CFL gamble pays off, UN okays project3 min read . Updated: 02 May 2010, 10:23 PM IST
CFL gamble pays off, UN okays project
CFL gamble pays off, UN okays project
New Delhi: Manu Maudgal refreshed a certain webpage every 15 minutes, late on 29 April. He had every reason to. On Thursday, the world’s largest carbon emission reduction project under the United Nations (UN) framework got the nod. The project is Indian and it aims to replace around 400 million light bulbs with energy-efficient compact fluorescent lamps, the swirly white bulbs popularly known as CFLs. The bulbs will be distributed to every household at a minimal cost of Rs15 per CFL, which usually costs upwards of Rs100.
BLY has the potential to reduce 40 million tonnes (mt) of carbon dioxide per year (every 10 lamps replaced mean one tonne of avoided emission). The largest existing stand-alone project under UN reduces 1.5 mt of carbon dioxide. A carbon credit is equivalent to one tonne of carbon dioxide emission avoided, and these are bought by firms in developed countries, which are under international obligation to reduce emissions to abate climate change, from developing countries.
This specific kind of project goes under the label of Programme of Activities or PoA in UN jargon, which means that a platform for the scheme is approved and investors can keep joining the programme later. Maudgal said there are 40 projects already lined up across the country, including in Uttar Pradesh, Punjab and Kerala.
PoA helps cut high transaction costs and lengthy process of individual approvals for smaller projects from the UN.
“Now, each investor will only need to spend, say, Rs5 lakh instead of Rs40 lakh as transaction cost and it will be registered under PoA in one month instead of more than one year," explained Maudgal.
Ajay Mathur, director general of BEE, is content at the outcome. “I am thrilled and I am proud. For a country to be this ambitious, it is huge."
Understandably so, as the whole concept depended on regular stream of revenue through the sale of carbon credits. The idea is this: An investor absorbs the initial cost, which is the difference between the CFL’s actual cost and Rs15. The difference is paid off in the form of carbon credits, leading to a profit for the investor. Each project will last for as long as the CFL does, which is close to six-seven years.
C-Quest Capital Llc. a carbon finance business headquartered in Washington, DC, is positive about the future of the scheme. It has already invested in one such programme in Andhra Pradesh and is working on at least 8-10 more.
“We will have more in Punjab very soon and we are very positive, as this spells big business for us. The job of approval from UN becomes much easier with BEE getting the PoA registered," said Bhaskar Natarajan, managing director, India, C-Quest Capital.
For the Kerala State Electricity Board, which has already started CFL distribution, the UN decision was a make-or-break one. “We are mighty relieved," said Rajeev Sadanandan, chairman of the board. “We had already announced the scheme and distribution started in April. And the gamble has paid off. But I had faith."
The investor in Kerala’s project is Energy Management Centre, a public sector unit, which got a loan from the state for the funding. For Kerala, the impact is significant. “Most of our load is from the domestic side and in lighting, during peak time. As per our calculations, we will save 600MW from our system, but we expect at least 250-300MW. We are distributing 15 million CFLs across 75 lakh houses. The sheer volume is mind-boggling. Even I didn’t realize the scale earlier," Sadanandan said.
Domestic appliances and the lighting sector account for almost 22% of the total electricity demand in India, and contributes almost fully to peak load. A CFL uses only one-fifth the electricity as a traditional incandescent bulb to provide the same intensity of illumination.
India has already seen two pilot projects, in Yamunanagar in Haryana and Visakhapatnam, Andhra Pradesh, which have also been registered at UN independently.
“We have had fantastic turnouts at panchayats where we have gone to distribute. Everyone wants one. Who wouldn’t? They are getting a Philips CFL worth Rs130 for Rs15," said Sadanand. But are people aware of CFLs? Sadanandan laughs and says: “This is Kerala, madam. Everyone knows what a CFL is."
“This is like pulse polio... It will touch every household. Every person," said Mathur.