Energy management consultation and training project

Midterm evaluation (6/91-7/96) discusses progress made under the energy supply and end-use efficiency components; it does not address the renewable energy commercialization or the private power development components. Under the supply-side component, the project is working with the relatively new Power Finance Corporation (PFC) to promote supply-side improvements in the State Electricity Boards (SEBs). However, while energy efficiency and utility restructuring is occurring to a limited extent, the PFC has not been a major vehicle for this change, and is no longer appropriate as the main implementing agent for the project. The component still holds great potential for meeting India"s power needs, but has been overambitious. It should offer more assistance in a few areas rather than a little assistance in many areas. It should also focus assistance on the reform-minded State Electricity Boards (SEBs) and not those that simply meet the financial performance conditionality; in many cases, participants were unable to put what they had learned to work in their SEBs. Thus far, U.S. training has not imparted skills or experience that could not be imparted in India. The component also suffers from a lack of good planning, strong management, and close cooperation among all parties. Under the end-use efficiency and demand-side management (DSM) component, the project is working, in concert with the Industrial Development Bank of India (IDBI), to promote end-use efficiency in selected energy-intensive Indian industries, and to promote conservation and related policy reforms. To date, the project has two major studies: Cogeneration in the Sugar Industry, and a prefeasibility study for Energy Service Companies (ESCOs); these have identified significant efficiency opportunities, but recommendations have not been implemented. Also, the Ahmedabad Electricity Corporation (AEC) has enthusiastically collaborated with EMCAT in carrying out DSM activities which have helped improve energy efficiency by the utility industry and consumers. However, energy use within the industry is still a major problem and EMCAT needs to be redirected in order to become more effective. While Loan Portfolio Development (LPD) activities have significant potential, they have not been effectively carried out or promoted. EMCAT has effectively stimulated U.S. and Indian ESCO joint-ventures, and the ESCO business in general; however, these ESCOs are encountering market resistance in efficiency shared-savings projects, and redirection is called for. The ESCOs have not yet adequately explored the market for joint-ventures in smaller-scale power generation, and EMCAT has not assisted in this area. Sustainability of both DSM and ESCO activities appears promising, although energy auditing and LPD activities are not being implemented in a sustainable manner. Institutionally, EMCAT demonstrates that the Industrial Development Bank of India (IDBI) provides an excellent linkage with the financing-side "constraint" and the AEC with the utility sector. EMCAT however, has a weak linkage with the industrial "customer", that is, industry itself. Lessons learned under the supply-side component are that a major change in the way government does business comes about not because of outside forces, but when players realize they have no other alternative to reform the system; assistance may change minds, but it has little impact if the minds it changes are not in a position to use that knowledge. Also, problems that appear to be technical in nature may in fact be the result of poor management and organization. Lessons learned under the end-use efficiency and DSM component, are as follows. (1) Industry efficiency investment decisions are largely the result of market forces, making technical understanding of efficiency opportunities a necessary but not sufficient condition for effective conservation. (2) Linkage of energy efficiency to environmental, economic modernization, and similar forces improves effectiveness and sustainability. (3) Success in DSM depends as much on the motivation and accountability of utility management as it does on the cost-benefit and technical feasibility of DSM measures. (4) Choosing the right counterpart is the most critical factor in sustainability services. (5) More effort must be made to disseminate project activities. This might be done through a quarterly newsletter circulated to the power sector.