thought to be a viable method of replacing existing lights with LED lights, is currently available in three types; the AM0046 large scale method, and the AMS-II.C and AMS-II.J small scale methods. The AM0046 was authorized as a viable method in 2007, but there are no cases of it being used in UN records, and only two cases of it being used for pipelines exist. On the other hand, the AMS-II.J method was authorized for use in 2008, and so far a total of ten normal projects and one program activity are registered as using it, and records of it exist in 41 normal projects and three program activities on pipelines. Table: Methodology used in existing projects that are similar to the CDM project (light bulb replacement) Source: Created from UNFCCC registered data and UNEPFI documentation The reason why the AM0046 method has not been used is because it is a large scale methodology with unfavorable cost efficiency unless the size of the project is


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expanded, which would require two types of households, using light bulbs and CFLs, to measure the amount of power they consume for lighting. The power consumption of at least 400 households for each type should be monitored in this case, which requires a huge amount of time and money. For example, a pipeline project in Ecuador prepared electricity meters for the lights and monitored consumption using a system in which the measurement data was transmitted via telephone lines. Even if the infrastructure is in place to support this, the costs involved in arranging the electricity meters and the transmitting the data are all additional costs, and it is necessary to increase the size of the project to a certain extent in order to be able to raise these costs. On the other hand, the AMS-II.J method, which is the most commonly used method, does not require the electricity consumed by lights to be monitored, and it is possible to set a regulated usage time of 3.5 hours. This drastically reduces the burden of monitoring, and as long as the wattage rates of the CFLs are accurately recorded, it is possible to calculate the power consumed with the use of the regulated values and determine the amount of emission reductions. It is also a small scale methodology, which means that project costs can be lowered, which has led to it being used for a large number of projects despite some restrictions. With regard to the AM0046 and AMS-II.J methods, both of these methodologies specify only CFLs as a high-efficiency lighting, and LED bulbs and other high-efficiency lighting cannot be used with these methods. Owing to the fact that LED bulbs cannot be used and the fact that a wide range of other high-efficiency bulbs are likely to be developed in the future, it is thought that these methodologies should be amended to also cover lights that consume small amounts of electrical power while providing similar levels of luminance as incandescent light bulbs. The CDM methodology was created in a conservative manner for both large scale methods and small scale methods. It is therefore considered necessary to keep the basic structure of this method while modifying the measurement methods for the conservative areas in order to bring it closer to a method that is able to measure the actual reductions in emissions. Given the results of the above analysis, we have decided to create a methodology that maintains the fundamentals of the most commonly used AMS-II.J method while expanding its prescriptions to enable (1) the use electricity consumption monitoring, and (2) make it applicable for LEDs and other high-efficiency lighting. We believe that the MRV method in question is a valid method for the job in hand because it is based on existing CDM methodology and will guarantee that it will pass India’s stringent inspections and be accepted. During the stage of working out a detailed monitoring method, we will take into account methods of reducing the project owner’s financial burden by eradicating all extraneous time and labor, and we expect to be able to create a methodology that will be accepted by India. 6) Environmental sufficiency Some harmful substances are used in the LED production process, but given that LED production is generally handled by major electronics manufacturers based in developed countries, it is difficult to conclude that this will cause a negative impact on the environment. As for the positive impact, in developed countries, the progression of lighting has been from light bulbs to fluorescent lights to LED, but in the emerging country of India, it is possible that soil contamination, etc. by mercury, lead, etc. used


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in fluorescent lights can be avoided by accelerating widespread use of LED lights. It is worth noting that capitalizing on the environmental benefits and avoiding the adverse environmental impacts does not require any extra or special measures to be undertaken. 7) Other indirect impacts The project/activities in India are expected to generate growing demand for LED products. However this also means that demand for incandescent and fluorescent lights will fall, which will impact on domestic production facilities and potentially cause job losses. On the other hand, rising demand for LED lights should lead to construction of new production plants and creation of new jobs, and it is likely that this will ultimately cause a shift towards a higher value-added industrial structure. In this sense, there seems little need for specific strategies to compensate for any adverse effects of the transition to LED. 8) Input from stakeholders The following comments were received from stakeholders in regards to the project.

a TERI (The Energy and Resources Institute) In terms of cost performance, LED is not considered viable as yet. The advantage of LED lights is that they do not contain mercury. CFL also uses mercury, albeit at very low levels, so this constitutes an advantage.

b Bureau of Energy Efficiency India is keen to adopt Japanese technology in a variety of fields. With respect to energy efficiency technologies, we are particularly interested in LED and fans, which have very low power consumption.

c Energy Efficiency Services Limited (EESL) LED lights have not been used to date in EESL projects simply because it takes too long to recover the initial investment. The investment recovery period—extremely important in ESCO projects—is six or seven years for LED, as opposed to three or four years for CFL.

9) Implementation of project/activities The project will be registered as a GHG reduction project involving the use of products from Japanese manufacturers, as stipulated in the bilateral offset credit agreement between the governments of Japan and India. This will make it easier to access policy finance from the Japanese government, and also improves the prospects for setting up a fund or other financing scheme for the project involving public-sector and private-sector financial institutions in both countries. The entity applying for credit could be distributers of a Japanese-owned manufacturer..


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Anticipated structure of project 10) Financial Planning LED lighting could be introduced to India in the form of a financing scheme whereby part of the savings in power bills is used to offset the initial purchase price. In Japan, the Akari Anshin Service from Panasonic provides rental and lease options to agencies and office building owners. We studied the feasibility of using one of these options as the basis for a finance leasing model in India. The agent that will conduct sales, installation, service and maintenance for the LED lighting will play an extremely important role in this scheme, so it will be particularly important to contract a reliable agent with a track record that is capable of performing these duties. As mentioned above, the purchase price of an LED light could be offset by the savings in electricity costs. Also, some commercial building owners may use rental income to supplement the initial purchase costs, therefore it is important to check the financing of their tenants using LED. Where financing is in hard currency such as US dollars rather than rupees, there is the potential for discrepancies between the rental income paid in rupees and the hard currency. Swap contracts to cover for exchange rate and interest rate fluctuation risk would be required, as per the earlier discussion about obstacles to foreign banks operating in India. 11) Introduction of Japanese Technology If LED lighting manufactured by Panasonic Corporation, a partner in this project, penetrates offices throughout India, greenhouse gas reductions of 745 thousand tons-CO2 annually are projected in 2020. The Akari Anshin Service operated by Panasonic in Japan allows companies to lease

Local project management company

Measuring equipment manufacturer

Contractor Contractor Contractor Contractor

Commercialbuilding CB CB CB

Management

Deliver equipments

Contract

Deliver LE

D units

Application

Japanese government

Indiangovernment

BOCMCommittee

Distributors

Order Equipments

FinancialInstitution

Financing

Local Support

Japanese mfrs

Equipment leasing


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rather than purchase LED lighting fixtures. This approach delivers two key benefits: (1) reducing the administrative burden after the lights have been used; and (2) encouraging better recycling via proper processing. To facilitate the popularization of LED lighting in India, conducting the same service for the purpose of reducing initial costs has the potential to provide momentum for installation and widespread adoption. 12) Future outlook and issues There are two key issues with implementing the project under the bilateral offset credit agreement:

• Setting up a structure to enable Japanese manufacturers to supply energy-saving products

• Accessing policy finance from Japanese government bodies such as JBIC, NEXI and JICA

The feasibility study suggests a solid enough market for energy-saving devices to warrant setting up a supply structure for products from Japanese manufacturers. Demand would be concentrated on corporate entities, where project application procedures are relatively straightforward. Since the project is to be expanded to the whole of India, it is important to provide a comprehensive retail structure together with a distribution network for transferring goods between states and territories. Note that interstate taxes are levied on the movement of goods between states, and this must be taken into account at the planning stage. The next step will be to apply for Japanese government policy financing through JBIC, NEXI and JICA. This should not be conducted until the project plan is finalized and the preliminary project results start to appear. In the event that policy finance would slow down the entire project, it may be prudent to consider other financing options such as putting together a private-sector fund. 5. “Co-benefits” (i.e. Improvement of Local Environmental Problems) Co-benefits of the project/activities include cutting SOx and NOx emissions associated with electricity generation, since LED lights use less electricity. Quantitative evaluation of the reduction is based on SOx and NOx emissions per unit of electricity generated. Unfortunately none of the power utilities in India has equipment for measuring SOx and NOx emissions, and in any case government regulations apply only to atmospheric concentrations. In the absence of data on emissions per unit of electricity generated, then, we have used the following figures taken from a previous study, Environmental status of India (Sukumar Devotta, C. V. Chalapati Rao, 2008).

• SO2 emissions from electricity generation in India = 7.4 g/kW • NOx emissions from electricity generation in India = 6 – 10 g/kWh

NB: Quantified at 8 g/kWh The co-benefit is quantified using the above figures together with the reduction in electricity consumption based on the potential overall reduction in the host country in 2015.


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Overall reduction in power consumption in the host country in 2015 = 85,784 t-CO2 ÷ 0.89 t-CO2/MWh = 96,387 MWh Reduction in SO2 emissions in 2015 = 96,387 MWh x 7.4 g/kWh = 713 tons Reduction in NOx emissions in 2015 = 96,387 MWh x 8.0 g/kWh = 771 tons 6. Contribution to Sustainable Development in Host Country In order to maintain a high GDP growth rate for the foreseeable future, India needs to quadruple its current energy supply by 2031. Unfortunately India is now the fourth biggest GHG emitter in the world, ahead of Japan. Emission volumes have skyrocketed in line with economic growth, and this means that India now needs to start considering energy quality as well as quantity. To this end, the government of India has launched a national mission to promote energy-saving schemes and initiatives and reduce overall energy consumption. This requires creating an environment that encourages state and local governments throughout the country to formulate and implement specific energy reduction strategies while also achieving significant participation rates from the private sector. As we saw in section 3. 2), the power shortfall across India was 92,848 GWh in 2010; this figure is predicted to reach 1,914,508 GWh by 2021. It is worth noting that primary energy consumption relative to GDP in India is currently about five times higher than Japan. Poor energy consumption efficiency casts a shadow over future economic growth in India. Meanwhile, general awareness of energy issues is also poor, as evidenced by the slow uptake of LED lights and other devices designed to minimize power consumption on the demand side. Most people seem to see the answer as simply producing more power, and this is partly attributable to the paucity of actual solutions that link the purchase of energy-efficient products and/or implementation of energy-saving initiatives to specific environmental benefits or advantages at the local level. This project will enable the introduction of demand side management designed to prevent demand for power in India from curtailing economic growth.

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New Mechanism Feasibility Study For Energy Savings …gec.jp/gec/en/Activities/fs_newmex/2011/2011newmex16_eJRI_India... · ＜1＞ New Mechanism Feasibility Study 2011 – Final