Energy Conservation Act,2001

Our country has a vast potential of energy saving. It is estimated that measures for energy conservation and improving energy efficiency have the potential for creating an equivalent capacity of a minimum of 25000 MW. The Government of India enacted the Energy Conservation Act for redeeming this potential and it came into force with effect from 1st March, 2002.The Act provides the legal framework, institutional arrangement and a regulatory mechanism at the Central and State level to embark upon the energy efficiency drive in the country (Fig. ).

Ambit of the Energy Conservation Act

You will be studying about energy conservation in Unit 1 of the Course BEE-002. We present here a brief background to help you understand the need for this Act.

Background of Energy Conservation Act, 2001

As a thumb rule, the energy needs of a country are about 1.5 times its GDP or the economic growth rate. India’s projected growth rate up to the year 2012 is about 8%. This necessitates commensurate needs of power. You will study in Unit 1 of the Course BEE-002 that India’s coal reserves could last for about 200 years, but about 73% coal cannot be used because of its high ash content. Our known oil and natural gas reserves are meagre and may last for only 20 years or so. Our oil imports are already very high and dependence on further imports is bound to affect our economy and energy security.

This scenario warrants a firm thrust on Improving energy efficiencies in new generation capacities, supply side, demand side and end-user side; and Lowering the energy intensity in our economy.You will learn about energy efficiency and energy intensity in Unit 1 of the Course BEE-02. We now describe the major features of this Act.

Important Features of the Act
Setting up of the Bureau of Energy Efficiency

The Bureau of Energy Efficiency has been established with effect from 1st March, 2002 under the provisions of the Energy Conservation Act,2001. It is responsible for the implementation of policies and programmes related to energy. It also coordinates the implementation of energy conservation activities. The mission of the Bureau is to institutionalize energy efficiency services, enable delivery mechanisms in the country and provide leadership to energy efficiency in all sectors of economy. Its primary objective is to reduce energy intensity in the Indian economy.

The role of the Bureau of Energy Efficiency is to:

• prepare standards and labels of appliances and equipment;

• develop a list of designated consumers;

• specify certification and accreditation procedures;

• prepare building codes;

• maintain Central EC fund;

• undertake promotional activities in coordination with centre and state level agencies;

• develop Energy Service Companies (ESCOs);

• transform the market for energy efficiency; and

• create awareness through a variety of measures including clearing house.

For performing the role assigned to it, the Bureau is supposed to

•coordinate with designated consumers, designated agencies and other agencies;

• recognize and utilize the existing resources and infrastructure;

• exercise powers as assigned to it, including recommending to the

Central Government the norms for processes and energy consumption standards; and

• take steps to prescribe guidelines.

The thrust areas of BEE are shown in Fig. .

Thrust Areas of the Bureau of Energy Efficiency

Standards and Labelling

Standards and Labelling (S & L) has been identified as a key activity for improvement in energy efficiency. The S & L programme, when in place would ensure that only energy efficient equipment and appliances would be made available to the consumers.

The main provisions of the Act on Standards and Labelling are to:

• evolve minimum energy consumption and performance standards for notified equipment and appliances;

• prohibit manufacture, sale or purchase or import of such equipment or appliance, which does not conform to the energy consumption
standards;

• introduce a mandatory labelling scheme for notified equipment appliances to enable consumers to make informed choices; and

• disseminate information on the benefits of energy conservation and efficient energy use to consumers.

The equipments to be covered initially under the S&L programme are household refrigerators, air-conditioners, water heaters, electric motors,agriculture pump sets, electric lamps and fixtures, industrial fans and blowers, and air-compressors.Designated Consumers.The Act provides the list of designated consumers, which includes the energy intensive industries, Railways, Port Trust, Transport Sector, Power Stations, Transmission & Distribution Companies and Commercial buildings or establishments. The government notifies the designated consumers.

The main provisions of the Act on designated consumers are as follows:

• The designated consumer should get an energy audit conducted by an accredited energy auditor. (Energy audit is explained in Unit 3 of
the Course BEE-002.)

• Energy managers are required to be appointed or designated by the designated consumers. They should have passed the Certification
examination arranged by the Bureau.

Examples of “Designated Consumers” as per the Energy Conservation Act

• Designated consumers would comply with norms and standards of energy consumption as prescribed by the GOI.
Certification of Energy Managers and Accreditation of Energy Auditing Firms

One of the important provisions in the Act is to create a cadre of professionally qualified energy managers and auditors with expertise in policy analysis, project management, financing and implementation of energy efficiency projects through a Certification and Accreditation programme. BEE has designed training modules, and is conducting a National level examination for certification of energy managers and energy auditors.

Energy Conservation Building Codes

Energy Conservation Building Codes encompass the norms and standards of energy consumption expressed in terms of per square metre of the area wherein energy is used.

The main provisions of the Act on Energy Conservation Building Codes are as follows:

• The BEE would prepare guidelines for Energy Conservation Building Codes (ECBC);

• ECBC would be notified to suit local climate conditions or other compelling factors by the respective states for commercial buildings
constructed after the rules relating to energy conservation building codes have been notified. In addition, these buildings should have a connected load of 500 kW or contract demand of 600 kVA and above.

• Energy audit of specific designated commercial building consumers would also be prescribed. By energy audit, we mean verification,monitoring and analysis of energy use including submission of technical report containing recommendations for improving energy efficiency with cost benefit analysis and an action plan to reduce energy consumption.

Central Energy Conservation Fund

This fund is to be set up at the Centre to develop the delivery mechanism for large-scale adoption of energy efficiency services such as performance contracting and promotion of Energy Service Companies (ESCOs). The fund is expected to give a thrust to R & D and demonstration in order to boost market penetration of efficient equipment and appliances. It would support the creation of facilities for testing and development and to promote consumer awareness.

Role of Central and State Governments

The following roles of Central and State Governments are envisaged in the Act:

The Central Government will

• notify rules and regulations under various provisions of the Act;

• specify norms for processes and energy consumption standards for any equipment/appliances which consume, generate, transmit or
supply energy;

• specify equipment or appliances to be covered by this Act;

• prohibit manufacture or sale, purchase or import of equipment or appliance, till such appliance or equipment conforms to energy
consumption standards;

• ensure direct display of such particulars on label on equipment or on appliance and specify the manner in which it is to be displayed;

• alter the list of Energy Intensive Industries;

• establish and prescribe such energy consumption norms and standards for designated consumers, as it deems necessary;

• provide initial financial assistance to BEE and EC fund; and

• coordinate with various State Governments for notification,enforcement, penalties and adjudication.

For further details, you may like to refer to Section 14 of the Act.Each State Government will

• amend the energy conservation building codes to suit the regional and local climatic conditions;

• designate a state level agency to coordinate, regulate and enforce provisions of the Act;

• constitute a State Energy Conservation Fund for promotion of energy efficiency.

For further details, you may like to consult Section 15 of the Act.

Enforcement through Self-Regulation

The following ways of self-regulation have been envisaged:

• The certification of energy consumption norms and standards of production process by the Accredited Energy Auditors is a way to
enforce effective energy efficiency in Designated Consumers.

• For energy performance and standards, manufacturer' s declared values would be checked in Accredited Laboratories by drawing samples from the market. Any manufacturer or consumer or consumer association can challenge the values of other manufacturers and bring
it to the notice of BEE.

Penalties and Adjudication
Failure to comply with the provision of clauses (c), (d), (h), (i), (k), (l), (n)(r), or (s) of Section 14 or clause (b), (c) or (h) of Section 15, will invite penalty.

• Penalty for each offence under the Act would be Rs.10,000/- for each failure and additional Rs.1,000/- for each day in case of continuing failures.

• The initial phase of 5 years would be promotional to facilitate the creation of the infrastructure for implementation of Act. No penalties would be effective during this phase.

• The power to adjudicate has been vested with State Electricity Regulatory Commission (SERC), which shall appoint any one of its
members to be an adjudicating officer for holding an enquiry for the purpose of imposing any penalty.

Impact of Implementing the Act
Many steps have been taken by BEE after the enactment of the Act. We describe below a few examples. You will read about some more examples and case studies in Units 3 and 4 of the Course BEE-002.Energy

Efficiency in Buildings and Establishments

Energy audit studies conducted in several office buildings, hotels and hospitals indicate an energy saving potential of 20-30%. The potential is largely untapped, partly due to lack of an effective delivery mechanism for energy efficiency. Government buildings by themselves constitute a very large target market. The Government of India is committed to set an example by implementing the provisions of this Act in all its establishments as a first initiative. To begin with, the Bureau conducted an energy audit in the Rashtrapati Bhawan, Parliament House, South Block, North Block, Shram Shakti Bhawan, AIIMS, Safdarjung Hospital, Delhi Airport, Sanchar Bhawan,and Rail Bhawan. BEE has identified a savings potential of 23 to 46 per cent in these nine buildings.

Energy Conservation Award

The Ministry of Power launched the National Energy Conservation Awards in 1991 to accord national recognition to industrial units for their efforts in reducing energy consumption. For example, in 2002, a total of 174 industrial units belonging to various industries such as automobile, aluminium, cement,chemicals, ceramics, chlor-alkali, edible oil/vanaspati, fertilizers, glass,integrated steel, mini-steel, paper and pulp, petrochemicals, refractory,refineries, sugar and textile plants, etc. responded to the Awards scheme.These units have been able to collectively save 641million kWh of electrical energy, which is equivalent to the energy generated from a 122 MW thermal power station at a Plant Load Factor of 60%. The participating units have also saved 1.7 lakh kilolitres of furnace oil, 7.4 lakh metric tonnes of coal and 3588 lakh cubic meters of gas per year. In monetary terms these units have been able to save Rs. 594 crores per year and the investment of Rs. 691 crores was recovered in 14 months time period.We now present the case study of the initiatives taken by the Maharashtra State Electricity Board.