India

IN-5:Venture Capital Fund for Energy Efficiency

Policy Description

The Venture Capital Fund for Energy Efficiency (VCFEE) will increase the availability of risk capital to the ESCOs and other companies who invest in the supply of energy efficient goods and services. This instruments targets several sectors, including industry.

Description

In June 2008 the Government of India announced its National Action Plan on Climate Change (NAPCC), which includes the Mission on Enhanced Energy Efficiency, approved in 2010 (NMEEE) [2] [6].  One of key elements  of the NMEEE is the establishment of a Framework for Energy Efficient Economic Development (FEEED)  [3]. The FEEED  includes a Partial Risk Guarantee Fund (PRGF) and a Venture Capital Fund for Energy Efficiency (VCFEE) [2].  The VCFEE will increase the availability of risk capital to the ESCOs and other companies who invest in the supply of energy efficient goods and services. This instruments targets several sectors, including industry.

The Energy Efficiency Services Limited (EESL) will administer these funds. EESL is a Joint Venture of NTPC (largest coal power company), PFC (Power Finance Cooperation), REC (Rural Electrification India) and POWERGRID with a mission to facilitate market implementation of energy efficiency projects. EESL will also function as resource and expert centre and may take the role of Energy Service Company (ESCO). The initial equity of EESL will be Rs. 190 crores with equal contribution from the 4 sponsors. No detailed information is available yet on the conditions of the fiscal and financial mechanisms under the FEEED.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies

Position in the Pyramid

About Us

Participation: Voluntary

Policy Linkages

Supports
Supports

Agencies Responsible

Ministry of New and Renewable Energy (MNRE)
Bureau of Energy Efficiency (BEE)

Primary Objective: Energy

Objective

Reduce the costs of capital for innovative energy efficiency investments.

Target Group

Several sectors, including industry.

Driver of energy consumption or emissions affected by policy: Energy efficiency

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Requirements on the Target Group

Not available.

Support by Government

The fund (seed) capital is partly supplied from the state budget through the (semi) public companies acting as sponsors of the EESL.

Implementation Toolbox

Unknown.

Complexity of Implementation

Government

Fund administration to be established. Loan and guarantee condition to be adopted and monitored.

Target Group

Lenghty loan/guarantee application procedures to go through.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions Not available. Not available.
Estimated costs/benefits for industry Not available. Not available.
Estimated cost for government Not available. Not available.
Other Benefits
General Benefits Reduced GHG emissions as well as of other energy-related pollutants, less reliance on imported fossil fuels, cost reduction of production.
Specific Benefits • Increased availability and reduced cost of capital for energy efficiency investment • Improved condition for energy efficiency commercial financing • Increased cost-effectiveness.

References & Footnotes

References

[1] Government of India (2008). National Action Plan on Climate Change.

[2] BEE (2008). National Mission for Enhanced Energy Efficiency. Draft Mission Document. Implementation Framework. December 2008 http://www.indiaenvironmentportal.org.in/files/National%20Mission%20for%20Enhanced%20Energy.pdf

[3] Sushilkumar Shinde. Make Energy Conservation a Mass Movement: - NATIONAL MISSION ON ENHANCED ENERGY EFFICIENCY TO BE IMPLEMENTED FROM THE 1st OF APRIL, 2010: http://www.energymanagertraining.com/NAPCC/main.htm

[4] Saurabh Kumar (2010). BEE, Promoting Innovative Energy Efficiency Financing Mechanisms, Jan 2010: http://www.asiaesco.org/pdf/presentation/6-2.pdf

[5] Energy Efficiency Services Limited (EESL) (2010). PRGF / VCFEE, 2010: http://www.eesl.co.in/website/PRGF.aspx

[6] Sanjay Dube, BEE, National Mission for Enhanced Energy Efficiency, Partial Risk Guarantee & Venture, 2010: http://www.emergent-ventures.com/UploadedFiles/Catalogue/PRGF--VCF-Under-NMEEE-Sanjay-Dube-%5BRead-Only%5D.pdf

[7] Indian Climate Portal, India and International Climate Negotiations: http://www.indiaclimateportal.org/national-climate-change-action