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Energy efficiency legislation spawning new business in India

September 21, 2009


Several years ago, energy audits were made mandatory in large in nine industrial sectors in India – Aluminum, Cement, Chemical, Coalmine, Fertilizer, Furnaces, HVAC, Automobile, Petrochemical, Steel and Textile. This was one of the major legal frameworks instituted in the country to promote energy efficiency in high energy consuming sectors. Under this legal framework, companies in these sectors were mandated to carry out energy audits and employ the so called ‘Certified Energy Managers’. These Energy Managers were certified through an examination conducted by Bureau of Energy Efficiency (BEE), which is the flagship body of the government to facilitate and foresee the policy implementation. Under the policy framework, these industries were also mandated to report energy consumption and energy conservation data annually.
This legal framework has spawned a new class of companies in India called ESCOS – Energy Saving Companies. While most of these companies are still small and at a start up stage, they have obtained a drastic first mover advantage by getting themselves endorsed by BEE, which keeps a detailed list of ESCOS. Once listed, these companies carryout energy audits and provide downstream services to a variety of industrial sectors. Also, the listing allows consumers to separate out the “wheat from the chaff,” and use their buying power to purchase only from energy conserving companies.
ESCOS is an emerging industry in India and offer a great business opportunity. So much that even large organizations, including traditional manufacturers in above listed sectors, have rolled out consulting arms to leverage their internal knowledge in energy efficiency and help other companies. Furthermore, a new class of financial service companies that offer innovative financial instruments to help companies make long terms investments in energy efficiency is emerging. These developments are driving industrial equipment manufacturers to innovate and offer products for either replacement or enhancement of energy intensive machines in various sectors.
This is an exciting time in energy management space in India. It has been seeded by government legislation but is now being driven by market forces.
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