Pay-as-you-save: Solar Energy for Industrial Heating
As a result of UNDP’s partnership with the Ministry of New and Renewable Energy and supported by Global Environment Facility, the installation of solar water heating systems in India has increased by 20 percent each year. In addition, the partnership has also resulted in a saving of 3.57 million units of electricity, and a corresponding reduction in greenhouse gas emissions of 1.66 million tCO2.
- As a result of installing a solar water heating system that replaced furnace oil for water heating purposes, Wheels India passenger car plant in Chennai, TN saves about 383 litres of furnace oil a day
- Solar water heating system has also enabled the company to save about US$ 74,000 in costs a year
- Sona Koya Steering Systems, another company in Chennai saves about 120 litres of furnace oil daily as a result of solar water heating system that replaced diesel in their pressurized water heating systems
- Innovative institutional partnerships between energy consumers are supported through a UNDP partnership with the Ministry of New and Renewable Energy
- The partnership is part of a global solar water heating market transformation initiative which since 2008 has aimed to accelerate demand for the solar water heating systems
- This six-country project supported by GEF aimed to triple the use of solar water heater systems to meet domestic and industrial heating requirements in India
- Project initiatives have resulted in a saving of 3.57 million units of electricity, and a corresponding reduction in greenhouse gas emissions of 1.66 million tCO2
- UNDP-MNRE partnership contributed close to 50% in the overall increase in installation of solar water heating systems from 2.55 million m2 in 2008-2009 to 7.01 million m2 in 2012-13
The rooftops of the Wheels India passenger car plant looks very different from its counterparts in the Padi area of industrial hub of Chennai in Tamil Nadu. This is because spread across 4,200 square metres of roof, are arrays of evacuated tube collectors that collect solar energy to heat water. Prior to painting wheels, hot water is required to degrease the wheels cleaning up grease and grime. Water needs to be heated at a temperature of 75º C, a process which was previously done using furnace oil. Today the passenger car plant uses solar energy to meet this requirement. Ten thousand passenger car wheels pass through the unit daily. It is estimated that the plant saves about 383 litres of furnace oil a day, or close to 115,000 litres of furnace oil annually.
Assuming that one litre of furnace oil costs INR 40.8 a litre or US$ 65 cents, this amounts to a potential saving of US$ 74,000 a year. The savings on costs has been so significant that the company now plans to replicate solar water heating systems in plants across the country including Haryana, Uttar Pradesh, Uttarakhand, Maharashtra and Tamil Nadu.
The solar water heating system was not Wheels India’s area of expertise. Therefore, Wheels India turned to an Energy Service Company (ESCO) Aspiration Energy which designed, installed and now operates the water heating systems. In return, the company receives a monthly fee estimated on the basis of the savings generated from replacing furnace oil or diesel through using solar water heating systems to meet its need for hot water. “In the current environment, it is difficult for companies to commit to any capital expenditure which has a payback period of longer than 18 months. Working with an ESCO therefore is ideal as it minimizes our risk while helping us capture opportunity from renewable energy to meet our industrial heating requirements,” says Mr. Srinivasan, Divisional Manager, Plant Engineering at Wheels India.
Employing 700 employees on the outskirts of the city of Chennai, Sona Koya Steering Systems installed solar water heater systems last year serviced by Aspiration Energy as the ESCO operator, to replace diesel in their pressurized water heating systems. According to Senthil Kumar, Senior Engineer, Maintenance, Sona Koyo, the savings have been immense, about 120 litres of furnace oil daily, i.e. 36,000 litres annually. The company is now channeling hot water to their employees’ cafeteria. A majority of ESCO’s support energy needs are in commercial areas such as municipal lighting. Aspiration remains one of the few ESCOs focused on solar water heating in India. Innovative institutional partnerships between energy consumers such as Wheels India and Sona Koyo and the ESCO Aspiration Energy are supported through a UNDP partnership with the Ministry of New and Renewable Energy as part of a global solar water heating market transformation initiative which since 2008 has aimed to accelerate demand for the solar water heating systems. Activities include raising awareness on heating technologies and building an enabling investment environment that encourages such capital intensive technologies.
This six-country project supported by the Global Environment Facility aimed in India to triple the use of solar water heater systems to meet the domestic and industrial heating requirements of a growing economy. Project initiatives have resulted in a saving of 3.57 million units of electricity, and a corresponding reduction in greenhouse gas emissions of 1.66 million tCO2.
While much emphasis on the use of SWH systems has been on domestic use, the project demonstrates the viability of these technologies in the industrial sector. In doing so, it has demonstrated the significant fuel savings and reduction in global greenhouse gas emissions because hot water requirements for industrial use are large. In comparison, domestic hot water demand is limited to two hours daily.
Results from the project have been encouraging. A terminal evaluation of the project revealed that the project contributed to a 20 percent increase each year in the installation of solar water heating systems. While overall, installation of solar water heating systems (in domestic/industrial), has increased three-fold from 2.55 million m2 in 2008-2009 to 7.01 million m2 in 2012-13. Over the project period the UNDP-MNRE partnership contributed close to 50 percent of this increased installation through efforts at building awareness on the benefits of solar water heating systems, and demonstrating innovative financial mechanisms such as the ESCO to encourage greater adoption. Further, in a study published by the United Nations Environment Programme, India had scored the highest amongst the countries that participated in a global initiative to improve the use of solar water for heating purposes. The five countries included Albania, Chile, Mexico, India and Lebanon.
India currently meets more than 70 percent of its energy requirements from fossil fuels. Over 400 million live without electricity in India. A key challenge for the country will be to meet the energy needs of a growing economy and as the 12th Five-Year Plan notes, renewable energy sources provide another route to energy security. According to Boo Thirumalai, CEO, Aspiration Energy, “For India to meet its energy needs, much will depend on decentralized, cost effective, localized energy production such as those demonstrated through solar energy.”
With companies under intense pressure to improve profit margins, many do not have time to design measures to reduce energy consumption. The approach demonstrated by the GSWH project which recognizes the importance of reducing risk to consumers, tailoring technologies to meet the specific needs of industrial users, supporting innovative institutional mechanisms such as ESCOs and building confidence in solar energy has demonstrated the potential market in this largely untapped area of energy demand.
Projects and Initiatives
As part of a six-country project across Albania, Algeria, Chile, India, Lebanon and Mexico, this project, in partnership with the Ministry of New and Renewable Energy, Government of India, aims to accelerate the growth of solar water heater market in India through sharing the experiences and lessons learnt from other countries.
2013 Annual Performance Report of UNDP-supported GEF-financed Projects