A Thematic Session on ‘Promoting Energy Efficiency in MSMEs’ was held in New Delhi on 7th February, 2014 during the 14th Delhi Sustainable Development Summit (DSDS, 6–8 February 2014). The session was chaired by Dr Ajay Mathur, Director General, BEE. Mr Daniel Ziegerer, Director of Cooperation, Embassy of Switzerland delivered the welcome address in which he underlined the importance of promoting energy efficiency in India’s MSME sector, which has been at the core of SDC’s agenda in India. Mr Suvendhu of Ernst & Young (E&Y) made a background presentation that highlighted the financial, technology and policy gaps in promoting energy efficiency in the MSME sector, based on a rapid study conducted by E&Y. He pointed to the need for wider dissemination of energy efficient technologies (EETs), and for bankers to be trained in evaluating energy efficiency projects.
Dr Ajay Mathur, BEE, noted that the MSME sector occupies a special place for innovation, job employment and exports. Adequate service mechanisms have to be established around demonstration projects, to facilitate their large-scale replication. Dr Veena Joshi, Senior Advisor (Energy), Embassy of Switzerland stressed the need to address ‘information failures’ in order to effectively implement energy efficiency programs in the MSME sector. It is essential to establish accurate baselines, for which standard templates must be developed. She suggested a ‘bottom-up’ approach under which all institutions related to the MSME sector should be mapped at the cluster, state and national levels, in order to help aggregation of data at the national level. BEE should consider putting in place an energy conservation code for the MSME sector, similar to that set up for the building sector.
Mr Hideaki Domichi, Senior Vice President, JICA, pointed out that Japan has made considerable reductions in energy consumption in its industrial sector due to the continuous introduction of dedicated programs. The JICA lines of credit to SIDBI have effectively been used for granting loans at reduced interest to over 6000 MSMEs for adopting energy efficient technologies (EETs), resulting in 30% reduction in energy consumption. A list of EETs is available as a reference point for bankers to assess EE projects.
Prof. Hironori Hamanaka, Institute for Global Environmental Strategies (IGES), outlined an ongoing technology transfer project titled ‘Research Partnership for Application of Low Carbon Technology for Sustainable Development’, being jointly implemented by TERI and IGES with JICA’s support to promote clean/energy efficient technologies in the Indian SME sector. By deploying a strategy that directly involves businesses on both supply and demand sides (i.e., Japanese technology supplier and Indian SME respectively) along with capacity building support, the project has successfully demonstrated Japanese EETs such as electric heat pump (EHP) in two dairy units (Amul in Anand and MILKFED in Chandigarh), and gas heat pump (GHP) in two foundries in the Rajkot engineering cluster. These EET demonstration projects have brought about 30%–40% energy savings compared to the baseline figures.
Dr Pradeep Monga, Director, Energy & Climate Change Branch, UNIDO highlighted UNIDO’s focus on benchmarking, promoting energy management systems and following a systems optimization approach in its efforts to promote energy efficiency in the MSME sector. He pointed out that the impact of energy conservation measures could be increased if there is convergence between energy efficiency and renewable energy options. Mr Jean-Yves Grosclaude, Director of Strategy, AfD, provided a financial institution’s perspective on the issue of promoting EETs in the MSME sector. AfD has provided lines of credit to SIDBI to facilitate cheap loans to SMEs for adopting EETs. He endorsed a cluster-based approach to implement energy efficiency programs in the MSME sector, and pointed out the need to establish guarantee mechanisms for banks to encourage lending to micro enterprises.
Mr Girish Sethi, Director - Industrial Energy Efficiency, TERI noted that to formulate effective programs for promoting energy efficiency in the MSME sector, MSMEs can be categorized into two broad categories: old/traditional sectors and new/advanced sectors. Large opportunities exist in ‘traditional’ units for energy efficiency improvements. The Research, Development, Demonstration and Dissemination (RDD&D) approach should be followed to implement EETs in MSME clusters, with emphasis on competency pooling and the establishment of local supply chains for wider dissemination of the EETs.