Promoting Energy Efficiency in the Tea Sector

A UNDP project with the Tea Board of India is helping small tea processing enterprises adopt a range of measures to improve energy efficiency in processing. With over US$ 2.5 million investments, the tea producers of the Nilgiri hills in south India are leading the way in demonstrating the possibilities of conserving energy and improving profitability in the sector.

Two years ago Manogaran, the tea maker and supervisor of the Kaikatty Tea Industrial Cooperative Society, in the Nilgiri hills in south India was a worried man. Employed at the cooperative for over 30 years, he had known no other job and was worried about rumours that the cooperative would shut down amid rising losses. He was not alone in his worries - spread over 2,000 acres, the cooperative is a lifeline for its 1,500 members. More than 60 percent of the local economy in these parts relies on revenue from the sector which employs more than 3,00,000 people.


  • In partnership with the Tea Board of India, UNDP is helping tea processing units in the Nilgiri Hills in south India to improve energy efficiency in processing
  • With over US$ 2.5 million investments, tea processing units have been able to save between 15-20 percent in energy costs
  • Carbon dioxide emissions have also reduced by around 263,952 tons over the project duration
  • With the success of the project in south India, the renewed focus is on the north-east of the country, which is home to at least 1,000 tea factories

South India where the Nilgiris is located contributes over 45 percent to India’s tea exports. Much of the region’s tea comes from 60,000 small tea growers that own one hectare of land and sell tea leaf to 100 small scale factories nearby that process the leaf into tea. On average, these bought-leaf factories consume nine million kilograms of firewood annually much of which is transported to the Nilgiris from over 400 kms away. Roughly 30 percent of production costs can be attributed to energy requirements.

As the Cooperative explored ways to reduce production costs and improve the quality of its tea, it undertook a detailed energy audit which highlighted many opportunities where greater energy efficiency could reduce production costs. The results have been remarkable. In a short span of two years, the cooperative has been able to turn around by saving on its energy bill by 30 percent.

In 2008, the United Nations Development Programme (UNDP) and the Tea Board of the Ministry of Commerce, Government of India with support from the Global Environment Facility initiated a four year project aimed at introducing energy conservation measures in small tea processing factories that could help units realise between 15 to 30 percent savings in energy costs. Close to 100 energy audits undertaken by the Technology Information Design Endeavour (TIDE), revealed that energy efficiency in both electrical and thermal applications could make a significant impact in lowering production costs in a sector facing intense competition from international markets. It can also help the firewood intensive sector overcome a new challenge – of rapidly changing environment.

According to V. Arunachalam, the head of Kaikatty, “Before we began investing in energy conservation measures, we viewed it as an exercise that meant choosing between profitability and the climate.” Today his view is different. “Energy efficiency in the tea sector has meant we can do justice both to the hill and the local community which thrives on tea."

R. Ambalavanan, the Executive Director of the Tea Board of India adds, “The growing shortage of fuel and climate change have created a sustainability challenge for the tea sector. Translating findings from energy audits into actual concrete measures is the key to the adoption of energy conservation practices as part of business strategy.”

As a result of project efforts, more than US$ 2.5 million, much of it as private equity, has been channeled into a range of energy saving measures – both in thermal and electric energy – this includes installing more efficient motors, investing in wood chippers to enhance efficiency in burning firewood, modifying blades in the drying process and using renewables such as biomass and hydro power. As a result, carbon dioxide emissions have reduced by around 263,952 tons over the project duration. On an average, the tea produced with energy conservation measures generated 0.27 kgCO2 less [10%] than earlier [3.81 kg CO2 per kg of tea processed]. The experiences of small tea processers have resonated with the larger, export-oriented tea estates. According to Shailajit Roy, Manager at one of the region’s largest tea exporters, “This year, we budgeted over US$ 40,000 in energy saving measures, last year we had no budget for these activities.”

Srinivasan Iyer, Head of the Energy and Environment Unit at UNDP, says “Meeting the sustainability challenge requires strong business engagement in investing in innovative solutions such as energy efficiency. For energy intensive sectors such as tea processing – rising energy demands and the changing climate call for climate resilient business strategies that can both improve competitiveness and achieve environmental outcomes.”

If these measures are adopted by all 265 tea processing units in south India, there will be an annual savings of 24.6 million kilowatt hours of electricity and 62 million kg of wood. This translates to reduction of 130,000 tons of CO2 emissions per annum. With the success of the project in south India, the renewed focus is on the north-east of the country, which is home to at least 1,000 tea factories. 

For India, where 400 million people still live without electricity and energy needs are rising to drive a rapidly growing economy, efforts such as those by the tea sector in the Nilgiris represent a powerful win-win strategy in addressing the challenge of climate change and profitability of businesses.

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