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NEW DELHI : The Union budget to be presented next month may give a push to the energy service company (ESCO) model in commercial buildings as part of India’s plan to reduce carbon emissions, two government officials aware of the deliberations said.

ESCOs offer design and implementation services for energy-efficiency projects after doing energy audits.

The move to encourage ESCOs follows Prime Minister Narendra Modi pledging at the COP26 summit to cut India’s total projected carbon emission by 1 billion tonnes and achieve net-zero carbon emissions by 2070.

“There can be 100 or 200 ESCOs in a country like India. So, what is being discussed is that the ESCO model needs to be promoted because somebody can invest on the basis of a robust contract, and the owner of that building or that factory will not have to invest, and he can service the ESCO investment through the energy savings. It is a very good model, but the contract has to be robust, and the risks have to be mitigated," union power secretary Alok Kumar said in an interview.

“There are several proposals under discussion with the finance ministry, and ESCO (for commercial buildings) was one of them. I don’t know what will be there in the budget. That’s the finance ministry’s call," Kumar added.

Mint had earlier reported that India may offer viability-gap funding or grants to companies for building energy storage projects and offshore wind power plants in the budget as part of a plan to transition from fossil-fuel-powered energy to renewables. A scheme tentatively named Roadmap for Sustainable and Holistic Approach through National Energy Efficiency may also be announced in the budget.

The government is also considering installing new power transmission lines to tap the large hydropower potential in India’s northeast region and incentives for setting up battery-swapping infrastructure for electric vehicles.

Queries emailed to the finance ministry spokesperson early Sunday morning weren’t answered until press time.

India’s energy efficiency measures have shown positive results in its domestic lighting programme, with the government’s UJALA scheme helping cut LED bulb prices.

State-run Convergence Energy Services Ltd (CESL) runs the Gram Ujala scheme that offers the world’s cheapest LED bulbs in rural areas for 10.

While 350 million compact fluorescent lamp (CFL) bulbs have been replaced with LED bulbs, the target is to reach 770 million.

At the Glasgow summit, Modi promised to meet 50% of India’s energy requirements from renewable energy by 2030 and increase non-fossil fuel power generation capacity to 500 gigawatts by the end of this decade.

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