Page 326 - Low Carbon Development in China and India
P. 326
Leasing or vendor financing are viable financing options for many 3.2
energy efficiency projects and DSM initiatives. A special fund to
provide equity capital for these projects is now available through
the Venture Capital Fund for Energy Efficiency (VCFEE) under the
National Mission for Enhanced Energy Efficiency (NMEEE). This fund
invests in the form of equity. A single investment by the fund does not
exceed INR 2 crore (approx. USD 0.33 million). The fund provides last
mile equity support to specific energy efficiency projects and is limited
to INR 2 crore or a maximum of 15 per cent of the total equity required
through Special Purpose Vehicles (SPVs), whichever is less. However,
during the Twelfth Plan, revision of rules and its notification is under
process to slightly modify the operational structure of the VCFEE .
NMEEE has been adopted by India for the role it is expected to
play in meeting the country’s energy demands. The Mission seeks to
promote market-based approaches to unlock the potential of energy
efficiency, which is estimated to be about INR 74,000 crore (approx.
USD 12.33 billion). It will help achieve fuel savings of around 23
million tonnes per year, total carbon dioxide gas emissions reductions
of 98 million tonnes per year, and avoid capacity addition of 19,000
MW by 2014–15 (Bureau of Energy Efficiency).
The Energy Efficiency Financing Platform (EEFP) is one of the four
initiatives under the NMEEE. Some of the key objectives of this initiative
include to ensure availability of finance at reasonable rates for energy
efficiency project implementation by including financial institutions,
and public and private sector banks; help stimulate necessary funding
for ESCOs based delivery mechanisms for energy efficiency; create
demand for energy efficiency products, goods, and services through
awareness, public policy; ensure credible monitoring and verification
protocols to capture energy savings; and capacity building of banks
and financial institutions.
Another initiative by the Government of India to develop fiscal
instruments to promote energy efficiency is the Framework for Energy-
Efficient Economic Development (FEED). This includes innovative
fiscal instruments and policy measures like the Partial Risk Guarantee
Fund (PRGF) and the Venture Capital Fund for Energy Efficiency
(VCFEE), public procurement of energy efficient goods and services,
and utility-based demand side management. FEED supports electricity
regulatory commissions to stimulate utility based demand side
management by incentivizing utilities for DSM including time-of-day
tariffs and load management directives. It also develops guidelines for
evaluating DSM options and integrating these with supply side options.
Chapter 2 Innovative Financing for Low Carbon Development 291
energy efficiency projects and DSM initiatives. A special fund to
provide equity capital for these projects is now available through
the Venture Capital Fund for Energy Efficiency (VCFEE) under the
National Mission for Enhanced Energy Efficiency (NMEEE). This fund
invests in the form of equity. A single investment by the fund does not
exceed INR 2 crore (approx. USD 0.33 million). The fund provides last
mile equity support to specific energy efficiency projects and is limited
to INR 2 crore or a maximum of 15 per cent of the total equity required
through Special Purpose Vehicles (SPVs), whichever is less. However,
during the Twelfth Plan, revision of rules and its notification is under
process to slightly modify the operational structure of the VCFEE .
NMEEE has been adopted by India for the role it is expected to
play in meeting the country’s energy demands. The Mission seeks to
promote market-based approaches to unlock the potential of energy
efficiency, which is estimated to be about INR 74,000 crore (approx.
USD 12.33 billion). It will help achieve fuel savings of around 23
million tonnes per year, total carbon dioxide gas emissions reductions
of 98 million tonnes per year, and avoid capacity addition of 19,000
MW by 2014–15 (Bureau of Energy Efficiency).
The Energy Efficiency Financing Platform (EEFP) is one of the four
initiatives under the NMEEE. Some of the key objectives of this initiative
include to ensure availability of finance at reasonable rates for energy
efficiency project implementation by including financial institutions,
and public and private sector banks; help stimulate necessary funding
for ESCOs based delivery mechanisms for energy efficiency; create
demand for energy efficiency products, goods, and services through
awareness, public policy; ensure credible monitoring and verification
protocols to capture energy savings; and capacity building of banks
and financial institutions.
Another initiative by the Government of India to develop fiscal
instruments to promote energy efficiency is the Framework for Energy-
Efficient Economic Development (FEED). This includes innovative
fiscal instruments and policy measures like the Partial Risk Guarantee
Fund (PRGF) and the Venture Capital Fund for Energy Efficiency
(VCFEE), public procurement of energy efficient goods and services,
and utility-based demand side management. FEED supports electricity
regulatory commissions to stimulate utility based demand side
management by incentivizing utilities for DSM including time-of-day
tariffs and load management directives. It also develops guidelines for
evaluating DSM options and integrating these with supply side options.
Chapter 2 Innovative Financing for Low Carbon Development 291
