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Final Report

LED Demand Aggregation


Study

ClimateWorks
Foundation

October 2011
Final Report

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Final Report

Table of Contents
Executive Summary 5
Abbreviations 7

List of Tables 9
List of Figures 9

Background 11

Overview of Indian LED market 11


Growth drivers 11
Context of the study 12
Scope of the study 12
Task I 12
Task II 13
Task III 13

Content of the report 13

Task I: Estimation of space lighting demand 14

Analytical approach 14
Approach 1: Using floor area and allowable Lighting Power Densities (LPDs) 15
Estimation of total floor area 15
Commercial buildings 15
Residential buildings 16
Estimation of lighting power density (LPD) 17
Estimation of space lighting demand 19

Approach 2: Using total connected load and load distribution profiles 21


Estimation of connected load at the national level 21
Estimation of lighting load / space lighting demand 22
Comparative study of lighting demand estimation from approaches 1 & 2 23

Estimation of National lighting inventory / stock 25


Lighting Inventory and Lumen demand projection 29
Baseline lighting demand in lumen hours 29
National lumen demand projection 31

Task II: Identification of Energy & GHG Savings 33

Determination of Present Energy Savings Potential 33

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Estimation of Market Share 33

Future Energy Savings Estimation 35


Analytical approach 35
Step 1: Future Improvement in Lighting 35
Step 2: Total Savings Potential 35
Step 3: Calculation of Penetration based Savings 35

Step 1: Future Improvement in Lighting 36


Technology Roadmap 36
Future Efficacy Predictions 36
Future Life Predictions 36
Price Roadmap 37

Step II: Total Savings Potential 38


Estimation of Future Market Share 38
Baseline Scenario 1 38
Baseline Scenario 2 38
Determination of Energy Savings 39
Baseline Energy Consumption 39
Energy Savings Potential 40
GHG Emission Reduction Potential 40

Step 3: Penetration based Savings 42


LED Penetration Rate 42
Calculation of Payback Period 42
Determination of Penetration Rates 42
Market Share based on Penetration Rates 43
Calculation of Savings 44
Flow Chart for calculation of Savings 45

Conclusion 45

Task III: Economic analysis of Demand aggregation strategies 46

CFL growth in India 46


Demand aggregation strategies 48
Stimulating economies of scale with demand aggregation strategies 49
Economic analysis of demand aggregation strategies 51
Demand aggregation in Residential buildings 51
Integration of LED lighting into the second phase of RGGVY scheme 51
Bundling of Utility driven DSM programs through a central institutional mechanism 54

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Replacement of T12 luminaries 56


Replacement of CFL luminaries 56
Replacement of ICL bulbs 57
Demand aggregation in Commercial buildings 58

The production and supply scenario of LED lighting systems 61


White-Light LED 61
Components of LED luminaires 62
Manufacturing process 67
Raw materials 68
Key players in the manufacturing segment 69

LEDs under the SEEP project 70


Conclusion 70
Recommendations and suggested roadmap 71
Appendix-I: Forecasting floor area in the residential buildings of the country 73
Appendix-II: Summary of lighting aspects of building energy audit reports 74
Appendix III: Cash flow statement for demand aggregation for BPL households 76
Appendix IV: Cash flow statement for demand aggregation of LED replacements for T12 luminaries 77
Appendix V: Cash flow statement for demand aggregation of LED replacements for CFL luminaries 78
Appendix VI: Cash flow statement for demand aggregation of LED replacements for ICL bulbs 79
Appendix VII: Cash flow statement for demand aggregation in central government buildings 80

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Executive Summary
Over the years, opportunities for Light Emitting Diodes (LEDs) in Indian lighting markets have showcased and
materialised in automotive, communications, signage, signalling, architecture and entertainment sectors. The
opportunity for LEDs in the general space illumination segment of residential and commercial buildings has
most recently emerged. This segment is niche and has significant potential for market transformation towards
LED lighting. LED technology has been globally recognised as super efficient and eco friendly in comparison to
the conventional lighting technologies. Several strategies have been considered to promote LED lighting in
India with demand aggregation being the key initiative.

In order to evaluate the demand aggregation strategies available with the stakeholders, it is necessary to
understand the scale of this demand and the nature of savings that can be achieved by meeting the demand. In
this regard, the ClimateWorks Foundation has initiated this study to analyze and estimate the total potential
demand for space lighting in the residential and commercial buildings of India. The overall assignment has
been broadly divided into three major tasks. The initial task involves estimation of space lighting demand in
terms of the total installed lighting load in the residential and commercial building categories of the country.
The findings of this task are critical supporting the basis for further analysis in the study. In the next task,
national level energy savings and GHG emission reductions potential are estimated to understand the scale of
benefits resulting from the complete market transformation. In the subsequent task, demand aggregation
strategies have been proposed and analyzed to determine the overall costs and benefits derived by all segments
of the stakeholders. The overall study is primarily focused to discuss the analytical approach, input parameters
and assumptions to estimate and quantify the characteristics of Indian lighting market. The findings presented
in each of the three major tasks are confined to general interior space illumination in the residential and
commercial building categories of the country.

The estimation of space lighting demand in India is a complex web of quantification of parameters involving a
very high degree of uncertainty. The floor space and connected load are the two primary input parameters
driving the space lighting demand in residential and commercial buildings in the country. The scale of this
demand estimated in this study is enormous with 31 GW of lighting load in the residential buildings and 11 GW
in the commercial buildings. Further this study estimates that in residential buildings, 46% of the current
lighting stock is accounted by CFLs followed by other florescent lamps (41%) and incandescent lamps (13%). In
the commercial buildings 63.7% is accounted by CFLs followed by other fluorescent lamps (34.6%) and
incandescent lamps (1.6%). Apart from this the total annual lighting service is also determined in terms of
teralumen-hours. Keeping this parameter constant per square metre of floor area, the future growth in the
lighting market is determined for the next two decades. The market for general interior space illumination in
India is estimated to increase by approximately 82% in the residential buildings and 54% in the commercial
buildings over the next two decades.

After quantifying the lighting demand and the national lighting stock, the present levels of efficacy for various
lighting technologies have been analyzed to determine the energy savings potential and GHG emission
reductions. With complete market transformation in the present days scenario, the annual energy savings
potential and GHG reductions are estimated to the tune of 29,850 GWh and 25.6 million tcO2 respectively. The
residential buildings contribute 76% of the national savings potential where as the commercial sector is
contributing for the remaining 24% potential.

In order to understand the future of Indian lighting market, a comprehensive analytical model is being
developed considering the various dynamic characteristics of Indian lighting industry. Variations in critical
lighting parameters like efficacy, price, useful life etc. are analyzed and competition among conventional
technologies are considered in the development of this model. The parameters affecting the market penetration
of LEDs have been forecasted after significant secondary research and consultations. This model conclusively
determines that between 2016 and 2021 the price reductions and efficacy improvements anticipated in the LED
technology will bring down the relative payback periods with respect to the conventional technologies to less
than 3 years. The model also predicts that by 2021 the LED technology will penetrate 57% of the lighting market

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in commercial buildings where as it will capture only 32% of the market in the residential buildings. By 2031
more than 80% of the lighting market will be captured in both the building categories. The findings of this
model are based on Empirical frameworks which assume that market penetration is solely driven by the
economics of transactions (payback periods). However the income level of the consumers, standardization of
the technology, consumer confidence and many other purchase characteristics may also drive market
penetration of LEDs.

In the final task of this study, demand aggregation strategies have been proposed and analyzed to assess and
quantify the overall benefits for the system as whole. Demand aggregation strategies by public entities can be
very useful in transforming the lighting market and motivating the major LED manufacturers to set up
production facilities in the country. Such strategies are always accompanied with benefits of bringing down the
initial costs to affordable prices. The demand aggregation options proposed in this study may integrate with the
existing schemes & policies or bring about a complete market transformation with newly evolved guidelines.
The strategies are proposed for a variety of consumer segments like BPL households, Non BPL households,
central government buildings, private commercial buildings etc. The price reductions of LED luminaries
corresponding to the volume of the demand aggregation have also been determined from a variety of sources.
With properly structured demand aggregation projects, LED lights can be procured at extremely competitive
prices with discounts up to 30%. Detailed financial statements have been developed to further evaluate the
demand aggregation options after considering the benefits of price reductions (discounts) and domestic
manufacturing facilities. The whole set of assumptions in terms of aggregated demand, energy use parameters
by various lamps, prices of luminaries, cost of energy saved and useful life have been developed for the sake of
economic analysis. The economic analysis is not relevant to any particular stakeholder. The overall costs and
benefits of demand aggregation projects (as whole) are being considered to evaluate the cash flows. The analysis
shows that all the proposed demand aggregation options are economically very attractive at discount rates
beyond 50% whereas the options with discounts less than 50% are promising only for replacement of
incandescent and T12 lamps in residential and commercial buildings respectively. Therefore demand
aggregation strategies seem to be very promising with high volumes of aggregation and higher price reductions
are availed from manufacturers.

The LED technology is still emerging and there is significant potential for growth in the efficacy, cost
effectiveness and useful life of the LED lighting fixtures. Thus the improvement of these critical parameters will
drive the market penetration of LED technology in the near future. The findings of this study indicate that the
market penetration in commercial buildings will be more aggressive in the future as compared to the residential
buildings. Therefore the government should focus on initiating demand aggregation options for residential
buildings to kick start the penetration of LED lighting technologies. Also the future policies in the Indian
lighting industry should focus on initiating the following strategies:

Extensive multi state demand side management programs with LED lighting as the focal point initiative
Investment conducive environment for global manufacturers for setting up Domestic manufacturing
facilities of LEDs for long term sustainability
Extensive R&D in the LED lighting areas for capitalizing the potential for technology improvements in
LED

Way forward

The findings of this study could form the basis for future detailed market assessment studies for various
investors in the energy efficient lighting industry. The demand aggregation options studied and analyzed in this
study can be further formulated for institutional structuring and development of new schemes. The
government/policy makers may base the findings of this study to structure and develop incentives for various
stakeholders in the LED lighting industry.

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Abbreviations
BEE: Bureau of Energy Efficiency
BLY: Bachat Lamp Yogana
BPL: Below Poverty Line

CDM: Clean Development Mechanism


CEA: Central Electricity Authority
CER: Certified Emission Reductions
CFL: Compact Fluorescent Lamps

CMIE: Centre of Monitoring Indian Economy


CPWD: Central Public Works Department
DSM: Demand Side Management
ECBC: Energy Conservation Building Code

ECO III: Energy Conservation and Commercialization (ECO) Bilateral Project Agreement
EELE: Energy Efficient Lighting Equipments
ELCOMA: Electric Lamp and Component Manufacturers Association of India
EPS: Electric Power Survey

ESMAP: Energy Sector Management Assistance Program

FTL: Fluorescent Tube Light


GDP: Gross Domestic Product
GHG: Green House Gases
GIZ: Deutsche Gesellschaft fr Internationale Zusammenarbeit (GIZ) GmbH
GOI: Government of India
GTZ: Deutsche Gesellschaft fr Technische Zusammenarbeit
GWh: Giga Watt hour (10^9 watt hours)
HP: Himachal Pradesh
HPERC: Himachal Pradesh Electricity Regulatory Commission
ICL: Incandescent Lamps
INR: Indian National Rupees
IRG: International Resources Group
IRR: Internal Rate of Return
ISLE: Indian Society of Lighting Engineers
LBNL: Lawrence Berkeley National Laboratory
LED: Light Emitting Diode

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LPD: Lighting Power Density


MOHW: Ministry of Health & Family Welfare
MOSPI: Ministry of Statistics and Programme Implementation
MSDP: Multi State DSM Programmes
NMCC: National Manufacturing Competitiveness Council
NMEEE: National Mission for Enhanced Energy Efficiency
RGGVY: Rajiv Gandhi Gramin Vidyutikaran Yojana
Sqm: Square meter
SSL: Solid State Lighting
TERI: The Energy and Resources Institute
Tlm: Tera Lumens Hours (10^12 lumen hours)
ToR: Terms of Reference defined for this assignment as per the ClimateWorks Foundation
US DoE: United States Department of Energy
USAID: United States Agency for International Development

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List of Tables
Table 1: Commercial floor estimates for India ........................................................................................................... 15
Table 2: Summary of commercial floor estimates by GIZ ......................................................................................... 16
Table 3: Residential floor area estimates ................................................................................................................... 17
Table 4: Population, urbanization and household size projections .......................................................................... 17
Table 5: Interior lighting power density - building area method .............................................................................18
Table 6: Interior lighting power density by space function method .........................................................................18
Table 7: Average existing LPD .................................................................................................................................... 19
Table 8: Total space lighting demand in Residential sector .................................................................................... 20
Table 9: Total space lighting demand (in Giga watt) in commercial buildings ...................................................... 20
Table 10: Space lighting demand in commercial sub-category buildings ............................................................... 20
Table 11: Space lighting demand estimation for the year 2011 ................................................................................ 23
Table 12: Electricity consumption from lighting appliances for the year 2011 ....................................................... 24
Table 13: National lighting inventory in residential buildings ................................................................................ 28
Table 14: National lighting inventory in Commercial buildings .............................................................................. 29
Table 15: Estimation of baseline teralumen-hours of annual lighting service in residential buildings ................ 30
Table 16: Estimation of baseline teralumen-hours of annual lighting service in commercial buildings .............. 30
Table 17: Baseline annual lighting service in teralumen-hours for 2011 .................................................................. 31
Table 18: Estimation of annual lighting service intensity for year 2011 ................................................................... 31
Table 19: Market Share in Present Lighting Demand .............................................................................................. 33
Table 20: Efficacy Projections for Lighting Technologies ........................................................................................ 36
Table 21: Projected Life of various Lighting Technologies ....................................................................................... 37
Table 22: Price Projections of various Lighting Technologies ................................................................................. 37
Table 23: Future Projected Lighting Demand ......................................................................................................... 39
Table 24: Future Projected Lighting Demand .......................................................................................................... 39
Table 25: Projected Future Baseline Consumption .................................................................................................. 39
Table 26: Projected Energy Savings Potential .......................................................................................................... 40
Table 27: Projected GHG Reduction Potential (Determined Efforts) ...................................................................... 41
Table 28: Projected GHG Reduction Potential .......................................................................................................... 41
Table 29: Demand aggregation strategies recommended by NMCC core committee ............................................ 48
Table 30: Demand aggregation strategies by stakeholder consultations ................................................................ 49
Table 31: Reduction in prices Vs volume of sales ..................................................................................................... 50
Table 32: Reduction in prices of CFLs for large scale distribution programs .......................................................... 51
Table 33: Assumptions for economic analysis .......................................................................................................... 52
Table 34: Assumptions for economic analysis of demand aggregation projects in Non BPL households ............ 54
Table 35: Assumptions for demand aggregation in central government offices .................................................... 59
Table 36: Summary of economic analysis of demand aggregation strategies ......................................................... 60
Table 39: List of countries producing Indium14 ........................................................................................................ 63
Table 40: Production of primary Gallium world ................................................................................................... 64
Table 41: Production of Yttrium - world ................................................................................................................... 65
Table 42: world smelter production and capacity of Aluminium3 ........................................................................... 65
Table 43: Mine production and reserves for Rare Earths3 ....................................................................................... 66
Table 37: Various materials used for different color LEDs ...................................................................................... 68
Table 38: Leading manufacturers of LED chips, components and fixtures* in the world ..................................... 69

List of Figures
Figure 1: Trend of opportunities for LED market in India........................................................................................ 11
Figure 2: Total connected load in the Residential buildings category ..................................................................... 21
Figure 3: Total connected load in the commercial buildings category .................................................................... 22
Figure 4: Distribution of connected load in the commercial buildings ................................................................... 23
Figure 5: Distribution of power consumption by appliances ................................................................................... 25
Figure 6: Distribution of lighting load in residential buildings ............................................................................... 26
Figure 7: Distribution of lighting load in commercial buildings ............................................................................. 26

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Figure 8: National lighting stock in Millions ............................................................................................................ 28


Figure 9: National lumen demand forecasting in teralumen-hours ........................................................................ 32
Figure 10: Overall market share of different technologies in the present scenario ................................................ 34
Figure 11: Analytical approach for Task II ................................................................................................................ 35
Figure 12: Efficacy Projections for Lighting Technologies ....................................................................................... 36
Figure 13: Projected Life of various Lighting Technologies ..................................................................................... 36
Figure 14: Price Projections of various Lighting Technologies ................................................................................ 37
Figure 15: Market Share of various Lighting Technologies for Commercial Buildings (Scenario 2)..................... 38
Figure 16: Market Share of various Lighting Technologies for Residential Buildings (Scenario 2) ...................... 38
Figure 17: Future Projected Lighting Demand ......................................................................................................... 39
Figure 18: Projected Future Baseline Consumption ................................................................................................. 39
Figure 19: Projected Energy Savings Potential ......................................................................................................... 40
Figure 20: Projected GHG Reduction Potential (Determined Efforts) .................................................................... 41
Figure 21: Projected GHG Reduction Potential (Aggressive Efforts) ....................................................................... 41
Figure 22: Arthur D. Little Payback v/s Penetration Models .................................................................................. 42
Figure 23: Payback for Conventional Technologies against LED in Residential Sector ........................................ 42
Figure 24: Payback for Conventional Technologies against LED in Commercial Sector ....................................... 42
Figure 25: Penetration of LED in Market Share of Conventional Technology in Commercial and Residential
Sector........................................................................................................................................................................... 43
Figure 26: Projected Future Lighting Inventory ....................................................................................................... 43
Figure 27: Share of LED in overall lighting Market.................................................................................................. 44
Figure 28: Probable Savings Based on Penetration Levels ...................................................................................... 44
Figure 29: Flow Chart for Task II .............................................................................................................................. 45
Figure 30: The Indian lighting industry .................................................................................................................... 46
Figure 31: Growth of CFL in India ............................................................................................................................. 47
Figure 32: Growth of CFL Vs GLS in India ............................................................................................................... 47
Figure 33: Demand Vs manufacturing capacity for CFLs in India ......................................................................... 48
Figure 34: Bulk order discounts available on the current market price of LEDs ................................................... 50
Figure 35: Sensitivity of Project IRR with the price reductions provided by manufacturers ................................ 54
Figure 36: Price reduction vs. Project IRR for demand aggregation projects replacing T12 luminaries ...............57
Figure 37: Price reduction vs. Project IRR for demand aggregation projects replacing CFL luminaries ..............57
Figure 38: Price reduction vs. Project IRR for demand aggregation projects replacing ICL luminaries .............. 58
Figure 39: Price reduction vs. Project IRR for demand aggregation in central government buildings ................ 60
Figure 40: Components of LED luminaire ................................................................................................................ 63

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Background
Overview of Indian LED market
Light Emitting Diode (LED) lighting technology has been globally recognised as extremely efficient and eco
friendly in comparison to the Incandescent Lamps (ICLs) and florescent lamps (FTLs, CFLs). Penetration of
LEDs in India could significantly reduce lighting load, peak demand and overall energy consumption without
compromising on the output. The entire lighting industry in India in 2009 was estimated to be INR 7167
crores1 out of which, the share of LED lighting was only INR 216.38 crores (@ Rs44.8 exchange rate)2. Over the
years the opportunities for LEDs in Indian lighting market have been across various segments including
automotive, communications, transport, signage, signalling, architecture and entertainment. The opportunity
for general space illumination of residential and commercial buildings purposes has recently emerged (see
figure-1).

Figure 1: Trend of opportunities for LED market in India

Early Years
Signalling Signage Gadget

Recent past
Automotive Entertainment Communication Architecture

Current times
General Space Illimunation

Growth drivers
The Indian LED market is anticipated to grow at 54% till 2014 based on the estimates of a major lighting
manufacturer. The various factors contributing to this growth are listed below.

Government support for promoting investments in energy efficient lighting systems


Development of national standards for testing and performance evaluation
Transfer and Improvements in existing technology for new applications
Global mandate to address GHG emissions &
Decline in average prices of LED

1 Statistics of Indian lighting industry, ELCOMA


2 LED Lighting scenario in India, Philips

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Context of the study


The Indian lighting sector especially the general illumination segment in residential and commercial buildings
has significant potential for market transformation. The Ministry of Power and specifically the Bureau of
Energy Efficiency (BEE) developed Bachat Lamp Yojana as the flagship scheme for increasing the market
penetration of CFLs. Through various other policy interventions, it is estimated that sales of CFLs increased
from 20 million in 2003-04 to 250 million in 2009-10, and reduced costs by 50%. Similar interventions to
impact the LED market in India would greatly reduce the need to add generation capacity and also would
significantly affect the peak demand. LED lighting offers advantages like:

Directional Lighting
Compactness & flexibility - lightweight, discreet and robust are making them very useful in virtually all
lighting applications.
Durability and low power consumption leading to very economical life cycle costs
Cool operation Lower heat generation and minimal effect on increasing space heat
Lower maintenance costs
Produce all manner of different pure colours

Several strategies have been considered to promote LED lighting in India with demand aggregation being the
key initiative. One of the key recommendations made by the Core Committee set up by the National
Manufacturing Competitiveness Council (NMCC) is the implementation of a multi-state demand side
management program that would aggregate the demand for LED lighting, thereby stimulating economies of
scale and reducing costs and time-frames. The committee has also proposed a few demand aggregation
strategies in the final report The Economic case to stimulate LED lighting in India.

To identify and execute the best option among the demand aggregation strategies available, it is necessary to
understand the scale of the demand and the nature of the savings that can be achieved by meeting this demand.
In this regard, ClimateWorks Foundation has initiated this study to analyse and estimate the total potential
demand for space lighting in the residential and commercial buildings of India. The demand estimated
represents the potential of Indian lighting market which can be met by LEDs. The study also determines the
total energy and cost savings that can be achieved with a detailed cost-economics of the proposed demand
aggregation programmes. This study will be further used to identify the impact that of an LED demand
aggregation programme at national level on the GHG emissions trajectory.

Scope of the study


The overall assignment has been broadly divided into the following major tasks:

Task I Task II Task III


Estimation of the total Economic Feasibility
space lighting demand Identification of Energy Study to implement the
and future growth Savings demand aggregation
potential strategies

Task I
Task I involves the estimation of total space lighting demand in the residential and commercial sectors of India.
Further the estimated demand is forecasted in the near future to identify the growth potential of the industry.
The scope of lighting demand estimation in this task is confined for general space illumination purposes. The

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project team has proposed two different approaches to estimate the space lighting demand in the task I. The
first approach adopts floor area estimates as the basic input parameter and further uses the lighting power
densities (LPDs) analyzed from the various building energy audit reports of BEE. The space lighting demand is
further estimated as the product of the floor area and the LPDs of the respective category of the buildings. The
second approach is based on the connected load data collected from the nodal agencies at the national level.
The team will further analyse the functional distribution of connected load in the residential and commercial
sectors to estimate the lighting demand. Subsequently the distribution/penetration of lighting technologies in
the current lighting market is analysed for estimating the installed base of lighting inventory/stock. The lighting
inventory is converted to an appropriate metric representing annual lighting service (lumen-hours) which is
further forecasted based on the information from a variety of sources.

Task II
In task II, the team will undertake an assessment of the national level potential for energy savings and GHG
emission reductions by adoption of LED based lighting applications in the commercial and residential building
categories. The team will further forecast and analyze characteristics of LED and other technologies derived
from the mapping of LEDs to the existing lighting technologies. The team will also evaluate the relative
penetration of LED with respect to the conventional technologies for the next two decades. This will be based on
a theoretical model that relates the consumer penetration characteristics with the relative payback periods.

Task III
Task III involves analyzing economic feasibility for scaling up the LED market penetration (in commercial and
residential buildings) at the national level. Several demand aggregation strategies will be recommended to take
advantage of the price reductions, economies of scale and stimulate market with domestic manufacturing of
LEDs. Various lessons learned from the CFL success story will be incorporated in the proposed demand
aggregation strategies. The discounted prices of LEDs and performance shall be considered to form the basis of
all the economic analysis.

Content of the report


This report is focused to discuss the analytical approach, input parameters and assumptions adopted to support
all three tasks. Further the report presents the findings of each of the tasks that are primarily confined to
general interior space illumination in the residential and commercial building categories of the country. In the
commercial buildings category, the analysis may be further categorized separately for public and private sector
owned buildings wherever possible. However there are certain limitations to carry out this assignment to the
extent of the scope defined as per the ToR. These limitations are discussed in the following sections whenever
and wherever required while detailing the methodologies.

The parameters quantified in this study are dependent on the information derived from a variety of sources
available in the public domain. The study does not comment on the quality, scope and reliability of the
information derived from these sources. However while using certain information the contextual relevance and
appropriateness may be discussed which are exclusively based on the judgments of the project team. Also the
scope of the commercial and residential sectors may vary significantly across the sources of information. This
variation in scope may affect the uniformity in the analysis and estimation of parameters. However any such
variation is neglected for the purpose of simplification in the analysis presented in this study.

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Task I: Estimation of space


lighting demand
This section of the report will discuss the analytical approach, input parameters and assumptions adopted to
present the findings of this task. The objective of this task is to estimate the space lighting demand which is the
presented as the total wattage of general lighting equipments currently installed in the country. This parameter
is further used to estimate the national lighting stock in the residential and commercial building categories. The
demand is also forecasted in the near future to understand the scale and nature of the future lighting market.

Analytical approach
The estimation of space lighting demand in the commercial and residential sectors of India is a complex web of
quantification of parameters involving a very high degree of uncertainty. The rising floor area (residential and
commercial), economy (especially the boom in services sector), gap in demand and supply of power, rising
electricity/fossil fuel costs, industrial growth and many other factors play significant role in driving the space
lighting demand. The availability and reliability of relevant sources of data has been a significant challenge in
the development of the overall analytical approach.

Two different approaches have been adopted in structuring and developing the model for Indian space lighting
demand. The overall analytical approach is presented in the following diagram. A comparative study of the
findings of both the approaches is carried out in the later part of this study to identify the most appropriate
demand estimate.

Estimation of space lighting demand

Approach 1: Approach 2:

Using total floor area and allowable Using total connected load and load
lighting power density distribution profile

1. Estimation of total Floor area (in 1. Estimation of total connected load


Sq.m) 2. Analysis of load distribution
2. Estimation of Internal lighting profile across different functions
power density (Watt/Sq.m) 3. Estimation of lighting load / space
3. Estimation of space lighting lighting demand in KW
demand in KW

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The following sections will detail the methodology and various sources of information adopted in approaches 1
& 2 to estimate the required parameters.

Approach 1: Using floor area and allowable Lighting


Power Densities (LPDs)
This approach adopts the total floor area estimates in the commercial and residential building categories as the
primary input parameter. Further it analyzes the actual existing lighting power densities in these building
categories. Based on the floor area and the existing LPD estimates, the total wattage of the lighting equipments
installed is calculated. The following sections will detail the analysis and relevant sources adopted for deriving
the floor area and existing LPDs.

Estimation of total floor area


The total floor area estimates are derived separately for commercial and residential building categories.

Commercial buildings
A variety of sources report the floor area estimates for the commercial buildings category in the country.
However further classification of this floor area estimate into public and private commercial is limited. Recently
in June, 2010 a study (Total commercial floor space estimates for India) has been carried out by the ECO III
team with the support of USAID and BEE for estimating the total floor area in the commercial buildings
category. Similarly a study by LBNL India energy outlook, 2009 also estimates the commercial floor space in
India. The floor area estimates calculated by ECO III and LBNL are based on the no. of enterprises and
establishments reported for various categories of businesses/services defined in the Economic census, 2005 by
Ministry of statistics and programme implementation. The other sources that report similar information are
Mckinsey, 2009 and ClimateWorks Foundation.

The ECO III study mentioned above also provides a comparative analysis of the commercial floor space
estimates determined across different sources in the industry. In addition to the floor space estimates, the
compounded annual growth rates are also provided by the respective sources (see Table-1). The study also
estimates that approximately 30 Million sq.m of commercial floor space may be added every year across the
country.

Table 1: Commercial floor estimates for India


Commercial
Source Commercial Floor space in Million sq.m Compounded
floor space
annual growth
projected for
2005 2006 2007 2008 2009 2010 rate
2011
McKinsey, 2009 697 752 812 877 947 1022 8% 1103.76

LBNL, India
860 885 912 939 966 995 3% 1024.85
energy Outlook
ECO III, Total
commercial floor
516 542 569 597 627 659 5% 691.95
space estimates
for India
ClimateWorks
Foundation, 346 376 408 442 480 521 8.5% 565.285
EDS estimate
Source: Total commercial floor space estimates for India by ECO III

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Note* Underlined numbers in bold are as calculated or as provided in respective study of the source. The
remaining numbers are projections based on the effective compounded annual growth rate (CAGR) which is
either assumed, or as calculated, based on the numbers provided.

Apart from this, the ECO III study has also made informed assumptions for the % distribution of commercial
buildings floor space among public (26%) and private sectors (74%). These estimates are provided by the expert
industry sources after significant consultations. The annual growth rates of commercial floor space provided in
table-1 will form the basis for forecasting the space lighting demand in this sector.

Another useful source of information for estimating commercial floor space is the Market assessment study for
Tri-generation in India undertaken by DSCL Energy Services Company Ltd in February, 2010. This study
commissioned by GIZ has undertaken a review of the commercial floor space estimates reported by various
agencies for different categories of buildings in commercial sector. Table- 2 shows the summary of existing floor
space estimates presented in the above mentioned study.

Table 2: Summary of commercial floor estimates by GIZ

Floor space Remarks


Market segment Unit Existing stock Projected stock
(year) (year)
37.16 (2011) Data for seven major cities
3
Private offices Million sq.m 21.04 (2009) considered based on availability of
data
Central NA Only central government. Data for
government Million sq.m 1.24 (2008) state government and municipal
4
offices offices are not available
12.24 (2010) Represents organized retail
5
Retail Million sq.m 2.83 (2006) segment only which is 4% of the
total retail space
6 117,117 (2011) Include on 3 star and above rating
Hotels Rooms 65,614 (2009)
for 11 cities
7 36.18- Govt. (2007) NA Based on no. of beds and floor area
Hospitals Million sq.m
29.07- Pvt. (2007) per bed allowed by MoHFW
7.25 (2015) Based on Data for 47 airports
8
Airport Million sq.m NA across Tier-I, Tier-II & Tier-III level
cities

Residential buildings
For the Residential building sector, the total floor area estimate has been calculated based on the provisional
population totals derived from the census of India, 2011. The division of population among urban (30%) and
rural (70%) India has been derived from the Report of the technical group on population projections
constituted by the national commission on population published by census of India in May 2006. The Census

3 Knight Frank Research; India Office Market Review; Q 1 2009


4 Govt of India; Ministry of Urban Development; Annual Report; 2007-08
5 AT Kearney; Windows of Hope for Global Retailers; Indian Retail Market Review Q3 2006 & 2008, Knight

Frank
6 India Report: The Voyage. An exploration of key hospitality markets in India by Cushman & Wakefield
7 National Health Profile, 2007, MOHFW, GOI
8 Airport Realty Report by Cushman & Wakefield

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of India, 2006 report also provides population and urbanization projections until March 2026. A recent study
by World Bank in 2008 for quantifying the electricity consumption in residential sector has further
extrapolated these projections until 2031. Apart from these projections the World Bank study has also projected
the average household size in urban and rural India.

Based on the data provided in the above mentioned sources, a total of about 9670 million sq.m of residential
floor space has been estimated in the country for the current year (see Table-3).

The annexure-1 shows the detailed calculations of residential floor space projections for the next two decades.
These projections are based on the population and urbanization forecasts carried out World Bank in 2008. The
average household area and the electrification rates in the urban and rural sectors have been projected after
significant research and consultations with the experts in the industry.

Table 3: Residential floor area estimates

Population Total no. of Total no. of Total area under


households electrified electrified households
households in million sq.m
Urban 365030961.2 88550738.2 83060592.4 3903.848
Rural 845162460.8 184159869 110864241 5764.941
1210193422
Total 272710607 193924833 9668.79
(as per census, 2011)

The growth rate in residential building sector is estimated based on the population & urbanization projections
provided by the Census of India, 2006 and World Bank, 2008. The forecasts of the key input parameters shown
in the table-4 derive the growth in development of residential floor space in the country. This will form the basis
for forecasting the space lighting demand in this sector.

Table 4: Population, urbanization and household size projections

Population Urbanization (% of Average household size


Year
('000 persons) urban population to
Urban Rural
total)
2011 1210193.42 30.00 4.1 4.6
2016 1268961.00 31.10 4.0 4.5
2021 1339741.00 32.30 3.9 4.4
2026 1399838.00 33.40 3.9 4.3
2031* 1444110.00 34.60 3.7 4.1

Source: Census of India, 2006; World Bank, 2008

Estimation of lighting power density (LPD)


The LPD of a building represents the wattage of the lighting fixtures in the unit lighted area of the building. The
Energy Conservation Building code (ECBC), 2007 developed by BEE defines the allowable LPDs for different
categories of buildings in the country (see Tables 5 & 6). The average LPD for various types of commercial
buildings/spaces defined by ECBC is 12.3 watts/sq.m. The allowable LPD estimate for multifamily residential
buildings is 7.5 watts/sq.m.

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Table 5: Interior lighting power density - building area method


Building area type LPD (watts/sq.m) Building area type LPD (watts/sq.m)

Automotive Facility 9.7 Multifamily Residential 7.5


Convention Center 12.9 Museum 11.8
Dining: Bar Lounge/Leisure 14 Office 10.8
Dining: Cafeteria/Fast Food 15.1 Parking Garage 3.2
Dining: Family 17.2 Performing Arts Theatre 17.2
Dormitory/Hostel 10.8 Police/Fire Station 10.8
Gymnasium 11.8 Post Office/Town Hall/ 11.8
Healthcare-Clinic 10.8 Religious Building 14
Hospital/Health Care 12.9 Retail/Mall 16.1
Hotel 10.8 School/University 12.9
Library 14 Sports Arena 11.8
Manufacturing Facility 14 Transportation 10.8
Motel 10.8 Warehouse 8.6
Motion Picture Theatre 12.9 Workshop 15.1

Table 6: Interior lighting power density by space function method


Building type LPD (watts/sq.m)
Convention Centre 12.9
Dining: Bar lounge/Leisure 14
Dining: Cafeteria Fast Food 15.1
Dormitory/Hostel 10.8
Gymnasium 11.8
Health Care Clinic 10.8
Hospital/Health Care 12.9
Hotel 10.8
Motel 10.8
Museum 11.8
Office 10.8
Police/Fire Station 10.8
Post Office/Town Hall 11.8
Mall/Retail 16.1
School/University 12.9

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Sports Arena 11.8


Motion Picture Theatre 12.9
Total/Average 12.3

The LPDs defined by ECBC signify allowable values that are theoretically calculated based on the function and
purpose served by the building. However the estimation of space lighting demand should consider the actual
existing LPDs rather than the allowable LPDs. Also the ECBC, 2007 does not categorize the buildings as public
and private sector while defining the LPDs. Therefore various sources of building energy audit reports have
been reviewed and analysed to derive the actual existing LPDs in the residential and commercial buildings.

The energy efficient building program of BEE has undertaken energy audit studies for more than 25
commercial buildings in the public sector. These public sector buildings are distributed across different states
and functions like educational university, hospital, hostel, office, administrative etc. Annexure-2 shows the
summary of the energy audit studies pertaining to the lighting aspect of these buildings. The average interior
LPD derived from this sample of commercial buildings is about 9.07 watts/sq.m.

For private commercial buildings in the country, the estimation of average existing LPD has been a major
challenge as there are very few energy audit studies reported in the public domain. Also the scope of energy
audit studies of private commercial buildings may vary significantly given the variety of services provided in
this category of buildings in the country. However if the lighting aspect of these buildings are studied with a
substantial sample size covering the various types of buildings, the results may be further analysed to derive the
average existing LPD for these buildings. Therefore in the absence of such information 12.3 W/sq.m of LPD has
been adopted for this category based on ECBC, 2007 recommendations.

For residential buildings in the country, the PwC team has analyzed recent survey findings of about 200
household buildings in the state of Himachal Pradesh. The built up area, lighting load, distribution of lighting
technologies and other aspects of lighting have been analysed for all the 200 residential buildings. The average
LPD estimated based on this analysis is about 3.43 watts/sq.m.

Table-7 shows the average existing LPD estimated for different sectors in the commercial and residential
buildings category.

Table 7: Average existing LPD

Sector Public commercial Private commercial Residential

Average existing LPD 9.07


12.3 3.43
(in watt/sq.m)
Energy Audit studies of
Source the efficient building ECBC, 2007 Himachal survey data
program of BEE

Estimation of space lighting demand


The Interior lighting power allowance of the building represents the total wattage of lighting fixtures required to
illuminate the building. It is the product of the gross lighted area and the allowable LPD defined for the
building. For simplification of analysis, the gross lighted areas of buildings in the residential and commercial
sectors have been assumed to be equal to the average floor area estimated in the previous sections.

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The average floor area and LPD estimates calculated in the previous sections are used to determine the Interior
Lighting Power allowance. This parameter which represents the total wattage of lighting fixtures presently
installed in the country may also be considered as the total space lighting demand in the residential and
commercial building sectors. Table-8&9 show the present space lighting demand in Giga Watt estimated for
residential and commercial building sectors in the country. The residential buildings category contributes 33
GW of space lighting demand whereas for the commercial buildings four different estimates have been
calculated based on the four different sources of floor space information.

Table 8: Total space lighting demand in Residential sector

Sector Residential

Floor space in sq.m 9668788370


LPD in W/sq.m 3.43
Space lighting demand in 33.164
Giga watt

Table 9: Total space lighting demand (in Giga watt) in commercial buildings

Public Private Total Source


commercial commercial commercial
2.60 10.05 12.65 McKinsey,
2009
2.42 9.33 11.74 LBNL, India
energy
Outlook
1.63 6.30 7.93 ECO III, Total
commercial
floor space
estimates for
India
1.33 5.15 6.48 ClimateWorks
Foundation

For further sub-categories of buildings in the commercial sector, the floor area estimates presented in table-2
and the allowable LPD estimates based on ECBC, 2007 are used to determine the space lighting demand. These
space lighting demands correspond to the year of the floor area information available for the respective sub-
categories of buildings (see Table-10). The demand estimates calculated in this table are not exhaustive and
does not cover the whole of commercial sector buildings in the country. Therefore for simplification of further
analysis in this report, the overall demand estimated for commercial buildings in table-8 has been used.

Table 10: Space lighting demand in commercial sub-category buildings

Sub-category Year Floor space in Allowable LPD Space lighting


million sq.m (watt/sq.m) demand in Giga
as per ECBC, 2007 Watt

Private offices 2011 37.16 10.8 0.401328

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Central government 2008 1.24 10.8 0.013392


offices
Organised Retail 2010 12.24 16.1 0.197064
Private Hospitals 2007 29.07 12.9 0.375003

Government Hospitals 2007 36.18 12.9 0.466722


Airport 2015 7.25 10.8 0.0783

Approach 2: Using total connected load and load


distribution profiles
In this approach the total connected load in the residential and commercial building sectors is analysed from
the database of the nodal agencies at the national level. The team has further analysed the functional
distribution of connected load in these sectors to estimate the lighting demand. The following sections detail the
methodology and the analysis carried out to estimate the space lighting demand using this approach.

Estimation of connected load at the national level


The Central Electricity Authority (CEA) undertakes a general review of the power scenario in India periodically
in which it captures the no. of consumers and the total connected load for different categories of consumers.
The All India total connected load of residential buildings has been compiled from the general review studies of
CEA until 2008 and is presented in figure-2. Based on the general trend of the connected load, the same has
been polynomially extrapolated until the year 2011-12. These projections indicate that the present total
connected load in the residential buildings sector is about 200 GW.

250
R = 0.9953

200

150

100

50

0
1992-93 1997-98 2002-03 2007-08

Figure 2: Total connected load in the Residential buildings category

Similarly the all India total connected load in the commercial buildings sector has been extrapolated from the
general review studies of CEA and these projections indicate that the present connected load is about 55 GW
(see figure-3).

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Final Report

70

60

50

40

30

20

10

0
1992-93 1997-98 2002-03 2007-08

Figure 3: Total connected load in the commercial buildings category

Estimation of lighting load / space lighting demand


This task details the assessment of the % share of lighting load in the residential and commercial buildings
among the various functions like HVAC, lighting, ICT & Entertainment and others. Further this share of
lighting load is multiplied with the total connected load estimated in the previous section to derive the space
lighting demand. The project team has come across several studies to analyse the load distribution profile based
on the load research surveys for a sample of consumers. However none of these studies have adopted the
samples that are representative of national level with a uniform geographical distribution of the sample.

For residential buildings, the most useful source of information for this purpose is a recent load research report
Load Research for Residential and Commercial establishments in Gujarat prepared by IRG/USAID in
consultation with BEE in 2010. This report which was concluded recently in March, 2010, (IRG/USAID in
consultation with BEE) conducted a load research survey targeting 400 residential households in the state of
Gujarat. The objective of this study was to understand the end-use consumption patterns of various appliances
and evolve a suitable programmatic approach to be taken up by the state utilities. As per the findings of this
survey, the lighting load constituted 5% of the total connected load in the residential buildings. Another useful
source of information available for residential buildings is the Himachal survey data which was used to estimate
LPD in the earlier section. Analysis of this survey data shows that lighting accounts for 19.66% of the total
connected load.

The % share of lighting load derived from Gujarat study may represent the economically developed states in the
country where as the % share derived from the Himachal survey may represent the economically
underdeveloped states. Further the estimation of most appropriate value (% lighting load) that is the
representative of national level is derived from a weighted average calculated based on the population of
economically developed and underdeveloped states. The corresponding weights derived from the population in
the states as per their economic development is 0.3 for the % share of lighting load from Gujarat study and 0.7
for the % share of lighting load from Himachal survey. Thus the overall weighted average % share of lighting
load estimated for residential buildings on this basis is 15.27%.

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For the commercial buildings sector, Gujarat study has undertaken a load research survey targeting 200
commercial establishments where in the lighting load constituted 20% of the total connected load (see Figure-
4). Based on this assessment of the share of lighting load, the space lighting demand (total wattage of the
lighting inventory) for residential and commercial buildings in the country is estimated as shown in Table-11.

Figure 4: Distribution of connected load in the commercial buildings

Commercial buildings

Others
ICT & 18% Space
Entertainm cooling
ent 45%
17%

Lighting
20%

Table 11: Space lighting demand estimation for the year 2011

Sector Residential buildings Commercial buildings

Total connected load in Giga watt 200 55


% of lighting load 15.27% 20%
Total lighting load / space lighting
30.54 11
demand in Giga watt

The total space lighting demand estimated using this approach is about 41.54 Giga Watt. The residential
buildings category contribute about 30.54 GW where as the commercial buildings contribute 11 GW of this
demand.

Comparative study of lighting demand estimation from approaches 1 & 2


Approaches 1 & 2 which are used to estimate the space lighting demand vary both analytically and also in terms
of the scope of the information adopted. We may observe that the space lighting demand estimated in both the
approaches (see tables 8 & 11) vary significantly. For the commercial buildings category, the demand estimated
in approach II is compared across the four different demand estimates calculated in approach I (see table 9 &
11). This comparison shows that the demand estimated (in approach I) based on LBNL and Mc Kinsey floor
space information is very much close to the estimate of lighting demand calculated in approach II. Therefore for
the purpose of future analysis, the space lighting demand estimated in the commercial buildings category is
adopted as 11 GW.

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For the residential buildings category, the project team has considered an indirect approach which compares
the end use electricity consumption of lighting appliances across various other reliable sources of information.
To begin with, the end use electricity consumption of lighting appliances is estimated based on the findings of
lighting demand from approaches 1 &2. Further an annual average of 1580 hrs of operation has been assumed
for all types lighting appliances in the residential buildings. This assumption is based on the secondary research
of various load profile studies by LBNL, TERI etc. With this estimate of annual hours of use, the project team
has calculated two different estimates of lighting energy consumption based on the total wattage/demand of
lighting appliances derived from approaches 1&2 (see Table-12). The approach 1 has yielded 52,399 GWh of
electricity consumption whereas approach 2 has yielded 48,253 GWh of consumption by lighting.

Apart from this, the 17th Electric Power Survey (EPS) of India has projected the total electrical energy
consumption in residential sector in India until 2011-12. A total consumption of 194937 GWh is projected by
CEA in the residential building sector. With respect to the total consumption of electricity, approach 1 estimate
contributes 27% and the approach 2 estimate contributes 25% in 2011.

Table 12: Electricity consumption from lighting appliances for the year 2011

Parameter Approach 1 Approach 2


Electricity projections in residential sector in
th 194937
2010-11 as per 17 EPS (in GWh)
Lighting consumption based on approach 1 52,399 48,253
(in GWh)
% of total electricity consumption in 26.88% 24.75%
residential buildings

Further the lighting energy consumption calculated in Table-12 has been compared with two important sources
of information which have studied the appliance wise end use electricity consumption in residential building
sector in the past.

The primary source of information regarding the electricity consumption by lighting appliances is adopted from
a World Bank study Residential consumption of electricity in India in 2008 which was commissioned as a
background study for developing strategies for low carbon growth. The study quantifies and projects the
electricity consumption as a function of the no. households, household expenditure, electrification rates and
appliance ownership. This assignment by World Bank has estimated 57, 786 GWh of electricity consumption by
lighting appliances in the Residential sector contributing about 30% of the total electricity consumption in this
sector for the year 2011 (see Figure-5).

Another important source of information in this regard is the distribution of electricity consumption in Indian
buildings provided by the Centre for Monitoring Indian Economy (CMIE) in 2001. As per this source, 28% of
the annual electricity consumption in residential buildings is contributed by lighting.

Therefore after comparing the lighting energy consumption estimates across various sources of information, the
residential space lighting demand estimated as per approach 1 (33 Giga Watt) is considered as most appropriate
value for further analysis in this study.

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Figure 5: Distribution of power consumption by appliances

Distribution of Power Consumption


100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
2005 2010 2015 2020 2025 2030

Lighting Entertainment Kitchen Appliances Heating/Cooling


Source: World Bank, 2008

A lot of reasons can be attributed to explain the non-appropriateness of lighting demand estimated from
approach 2. Inherent differences in the data, methodology and assumptions may have lead to different results.
In approach 2, the Lighting demand in the residential sector is derived from mainly the connected load data
which is surveyed by CEA.

The connected load information surveyed by CEA during the time of establishment of residential buildings may
increase significantly with the increase in household income/expenditure. Therefore the actual load in the
residential buildings in most of the cases may be greater than the connected load. Such cases can be seen from
the Gujarat load research study by TERI, wherein average connected load per household was found in the range
of 27%-75% of the actual load.

In contrast to the residential sector the reverse was found in the commercial sector, wherein the connected load
exceeded the actual load in about 80% of the cities/towns covered under the study. The range of connected load
varied between 105%-189% of the actual load.

Estimation of National lighting inventory / stock


The purpose of this task is to determine the total existing installed base of lighting inventory/stock in the
country. This task initially requires a detailed analysis of the distribution of existing lighting inventory among
different lighting technologies. This also signifies the penetration of various lighting technologies in the present
days lighting scenario which will play a key role in the forecasting of lighting demand and the development of
key policies for further growth of the lighting industry.

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Figure 6: Distribution of lighting load in residential buildings

Residential Buildings

LED
0%

CFL T12 tube light


20% - magnetic
choke
30%

Incandescent
lamps
25%

T12 tube
light -
electronic
choke
T5 tubelight T8 tube light - T8 tube light - 4%
4% electronic magnetic
choke choke
6% 11%

Figure 7: Distribution of lighting load in commercial buildings

Commercial Buildings
LED
0%
T12 tube
T12 tube light light -
CFL - magnetic electronic
38% choke choke
25% 9%

T8 tube light
Incandescen - magnetic
t lamps T8 tube light choke
4% T5 tubelight
- electronic 7%
6%
choke
11%

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The three most useful sources of information for this purpose are: a recent load research report prepared by
IRG/USAID in consultation with BEE in 2010, a load research survey conducted by TERI in the city of Delhi in
2007 and another load research study initiated by the Himachal Pradesh Electricity Regulatory Commission
(HPERC) in 2010. The first report has analysed the penetration of different lighting technologies from the
survey of a sample of 400 residential households and 200 commercial establishments in the state of Gujarat.
Among the different lighting technologies in the residential buildings, tube lights account for 55% of the lighting
load followed by CFL (29%) and incandescent lamps (16%). In the commercial buildings, tube lights account for
58% of the lighting load followed by CFL (38%) and incandescent lamps (4%).

The load research study conducted by TERI was a case study approach in the city of Delhi for a sample of 1000
households in 2007. The purpose of this study was to ascertain the usage and ownership pattern of electrical
appliances in the households. As per the findings of this study fluorescent tube lights account for 63% of the
lighting load followed by incandescent bulbs (33%) and CFLs (4%).

In the state of Himachal Pradesh, recently a load research survey was undertaken by the state regulatory
commission for development of a state wide DSM regulation. About 200 households and 100 commercial
establishments have been surveyed for analysing the end use appliance consumption and load patterns. As per
the findings of this study fluorescent tube lights account for 55% of the lighting load in the residential building
sector followed by incandescent bulbs (28.7%) and CFLs (16.8%). In the commercial building sector fluorescent
tube lights account for 64% of the lighting load followed by incandescent bulbs (3%) and CFLs (33%).

After reviewing all of the three relevant load research studies, the ECO III study in Gujarat and the load
research study in Himachal Pradesh (HP) have proved as the most promising sources for information regarding
penetration of lighting technologies with the latest information. For the residential sector, though TERI has
analyzed the lighting distribution for a sample of 1000 households, the information presented is relatively old
(2007). The lighting technology penetration (%) values derived from the Gujarat study may represent the
economically developed states in the country where as the % penetration derived from the Himachal survey
may represent the economically underdeveloped states. Further the estimation of national level lighting stock is
derived from a weighted average % of penetration calculated based on the population of economically
developed and underdeveloped states. The corresponding weights derived from the population in the states as
per their economic development is 0.3 for the Gujarat study and 0.7 for the Himachal survey. For commercial
buildings the findings of only Gujarat study has been considered. Figures-6&7 show the distribution of lighting
stock in residential and commercial building sectors estimated as discussed.

The data from the above mentioned sources used in the calculation of lighting stock is illustrated in Tables -
13&14. The subsequent columns in these tables show the normal wattage per lamp and the total demand in kW
for various lighting technologies. The wattage considered includes the losses in the ballast. The total stock of
fixtures in the country is calculated based on the penetration levels and the total lighting demand in kW
estimated for residential and commercial buildings in the previous sections.

In the residential buildings, a total of 992 million lighting fixtures have been estimated with 450 million stocks
of CFLs, 406 million stocks of fluorescent Tube lights and 131 million stocks of incandescent lamps. In the
commercial buildings category, a total of 398 million lighting fixtures have been estimated with 250 million
stocks of CFLs, 138 million stocks of fluorescent Tube lights and 6 million stocks of incandescent lamps. Figure-
8 shows the present national lighting stock of various technologies in these sectors.

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Figure 8: National lighting stock in Millions

500

400

300

200
Residential
100 buildings

0
Commercial
buildings

Further using the above estimated lighting inventory, this study applies average efficacies, wattages, and
operating hours to convert the national lighting inventory into lumen-hours of lighting service in each sector
(residential and commercial buildings). Subsequently holding the lumen demand per square meter constant
within each sector, the lumen demand will be forecasted using the percentage change in square meters of floor
area projected in the earlier sections.

Table 13: National lighting inventory in residential buildings

National
Share in Normal wattage per Stock of fixtures
Technology General specification demand in
load fixture (in watts) (in millions)
kW

T12 tube light - Single lamp with ballast -


4 feet
30.0% 52 9949183 191
magnetic choke
T12 tube light - Single lamp with ballast -
4 feet
3.9% 43 1293394 30
electronic choke
T8 tube light - Single lamp with ballast -
magnetic choke 4 feet
10.9% 44 3614870 82

T8 tube light - Single lamp with ballast -


4 feet
5.9% 35 1956673 56
electronic choke
Single lamp with ballast
T5 tube light 3.9% 28 1293394 46
- 4 feet
Incandescent General service lamp 24.9% 63 8256755 131
Equivalent to 60 W
CFL
incandescent 20.4% 15 6771566 451
Equivalent to 60 W
LED
incandescent
0.1% 9 33164 4

Total 100.0% 33,163,944 992

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Table 14: National lighting inventory in Commercial buildings

National
Share Normal wattage per Stock of fixtures
Technology General specification demand in
in load fixture (in watts) (in millions)
kW

T12 tube light - Single lamp with ballast 25.0% 52 2500000 48


magnetic choke - 4 feet
T12 tube light - Single lamp with ballast 9.0% 43 900000 21
electronic choke - 4 feet
T8 tube light - Single lamp with ballast 7.0% 44 700000 16
magnetic choke - 4 feet
T8 tube light - Single lamp with ballast 11.0% 35 1100000 31
electronic choke - 4 feet
T5 tube light Single lamp with 6.0% 28 600000 21
ballast - 4 feet
Incandescent General service lamp 4.0% 63 400000 6
CFL Equivalent to 60 W 38.0% 15 3800000 253
incandescent
LED Equivalent to 60 W 0.0% 9 4000 0.44
incandescent
Total 100.0% 10000000 398

Lighting Inventory and Lumen demand projection


This analysis determines the present annual demand for lighting services (in teralumen-hours9) and then
groups this service by lighting technology. The baseline lighting demand is then divided by the total building
floor space to ascertain the lighting demand per square metre of building space. Lighting demand per square
metre is then held constant in each sector, and total national lumen demand is forecasted over the analysis
period using floor space growth estimates for residential and commercial sectors.

This methodology has been adopted from a recent study by US department of energy in February 2010 Energy
savings potential of solid state lighting in general illumination.

Baseline lighting demand in lumen hours


For each of the lamp types, the lamp wattage by sector is multiplied by the estimated installed base of lamps
and the annual operating hours. For fluorescent lamps, ballast losses are included with the lamp wattage
estimate. This provides lighting system kilowatt hour (kWh) consumption per annum for the residential and
commercial building sectors. These values are then multiplied by their respective light source efficacies,
converting the national annual energy demand (in kWh) into an annual lighting service demand (in teralumen-
hours). For example, if a residential dwelling consumed 100 kWh of electricity for general service incandescent
lighting, this would be converted into 1300 kilo lumen-hours per year of lighting service. This result is found by
multiplying 100 kWh of electricity consumption by 13 lumens per watt (lm/W), the estimated efficacy of a
residential general service incandescent lamp. Often, higher incandescent wattage lamps of the same type have

9 Due to the magnitude of calculated national lumen demand, the notation tera is used, meaning 10E+12
(1,000,000,000,000) lumen-hours of annual lighting service.

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higher efficacy ratings, and increasing wattages and efficacies will both contribute to greater annual lumens of
service. Conversely, fluorescent lamps tend to have increasing efficacy at lower wattages.

Table 15: Estimation of baseline teralumen-hours of annual lighting service in residential buildings

National No. of fixtures Lamp lumen Annual lighting


Hours of use
Technology demand in the country efficacy demand
per day
(in kW) (in millions) (in lm/W) (in Teralumen-hrs)
T12 tube light -
9949183 191 5 65 1180
magnetic choke
T12 tube light -
1293394 30 5 75 177
electronic choke
T8 tube light -
3614870 82 5 85 561
magnetic choke
T8 tube light -
1956673 56 5 95 339
electronic choke
T5 tube light 1293394 46 5 105 248
Incandescent
8256755 131 3 13 118
lamps
CFL 6771566 451 3.7 60 549
LED 33164 4 3 100 4
Total 33163944 992 3175

Tables-15 & 16 present the data used for the various lighting technologies in the baseline inventory. The average
operating hours and lamp efficacy are primarily extracted from the LBNL study 2010, TERI load research study
2007, US DoE 2010 and some stakeholder consultations and also through significant secondary research from
major lamp manufacturer catalogues. A total of 4824 teralumen-hours of annual lighting service has been
estimated in the residential & commercial buildings in the country.

The teralumen-hours of lighting service calculated has been further classified and apportioned into three
technology bins. The technology bins are created to group together the annual lighting demand according to the
lighting service quality. Table-16 shows the baseline annual lighting service demand estimated for the grouped
technology bins.

Table 16: Estimation of baseline teralumen-hours of annual lighting service in commercial buildings

National No. of fixtures Lamp lumen Annual lighting


Hours of use
Technology demand in the country efficacy demand
per day
(in kW) (in millions) (in lm/W) (in Teralumen-hrs)
T12 tube light -
2500000 48 8 65 475
magnetic choke
T12 tube light -
900000 21 8 75 197
electronic choke
T8 tube light -
700000 16 8 85 174
magnetic choke

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T8 tube light -
1100000 31 8 95 305
electronic choke
T5 tube light 600000 21 8 105 184
Incandescent
400000 6 3 14 6
lamps
CFL 3800000 253 3.7 60 308
LED 4000 0.44 3 100 0.44
Total 10000000 398 1649

Table 17: Baseline annual lighting service in teralumen-hours for 2011

Compact
Technology Bin Incandescent Fluorescent LED Total
fluorescent

Residential buildings 117.53 2505.10 548.70 3.63 3175


Commercial buildings 6.13 1334.44 307.91 0.44 1649
Total 123.67 3839.54 856.61 4.07 4824

National lumen demand projection


The lumen-hour demand calculated by sector and technology bin is projected over the analysis period to
estimate the growth in lighting demand between 2011 and 2031. The lumen-hour demand calculated in 2011 is
divided by the cumulative national floor space for each sector to determine a lumen-hour of lighting demand
per square metre of building space. Then, the projections for square feet of building growth by sector are used
to project the lumen-hour demand from 2011 to 2031, holding the lumen intensity per square metre constant.
This assumption is based on the premise that in the future, people occupying a space will continue to expect
todays luminance levels and duration of service. For the residential sector, the annual lighting demand in 2011
is approximately 331 kilo lumen-hours per square metre while for the commercial sector the demand is almost
ten times higher; 1493 kilo lumen-hours per square metre (see Table-18). The lighting service is higher due to
the longer operating hours and higher levels of illumination in commercial floor space compared with
residential.

Table 18: Estimation of annual lighting service intensity for year 2011

Existing annual Annual Lighting service


Existing floor
Sector lighting service intensity
space (in sq.m)
(in teralumen-hours) (in kilo lumen-hours/sq.m)

Residential buildings 9668788370 3174.96 328.37

Commercial buildings 1103760000 1648.92 1493.92

The annual average growth estimates of floor space in the residential and commercial sectors are used to
project the increase in lumen demand moving forward. The residential floor space increase is projected for
every year over the 20-year analysis period (annexure-1) and the commercial sector floor space increase is
projected to increase at 30million sq.m over the analysis period.

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Figure-9 the national lumen-hour demand growth in teralumen-hours per year by sector, which grows steadily
over the analysis period of 2011 to 2031. By this account, lumen-hour demand in India is estimated to increase
by approximately 82% in residential buildings and 54% in commercial buildings over the next two decades.

Figure 9: National lumen demand forecasting in teralumen-hours

7000

6000

5000
Teralumen-hours

4000
Residential
3000
Commercial

2000

1000

0
2011 (base 2016 2021 2026 2031
year)

The lumen-hour demand estimated for both the present and future scenarios forms a critical input for further
analysis of the lighting market in the country. The scale of annual lighting service (in terms of lumen-hours)
contributed by various technologies in the present day's scenario is fundamental to understand and quantify
how the lighting market may respond to the influx of new energy efficient technologies.

The further sections of this study will attempt to quantify the impact of LED market penetration the present
and future scenarios of the lighting industry. The impact will be determined in terms of the energy savings
potential and the greenhouse gas (GHG) reductions.

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Task II: Identification of Energy


& GHG Savings
The objective of this task is to present the total energy savings potential and GHG reductions resulting from the
complete market penetration of LED based lighting solutions. To determine the future savings potential
improvement in technology for the various conventional and SSL technologies have been projected. Further
based on the Arthur D. Little Inc.s payback versus penetration curves the market size capture by LED is
estimated. This market size is further used to identify the possible savings achieved by LEDs. The following
sections will discuss the analytical approach and subsequently present the findings of the task.

Determination of Present Energy Savings Potential


The present energy savings potential can be estimated by determining the present consumption by various
lighting technologies and then calculating the energy consumption if the entire lighting demand is met by LED.

Estimation of Market Share


The market share of various lighting technologies is calculated based on lumens output for each of the
technologies as the future demand has been projected in terms of lumens output (see table-19). This can be
calculated as.

Table 19: Market Share in Present Lighting Demand

Technology CFL ICL T5 T8 T12 Total


Wattage Residential 6765444.598 8257822.083 1293393.82 5571542.61 11242577.05 33163944.11
Consumption
Commercial 3800000 400000 600000 1800000 3400000 10000000
(kW)
Efficacy (lm/W) 60 13 105 90 70
Lumens Output Residential 405.93 107.35 135.81 501.44 786.98 1940.82
(tlm) Commercial 228 5.2 63 162 238 696.2
Residential 20.92% 5.53% 7.00% 25.84% 40.55% 100%
Market Share
Commercial 33% 1% 9% 23% 34% 100%

The current share of the lighting market penetrated by LED lighting is insignificant (see figure-10). This clearly
indicates the scale of huge market potential yet to be captured by LED lighting solutions.

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Figure 10: Overall market share of different technologies in the present scenario

Commerical Residential
LED LED
0% 0.17%

CFL
T12 CFL 21%
34% 33% T12
41%
ICL
5%
T5
T5 7%
T8 9% ICL
T8
23% 1%
26%

Further based on the present efficacy levels of the lighting technologies, the annual energy savings potential and
GHG reductions are estimated which are to the tune of 29,850 GWh and 25.6 million tCO2 respectively (see
table-20). The energy savings potential and GHG reductions estimated above are the overall national level
estimates in the present scenario of the lighting market in the residential and commercial building categories.

Table 20: Energy savings potential and GHG emission reductions in 2011

Sector Energy saving potential in GHG emission reductions in


Giga watt hours Million tCO2

Residential buildings 22647.4 19.42


Commercial buildings 7195 6.17

The residential buildings contribute 75% of the national savings potential where as the commercial sector is
contributing for the remaining potential. Similarly the energy savings potential is also being estimated for the
coming two decades. To carry out this task in a pragmatic approach, the efficacy improvements of different
lighting technologies have also been forecasted. Also different baseline scenarios have been generated to
consider the competition among the conventional technologies. The overall approach and methodology is
detailed in the following sections.

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Final Report

Future Energy Savings Estimation


It is highly unlikely that the entire lighting market would be captured by LED today. Thus it is important to
predict the energy savings potential for the future. The following approach would be used to determine the
savings.

Analytical approach
The overall process of savings estimation can be divided into three parts (see figure-11):

Step 2: Total
Technology Roadmap Savings Potential Payback Period
Price Roadmap Calculation
Future Technology Market Penetration
Market Share determination
Estimation of Total Penetration based
Savings Potential Savings

Step 1: Future
Step 3: Penetration
Improvements in
based Savings
Lighting

Figure 11: Analytical approach for Task II

Step 1: Future Improvement in Lighting


The identification of the future savings would depend on the technology and price roadmap of the various
lighting technologies. Thus the first step in the process is to identify or predict the technology and price for the
future. The future improvement in lighting technology would be in terms of efficacy, life (technology roadmap)
as well as price (price technology).

Step 2: Total Savings Potential


The total savings potentials would be calculated on the premise that all the future lighting in India would be
fulfilled by LEDs. To estimate the baseline, various scenarios would be considered, based on the competition
levels among the various lighting technologies in absence of LED lighting. The baseline would also take into
account the technology roadmap proposed.

Step 3: Calculation of Penetration based Savings


The savings calculated in step 2 is based on the assumption that all the lighting demand would be fulfilled by
LED. But the market share of LED would depend on the technology and price improvements of LED with
respect to other technologies. The penetration would be calculated based on the payback period using the
payback response models developed by Arthur D. Little Inc. Further the energy and GHG savings for these
penetrations levels would be carried out.

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Step 1: Future Improvement in Lighting


Technology Roadmap
The lighting technology would improve over a period of time both in terms of efficacy and life. It is very difficult
to predict this improvement in technology. The quantum of these improvements would depend on the maturity
of the technology and the market outlook towards these technologies.

Future Efficacy Predictions Efficacy Predictions (lm/W)


300

The efficacy of LEDs is expected to double in the 200


next 20 years. The increase in efficacy for LEDs is
predicted based on the various interactions with 100
industry officials and US DOE reports. The ICL,
T8, T12 are more mature technologies as 0
compared to T5 and CFL. Thus the scope of 2011 2016 2021 2026 2031
improvement is less than that T5 and CFL. Please
refer Figure 12 and Table 20 for more details. LED CFL ICL T5 T8 T12

Figure 12: Efficacy Projections for Lighting Technologies

Table 20: Efficacy Projections for Lighting Technologies

Year LED CFL ICL T5 T8 T12


lm/W lm/W lm/W lm/W lm/W lm/W
2011 100 60 13 105 90 70
2021 150 66.00 13.46 111.30 93.15 72.45
2031 200 72.60 13.93 117.98 96.41 74.99
Basis Industry
10%/10 year 3.5%/10year 6%/10 year 3.5%/10 year 3.5%/10 year
Interaction
/DOE Report PwC Analysis PwC Analysis PwC Analysis PwC Analysis PwC Analysis

Future Life Predictions Life Prediction (hrs)


The life of LEDs is expected to increase at a 50000
great rate in the next 20 years. Even though 40000
many manufacturers state life of LEDs to be
around 40000 hrs, but the life observed 30000
currently is about 25000 hrs. The ICL, T8, T12 20000
are more mature technologies as compared to
10000
T5 and CFL. Thus the scope of improvement is
less than that T5 and CFL. The improvement in 0
life of other technologies is marginal compared 2011 2016 2021 2026 2031
to that of LEDs. Please refer Figure 13 and LED CFL ICL T5 T8 T12
Table 21 for more details.
Figure 13: Projected Life of various Lighting Technologies

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Final Report

Table 21: Projected Life of various Lighting Technologies

Year LED CFL ICL T5 T8 T12


Yrs Yrs yrs Yrs yrs yrs

2011 25000.00 6000.00 2000.00 9000.00 10000.00 5000.00

2021 45000.00 6450.00 2120.00 9675.00 10600.00 5300.00

2031 50000.00 6933.75 2247.20 10400.63 11236.00 5618.00

Basis Industry
7.5%/10 year 6%/10year 7.5%/10year 6%/10year 6%/10year
Interaction
/DOE Report PwC Analysis PwC Analysis PwC Analysis PwC Analysis PwC Analysis

Price Roadmap Price (INR/klm)


The real cost of technology would reduce over a 2000
period of time due to use of cheaper material and
improvements in manufacturing technology. LED 1500
technology is assumed to follow a roadmap based 1000
on Haitz Law. Haitz law postulates that every
500
decade, the cost per lumen (unit of useful light
emitted) falls by a factor of 10, the amount of light 0
generated per LED package increases by a factor 2011 2016 2021 2026 2031
of 20, for a given wavelength (color) of light. The
LED CFL ICL T5 T8 T12
ICL, T8, T12 are more mature technologies as
compared to T5 and CFL. Thus the scope of Figure 14: Price Projections of various Lighting Technologies
reduction in price is more in T5 and CFL. See
figure-14 and table-22 for more details.

Table 22: Price Projections of various Lighting Technologies

Year LED CFL ICL T5 T8 T12

INR/klm INR/klm INR/klm INR/klm INR/klm INR/klm

2011 1500.00 166.67 19.23 30.95 12.78 14.29

2021 150.00 150.00 17.79 27.86 11.82 13.21

2031 15.00 135.00 16.45 25.07 10.93 12.22

Basis Haitz Law 10%/10 year 7.5%/10year 10%/10year 7.5%/10year 7.5%/10year


PwC Analysis PwC Analysis PwC Analysis PwC Analysis PwC Analysis

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Final Report

Step II: Total Savings Potential


Estimation of Future Market Share
The market share among various technologies would depend on the changes in technology and prices. The present
market share in lighting demand has been calculated before. Please refer to table 19 for more details.

Baseline Scenario 1
As predicted in Step 1, most of the technologies have matured, thus there would be no migration among various
technologies thus the market share of various technologies would be same as current market share.

Baseline Scenario 2
It has been observed that the market tends to move towards more efficient products. Thus the market share of
efficient lighting technologies should improve with time. For simplicity, it is assumed that the movement would be
only among comparable technologies i.e. CFL would penetrate the market of ICL and T5 would penetrate the market
share of other FTL technologies. The penetration rate is assumed to be 3%.This will result in decrease in market share
of ICL, T12 and T8 with a corresponding increase in market share of CFL and T5. Due to the insignificant market
share of ICLs currently the increase in market share of CFL is negligible as compared to that of T5. See figures-15 &16.

Market Share Commercial Market Share Residential


40.0% 50%
35.0%
30.0% 40%
25.0%
30%
20.0%
15.0% 20%
10.0%
5.0% 10%
0.0% 0%
2011 2016 2021 2026 2031 2011 2016 2021 2026 2031
CFL ICL T5 T8 T12
CFL ICL T5 T8 T12

Figure 15: Market Share of various Lighting Figure 16: Market Share of various Lighting Technologies
Technologies for Commercial Buildings (Scenario 2) for Residential Buildings (Scenario 2)

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Final Report

Determination of Energy Savings


Baseline Energy Consumption
The lighting demand for the future years has been calculated in Task 1, considering the luminous flux for a given area
(lm/sq. ft) to be constant. The lighting demand for the future years is as follows:

Floor Space Lighting Demand Lighting Demand (tlm-hr)


Year (sq. m) (tlm-hr)
8000.00
Resi. Comm. Resi. Comm. 6000.00
2011 9668.8 1103.8 3203.08 1648.93 4000.00
2016 11440.0 1253.8 3789.85 1873.02 2000.00
2021 13535.5 1403.76 4484.04 2097.11 0.00
2011 2016 2021 2026 2031
2026 15172.99 1553.76 5026.51 2321.19
Residential Commercial
2031 17617.7 1703.76 5836.38 2545.28

Figure 17: Future Projected Lighting Demand


Table 24: Future Projected Lighting Demand

Based on the future efficacies and market share (scenario 1 and 2) of the various lighting technologies and the
projected lighting demand, the baseline energy consumption is calculated

Table 25: Projected Future Baseline Consumption Figure 18: Projected Future Baseline Consumption

Resi. Resi. Comm. Comm. Baseline Consumption (tWh)


Scenario1 Scenario2 Scenario 1 Scenario 2
year 100.0
tWh tWh tWh tWh
80.0
2011 54.7 54.7 23.7 23.7
60.0
2016 63.2 60.1 26.1 25.5
40.0
2021 73.0 66.3 28.4 27.0
2026 79.9 69.5 30.5 28.4 20.0

2031 90.6 75.6 32.5 29.6 0.0


2011 2016 2021 2026 2031
Residential Scenario 1 Residential Scenario 2
Commercial Scenario 1 Commercial Scenario 2

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Final Report

Energy Savings Potential Projected Savings Potential (tWh)


Energy Savings Potential is estimated by calculating
80.0
the energy requirement if the entire lighting demand
60.0
is met by LED.
40.0
20.0
0.0
2011 2016 2021 2026 2031
Residential Scenario 1 Residential Scenario 2
Commercial Scenario 1 Commercial Scenario 2
Table 26: Projected Energy Savings Potential
Figure 19: Projected Energy Savings Potential
Resi. Resi. Comm. Comm.
Scenario 1 Scenario 2 Scenario 1 Scenario 2
Year
tWh tWh tWh tWh
2011 22.6 22.6 7.2 7.2
2016 32.9 29.8 11.1 10.5
2021 43.1 36.4 14.4 13.1
2026 51.2 40.7 17.3 15.1
2031 61.5 46.4 19.8 16.9

Thus it can be observed that there is a significant source of savings, if all the lighting needs are fulfilled by LED are
about 80 tWh.

GHG Emission Reduction Potential


In India, thermal power is the mainstay of electricity generation. In CO2 Baseline Database for the Indian Power
Sector published by Central Electricity Authority, for every MWh of energy generated in India about 0.85 tCO2 (or
equivalent) was emitted in 2009-10. This statistic has remained constant over a period of time. All the planned
conventional plants planned in the future are high efficiency plants with the low carbon footprint. Also the number of
renewable based plants is expected to increase exponentially in the future. This would result in reduction of the
Indian grid emission factor. The Planning Commissions report on Low Carbon strategies for inclusive report
envisions a percentage reduction in energy intensive by a factor of around 24.16% (24.44 % for 8% GDP growth and
23.88% for 9% GDP growth) with determined efforts and 33.84% (34.40 % for 8% GDP growth and 33,27% for 9%
GDP growth) with aggressive efforts over 2005 levels.

The energy intensity has remained fairly constant since 2005. For the basis of this analysis we also assume that the
percentage reduction in energy intensity would be same as percentage reduction in emission factor and this trend
would remain the same in future.

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Final Report

Emmision Factor
0.90 GHG Reduction (Determined Efforts)
0.80
0.70 40.0
0.60 30.0
0.50
20.0
0.40
0.30 10.0
0.20 0.0
0.10 2011 2016 2021 2026 2031
0.00
2011 2016 2021 2026 2031 Residential Scenario 1 Residential Scenario 2
Commercial Scenario 1 Commercial Scenario 2
Determined Effort Aggressive Efforts

Table 27: Projected GHG Reduction Potential Figure 20: Projected GHG Reduction Potential
(Determined Efforts)
(Determined Efforts)
GHG Reduction (Aggressive Efforts)
Resi. Resi. Comm. Comm. 30.0
Scenario 1 Scenario 2 Scenario 1 Scenario 2
Year 25.0
Million tCO2 20.0
2011 19.3 19.3 6.1 6.1 15.0
2016 24.3 22.1 8.3 7.8 10.0
2021 27.8 23.5 9.3 8.4 5.0
2026 28.7 22.8 9.7 8.5 0.0
2011 2016 2021 2026 2031
2031 30.0 22.7 9.7 8.2
Residential Scenario 1 Residential Scenario 2
Commercial Scenario 1 Commercial Scenario 2
Figure 21: Projected GHG Reduction Potential (Aggressive
Efforts)
Table 28: Projected GHG Reduction Potential
(Aggressive Efforts)

Resi. Resi. Comm. Comm.


Scenario 1 Scenario 2 Scenario 1 Scenario 2
Year
Million tCO2
2011 19.3 19.3 6.1 6.1
2016 22.8 20.7 7.7 7.3
2021 24.2 20.5 8.1 7.3
2026 23.3 18.5 7.9 6.9
2031 22.34 17.10 7.38 6.29

It can be observed that if the grid emission factors follow the aggressive path, the GHG emission reduction potential
actually decreases.

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Final Report

Step 3: Penetration based Savings

Penetration LED Penetration Rate


100%
Even though payback period is not the best method to
80%
determine which lighting technology to purchase when
60% compared to life cycle cost or internal rate of return. Due
40% to the simplicity of calculation, payback period is a good
estimator of purchasing behaviour for majority of
20%
consumers. On this premise, Arthur D. Little Inc has
0% developed curves which give the penetration rates of
0 1 2 3 4 5 6 7 8 9 10
SSL technologies to the mean payback.
Residential Commercial
Figure 22: Arthur D. Little Payback v/s Penetration
Models

Calculation of Payback Period


There are various ways to calculate the simple payback period. The Arthur D. Little model uses the payback period
formula proposed in E Source, Inc.s Lighting Technology Atlas (1997)

Based on the technology, price roadmaps and the future estimated cost of power (Residential: INR 3.5/kWh and Commercial: INR
5.5/kWh escalating at the rate of 5%) the simple payback period for various technologies in comparison to LED was calculated. The
payback periods for commercial and residential sectors are calculated separately.

It should be noted that the paybacks for T8 and T5 are graphically represented in the above graphs post 2013 and
2014 respectively. The paybacks for the years prior to these years are very high. It should be also understood that
paybacks more than life of the LED are statistically insignificant.

Figure 24: Payback for Conventional Technologies Figure 23: Payback for Conventional Technologies
against LED in Commercial Sector against LED in Residential Sector
Payback Commercial (yrs)
Residential Payback (yrs)
40
30 35
30
20
25
10 20
15
0
10
2011 2016 2021 2026 2031
5
0
CFL ICL T5 T8 T12 2011 2016 2021 2026 2031
CFL ICL T5 T8 T12
Determination of Penetration Rates
Based on the Arthur D. Little Inc.s and the paybacks calculated, penetration rates were determined across all the
technologies. Due to rapid technology and price improvements in LED, the payback period for certain lighting
technology are declining at a rapid pace. This based on Arthur D. Little curves results in rapid market penetration in
markets of certain lighting technologies. There are many intrinsic barriers to this rapid market takeover like demand
supply gap, supply chain failure. To counter this we have assumed that the penetration would be spaced equally (20%
each year) over a period of 5 years. The penetration rates after considering these lagging rates are as below:

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Final Report

Figure 25: Penetration of LED in Market Share of Conventional Technology in Commercial and Residential
Sector

Penetration Rates (Commercial) Penetration Rates (Residential)


100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
2011 2016 2021 2026 2031 2011 2016 2021 2026 2031

CFL ICL T5 T8 T12 CFL ICL T5 T8 T12

Market Share based on Penetration Rates


LED technology could enter the market either by being the part of new lighting inventory arising due to increase in
lighting demand or being the part of replacement inventory. This model assumes that the inventory in 2011 is new
and would be replaced only at the end of their life cycle. Based on the model, the revised lighting inventory would be
as follows:

Figure 26: Projected Future Lighting Inventory

Residential Lighting Inventory based on Scenario Residential Lighting Inventory based on


6000.0 1(tlm-hr) Scenario 2(tlm-hr)
6000.0
4000.0
4000.0
2000.0
2000.0

0.0 0.0
2011 2016 2021 2026 2031 2011 2016 2021 2026 2031
LED CFL ICL T5 T8 T12 LED CFL ICL T5 T8 T12

Commercial Lighting Inventory based on Commercial Lighting Inventory based on Scenario


2(tlm-hr)
Scenario 1(tlm-hr)
2500.0 2500.0
2000.0 2000.0
1500.0 1500.0
1000.0 1000.0
500.0 500.0
0.0 0.0
2011 2016 2021 2026 2031 2011 2016 2021 2026 2031
CFL ICL T5 T8 T12 LED CFL ICL T5 T8 T12 LED
\

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Final Report

It can be observed that LED market would capture a Share of LEDs in the overall lighting market
substantial portion of the commercial lighting faster than 100%
it can capture the residential market. This is in line with 80%
the payback curves and the general understanding of the 60%
market. Acceptability of newer technologies with a longer
40%
payback period is more in commercial consumers than in
20%
residential consumers.
0%
2011 2016 2021 2026 2031
Comm. Scenario 1 Comm. Scenario 2
Figure 27: Share of LED in overall lighting Market
Resi. Scenario 1 Resi. Scenario 2

Calculation of Savings

Figure 28: Probable Savings Based on Penetration Levels


year Comm. Comm. Resi. Resi.
Scenario 1 Scenario 2 Scenario 1 Scenario 2
Penetration Based Savings (tWh)
tWh
60
2011 0 0 0 0
2016 2.53 2.40 8.60 7.65
40

2021 9.20 8.33 23.65 19.71 20


2026 14.07 12.43 40.83 32.50
0
2031 16.84 14.29 53.45 40.56 2011 2016 2021 2026 2031
Comm. Scenario 1 Comm. Scenario 2
Resi. Scenario 1 Resi. Scenario 2

Savings are calculated similar to saving calculated in Step 2. Even though initially the possible savings based on the
payback curves are less compared to the potential savings. In 2031, the estimated penetration based savings are about
87% of the potential savings.

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Final Report

Flow Chart for calculation of Savings


The entire computations could be graphically represented as figure-29 shown below:
Task I

Technology Lighting Demand


Market Share Forecast

Price Technology
Roadmap
Step 1

Roadmap

Step 2
Future Technology Maximum Saving
Market Share Potential

Payback LED Energy & GHG Savings


Penetration based on Penetration
Step 3

Period Rate models


Task II

Figure 29: Flow Chart for Task II

Conclusion
This task conclusively determines that between 2016 and 2021 the price reductions and efficacy improvements
anticipated in the LED technology will bring down the relative payback periods with respect to the conventional
technologies to less than 3 years. The model also predicts that by 2021 the LED technology will penetrate 57% of the
market in commercial buildings where it will capture only 33% of the market in residential buildings. By 2031 more
than 80% of the lighting market will be captured in both the building categories. However the findings of this model
are based on a theoretical framework which assumes that market penetration is solely driven by the economics of the
transaction (payback in this scenario). The income level of the consumers, standardization of the technology,
consumer confidence and many other purchase characteristics may also drive market penetration.

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Final Report

Task III: Economic analysis of


Demand aggregation strategies
The findings presented in the previous tasks clearly indicate that the LED technology will dominate the future of
general space lighting market which is also agreed upon by many experts in the industry. However in the present
scenario, the technology is closely held by a few companies globally which has an adverse impact on its cost
effectiveness. In this scenario, lack of incentives (especially in the terms of demand) is a major barrier for the
government to promote this innovative lighting model and attract major LED manufacturers to set up production
facilities. Aggregation of future LED demand can significantly enhance volumes and further attract leading
manufacturers to India and enjoy the co-benefit of reduced cost. This policy/strategy has been previously
recommended by the Government of India in its recent study of the LED lighting industry in May 2010. The CFL
growth story in India can be considered as the trigger point for the transformation of lighting industry in the country.

CFL growth in India


The Indian lighting industry has witnessed an average annual growth of 12% over the past 6 years. The growth is
driven by increased reach of electricity to the rural areas of the country and also by major government schemes like
the RGGVY and efforts of REC etc. The Figure 30 depicts the growth of the Indian lighting industry over the past six
years.

The increase in the lighting has driven the market towards more efficient products such as CFLs. The demand for
CFLs has risen by almost 200% with 2007 as the base year. Figure 31 shows the increase in the demand for CFLs over
the years. The increase in the demand may be a result of various government initiatives such as RGGVY, BLY etc
which distribute free CFLs to BPL consumers. The increase in electricity tariffs might have also contributed to the
shift in consumer behavior from low cost, high consumption incandescent bulbs to relatively higher cost, low
consumption CFLs.

Indian Lighting Industry


9000
8000
Value in Million INR

7000
6000
5000
4000
Value of industry (in
3000 Million INR)
2000
1000
0
2005 2006 2007 2008 2009 2010
Year

Figure 30: The Indian lighting industry

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Final Report

Growth of CFL in India


1600
1400
1200
Million pieces

1000
800
600
Qty million pieces
400
200
0

2009
2002
2003
2004
2005
2006
2007
2008

2010
2011
2012
2013
2014
2015
2016
Year

Figure 31: Growth of CFL in India

CFLs have grown from forming a 5% of the total sales of all lighting equipment in 2003 to a 40% share in 2010. The
numbers are presented in Figure 32 below, showing a dramatic shift in consumer behaviour in favour of CFLs.
General awareness and the need to cut down on the electricity combined with massive awareness programmes by the
government could be the possible reasons for the remarkable growth. BEEs Bachat Lamp Yojana (BLY) scheme was
launched in February 2009 which pushed the sales of CFLs from 200 million pieces in 2008 to 320 million pieces in
2010 leading to a 60% jump in CFL demand with 2008 as the base year.

The steep rise in the demand for CFLs was matched immediately by the increase in the manufacturing capacity. The
demand Vs supply for CFLs is shown Figure 33. The demand for CFLs became substantial in 2006 and the
manufacturing capacity matched in within 2 years.

Growth of GLS Vs CFL in India


900

800

700
Qty Million pieces

600

500

400 Demand for CFL


GLS
300

200

100

0
2003 2004 2005 2006 2007 2008 2009 2010
Year

Figure 32: Growth of CFL Vs GLS in India

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Demand Vs Capacity for CFL


600

500
Qty Million pieces

400

300
Demand for CFL
200 Manufacturing capacity

100

0
2003 2004 2005 2006 2007 2008 2009 2010
Year

Figure 33: Demand Vs manufacturing capacity for CFLs in India

Demand aggregation strategies


A core committee set up in 2009 and led by the national manufacturing competitiveness council (NMCC) consulted
various stakeholders in the industry to develop strategies for market penetration of energy efficient lighting
equipments (EELE). Demand aggregation through bundled Multi state DSM programmes (MSDP) has been identified
as one of the most promising solutions to overcome the barriers of market transformation in the general lighting
segment. The committee also suggests that such a framework should be integrated with mandatory phased domestic
manufacturing for further scope of reducing the costs and subsequently motivate the manufacturers to re assess their
market size, investments and potential revenues. This strategy is similar to the success witnessed in CFLs which saw
50% reduction in costs and 250 million sales in 2009 from 20 million initially.

The core committee set by NMCC has recommended several demand aggregation strategies based on its consultation
with the stakeholders (see table-29). Some of the strategies aim to integrate with the existing schemes and policies
whereas others look forward to bring about a complete market transformation in certain categories of the buildings.

Table 29: Demand aggregation strategies recommended by NMCC core committee

Demand aggregation strategy Consumer


category

Integration of LED lighting in the second phase of Rajiv BPL households


Gandhi Gramin Vidyutikaran Yojana (RGGVY)
Integration of LED lighting for households in all the villages BPL households
expected to be electrified by the central power generating
stations (which are within 5Km radius)
Mandatory legislation for use of LED lamps by CPWD and Non BPL households
other state PWD departments and public sector
commercial
establishments
Bundling of Utility driven DSM programs through a central Non BPL households
institutional mechanism
Source: The economic case to stimulate LED lighting in India, Ministry of Power, Government of India, 2010

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Regulated multistate DSM programs can be very effective in aggregating the demand for LEDs and achieving the
desired objectives. Some of the main drivers for considering this strategy is as follows:

1. Reduced transaction cost by:

i. Enlarging geographical scope of the program, moving from utility to state, national and then global
programs; and the

ii. Product chain stakeholders starting from the customer and moving upstream to retailer, wholesaler and
finally the manufacturer.

2. Avoids adverse effects on the balance sheets of the Utility if single utility is considered for demand
aggregation

3. Significant scope for market transformation and capable of high value demand aggregation

4. Highly replicable model for promoting energy efficient lighting

Apart from the above mentioned strategies recommended by government of India, the project team has identified
strategic options to aggregate demand for general lighting purposes in the commercial category of buildings in India
(see table-30). These strategies are proposed after significant secondary research and consultations with the
stakeholders. The energy efficient building program and the Energy conservation building code initiated by BEE have
been considered as the most promising platforms among the existing schemes for integrating LED based lighting
solutions and aggregate demand in the commercial buildings sector.

Table 30: Demand aggregation strategies by stakeholder consultations

Demand aggregation strategy Consumer


category
Integration of LED lighting solutions in the specifications of Public and private
ECBC Code, 2007 commercial buildings
Integration of LED lighting solutions in the energy efficient Public sector
building program of BEE commercial buildings

In the further sections of this report, the above mentioned strategies have been explained in detail with examples of
demand aggregation resulting from these strategies. The scale of the volumes aggregated has been quantified for
further evaluation of the economics of such demand aggregated projects considering the benefits of price reductions
and cumulative savings.

Stimulating economies of scale with demand aggregation


strategies
The bulk procurement has been the key element of large scale Energy Efficient Lighting Equipment programs
implemented globally. Lessons from the large scale distribution of CFLs worldwide have shown significant cost
reductions and higher quality through bulk procurement. Similarly the real price of LEDs could be discovered only if a
large enough order is placed. This is crucial to drive down costs by increasing competition. Bulk procurement and
large scale distribution provides a unique opportunity to reduce transactions costs and stimulates economies of scale
thus making it very attractive for deployment of LEDs. This section of the report attempts to quantify the impact of
bulk procurement of LED lighting on the price/cost of such projects.

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Figure 34: Bulk order discounts available on the current market price of LEDs

Discount vs bulk order


35%
30%
25%
20%
15%
10%
5%
0%
000 10000 100000 1000000 10000000

Discount in %

To carry out this task the project team consulted various manufacturers in the industry in the recent light fairs
organised in Chennai and Hyderabad by ISLE and ELCOMA respectively. The project team sought for information
regarding the discounts available on the current market price of LED luminaries with different volumes of the bulk
order. A draft format of the LED price information was prepared exclusively for the manufacturers for collecting such
data. However a very few manufacturers provided this information given the complexity in the supply chain of LED
production industry. A majority of the suppliers assembled the LED lighting fixtures by importing the major
components from different parts of the globe. These suppliers expressed the uncertainty prevailing in the global LED
markets for determining such discounts.

Figure-34 shows the discount available on the LED luminaries with regard to the volume of the bulk procurement as
provided by a very few suppliers. It also shows that one can obtain discounts up to 25% of the market price for LED
lighting projects with aggregated demand of more than 1 million lamps and 30% for demand aggregation of more
than 5 million lamps.

The Ministry of Power, Government of India in its study The Economic case of LED lighting in India also provides
similar information of the average prices of LED luminaries with respect to the volume of the procurement (see table-
31). This data was provided for carrying out simple economic analysis of demand aggregation strategies proposed in
this study. The data provides variation in the prices of LED lighting fixtures for different applications both in terms of
volume of procurement in also with respect to the time of procurement. However the information presented here
corresponds to the demand of 2 million maximum. Many of the strategies proposed earlier can aggregate demand up
to 5 million or more. Also the relevant sources are not provided in the report published by the government making it
very difficult to analyse the basis of this information.

Table 31: Reduction in prices Vs volume of sales

Conventional LED Q4 2010 unit price in Q4 2011 unit price in


Lamp Product Rs./volume Rs./volume
500K 1 Mn 2 Mn 500K 1 Mn 2 Mn
ICL bulb (40- LED lamp 445 425 399 395 375 350
60 watt) (6-9 watt)
4ft T12 (40 LED linear 1275 1175 1075 1050 990 950
watt) (15 watt)
Area light (70 LED area 5900 5500 4900 4750 4400 4000
watt) light (40

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watt)
Down lighter LED down 2500 2200 1900 1800 1600 1400
(18 watt) lighter (9
watt)
Source: Annexure VIII, The economic case to stimulate LED lighting in India, Ministry of Power, Government of India, 2010

The CFL programs implemented worldwide (Srilanka, Vietnam, South Africa etc.) have also witnessed significant
reduction in prices during the bulk procurement and globally participated competitive bidding. Table-32 shows the
summary of cost reductions and other important aspects of these successful programs which have distributed CFL
lamps on a very large scale.

The information presented in this table may be replicated for the LED lights as the same manufacturers also supply
the latest LED technology. However most of these programs were implemented 5-6 years in the past when the CFL
market was still emerging into the energy efficient lighting industry. The application of similar discounts in LED
lighting may be erroneous given the differences in the technology and the markets for LED supply chain industry.

Table 32: Reduction in prices of CFLs for large scale distribution programs

Procurement Bulk Price (in Average Market % drop in


Program Year
Size $) Price price
Vietnam Phase-
2004 300000 1.07 2.75 61.09%
1
Vietnam Phase-
2005 700000 0.98 2.25 56.44%
2
Uganda 2006 800000 1.1 3.5 68.57%

Philippines 2009 5000000 1.07 3.5 69.43%


Dec '04-
Bangalore 175000 16.00%
Oct'05
South Africa 2006 5000000 0.8 1.4 42.86%
Source: ESMAP, World Bank, 2008

Economic analysis of demand aggregation strategies


This part of the study evaluates the economic feasibility of various demand aggregation strategies proposed (for both
Residential and commercial buildings) in the previous sections. Detailed financial statements have been prepared
considering the volume of the aggregated demand, corresponding price reductions, replacement technology, life of the
existing and replaced luminaries and many other assumptions. The assumptions have been considered after extensive
secondary research and relevant stakeholder consultations.

Demand aggregation in Residential buildings


Integration of LED lighting into the second phase of RGGVY scheme10
Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) was launched in 2005 for electrification of un-electrified villages
and also to provide free electricity to rural BPL households. During the XI plan 573 projects have been sanctioned
with a target of 1.18 lakh villages and 2.46 crore BPL households. The balance areas are proposed to be covered under
the second phase of the scheme. An estimated 150 lakh BPL households are expected to be covered in this phase.

10 The economic case to stimulate LED lighting in India, Ministry of Power, Government of India, 2010

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During the initial phase one CFL bulb was provided along with each of the free connection to the BPL household. In
the second phase of RGGVY scheme one LED bulb may be proposed in place of CFL bulb to further reduce the energy
consumption. A one year warrantee may be provided by the manufacturer of the LED. All complaints and
replacements of the LED (within the warrantee period) may be expedited through the Discom (utility office) or the
billing center, whichever is closer, which would in turn claim the charges from the manufacturer against the
complaint and the receipt of the replacement LED bulb by the consumer. With a scope of 50 lakh BPL households
expected to be electrified, the cost of procuring LED bulbs in bulk may be expected to drop drastically. This coupled
with the mandatory domestic manufacturing laws for such demand aggregation projects, the price of the LED bulbs
will further fall on account of the existing duties levied on the components of LED bulbs imported from different parts
of the world.

The economic analysis takes into account the possible discounts available on the LED bulbs considering the benefits
of both demand aggregation and the domestic manufacturing. The lead time for implementing this demand
aggregation project has been considered as five years covering 10 lakh BPL households every year. The whole project
may be divided on to 10 different programmes with 2 programmes implemented every year. The current market price
of LED lighting fixtures has been estimated as INR 150/watt. This value has been derived after significant review of
product catalogues of different manufacturers and based on the consultations with the industry experts. Similarly the
life of LED bulbs has been estimated (@25000 hrs) based on the rated life information provided by different
manufacturers in their product catalogues. The price and rated life has considerable variation among the different
manufacturers, suppliers (assembling imported components) and other component providers. This variation may be
attributed to the lack of technical standards of various types of LED luminaries available in the market today.

Table 33: Assumptions for economic analysis

Parameter Value Unit


Demand aggregation parameters
Aggregated volume 5,000,000 No. of households
No. of lamps 1 Per household
Total no. of programmes 10
No. of households per programme 500,000

No. of programmes per year 2


No. of lamps replaced per year 1000000

Lead time for lamp installation 5 Years

Energy use parameters


ICL wattage 40 Watts
LED bulb wattage 5 Watts
Electricity Tariff 2.5 Rs/kWh

Monetary savings to DISCOM from


peak load reduction 1.00 Rs/kWh
Current base line for electricity CO2 0.85 kg/kWh
emission in India

Price of one CER 10 Euro


Exchange rate of 1 Euro 63.4 Rs.
Cost parameters
Current Market price of LED luminaire 150 Rs/Watt
per watt
Cost of installation 5 Rs.

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Excise duty on production of LED bulbs 5%


(post union budget 2011-12)
Other duties ((post union budget 2011- 0%
12)
Current market price of ICL bulb 0.25 Rs./watt
Other parameters
Life of LED bulb 25000.00 Hours
Life of ICL bulb 2000.00 Hours
% of lamps defaulting every year 1%
No. of days in a year 365 Days
Hours of operation per day 5 Hours
Life of LED bulb 14 Years
Life of ICL bulb 1 Years

With an aggregated volume of 5 million LED bulbs in this project, the bulk discount available as per the information
provided by the suppliers is around 30%. Apart from this the mandatory domestic manufacturing may also provide an
additional 5% price reduction on account of the duties levied on the existing LED bulb components imported from
different parts of the world.

Based on the parameters and assumptions shown above, a detailed cash flow statement has been developed for
project cycle of 18 years (see appendix-III). The project IRR (with CDM benefits) is calculated as 50% with a payback
period of five years. The project IRR (without CDM benefits) is estimated at 43%. Clearly the economic attractiveness
of this demand aggregation strategy is dependent on the bulk order discount availed by the manufacturers under a
competitive global bidding scenario. Therefore the sensitivity of the project IRR has been analysed with different
possible ranges of the discounts provided by manufacturers in such scenarios (see figure-35).

For other demand aggregation strategies which are exclusive for BPL households (Integration of LED lighting for
households in all the villages expected to be electrified by the central power generating stations (which are within
5Km radius) similar economics may be considered by the stakeholders. This is because all of these strategies attempt
to replace the ICL bulbs with LEDs in bulk. Only the project volume and lead times of the project may vary as per the
institutional capacity for project implementation whereas other parameters may remain the same.

The economic analysis presented here are not relevant to any particular stakeholder. The overall costs and benefits of
demand aggregation projects (as whole) are being considered to evaluate the cash flows. Cash flows relevant
particular stakeholders may be developed based on the business models proposed to implement such projects.

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Figure 35: Sensitivity of Project IRR with the price reductions provided by manufacturers

Discount vs Project IRR


180%
160%
140%
120%
100%
80% Project IRR

60%
40%
20%
0%
35% 50% 55% 60% 65% 70% 75%

Bundling of Utility driven DSM programs through a central institutional mechanism


In this mechanism, the utilities may assess the demand for LED lighting separately as per the methodology used in
the task I of this assignment. The main target areas will be the non-BPL households in both rural and urban sectors
under the jurisdiction of the utility. Further the demands assessed by various utilities may be bundled to increase the
geographical scope from utility to state, state to region (a group of states) and region to national level. The demand
aggregation can take place through a central institutional mechanism and the projects may be bid out for supplies
through a competitive bidding mechanism to ensure substantial price reductions in the cost of procuring LED
lighting. Also such mechanisms must be integrated with a mandatory domestic content in manufacturing and
supplying of LED lighting.

The projects goal may be to deliver LEDs at the cost of conventional light sources. The difference in cost may be
covered by the sale of Certified Emission Rights under the Clean Development Mechanism of the Kyoto Protocol. To
further enhance the economic feasibility of such projects, the resulting energy savings may also be shared mutually
between the utilities and the manufacturers on a predetermined basis. However given that the LEDs is an emerging
technology with a scope of continuous improvements in efficacy levels and price reductions the utilities may have to
study the feasibility options and separately assess the demand for various options like T12, CFL and ICL lamps.

The economic analysis presented in this section considers a hypothetical scenario and evaluates the feasibility of
demand aggregated options of replacing T12, CFL and ICL lamps bundled across many utilities in India. Considering
an average of 50 lakh households under each distribution utility the aggregated demand even at the state level can be
very huge. Therefore the utilities may initially implement the projects in selected circles with a capacity of 5 lakh
households. By bundling 10 such circles across the utilities in different states one can generate a demand of 50 lakh
households through a centralised institutional mechanism.

Table-34 presents the whole set of assumptions in terms of aggregated demand, energy use by various lamps, prices of
luminaries, cost of energy saved, life assessment etc. considered for the above mentioned economic analysis.

The economic analysis presented here are not relevant to any particular stakeholder. The overall costs and benefits of
demand aggregation projects (as whole) are being considered to evaluate the cash flows. Cash flows relevant
particular stakeholders may be developed based on the business models proposed to implement such projects.

Table 34: Assumptions for economic analysis of demand aggregation projects in Non BPL households
Parameter Value Unit
Demand aggregation parameters

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Aggregated volume 5,000,000 No. of households


Total no. of lamps 6 per household
No. of incandescent lamps 1 per household
No. of T12 luminaries 3 per household

No. of T8 luminaries - per household


No. of CFLs 2 per household
Lead time for lamp installation 1 Year

Energy use parameters


Incandescent 60 Watts
T12 50 Watts
T8 35 Watts
CFL 15 Watts
LED fixture equivalent to 60 watt 9 Watts
incandescent
LED fixture equivalent to T12 24 Watts
LED fixture equivalent to T8 18 Watts
LED fixture equivalent to CFL 9 Watts
Electricity tariff 3.5 Rs/kWh
Monetary savings to DISCOM from
peak load reduction 1.00 Rs/kWh
Tariff increase for Non BPL households 5% per year
Current base line for electricity CO2 0.85 kg/kWh
emission in India

Price of one CER 10 Euro


Exchange rate of 1 Euro 63.4 Rs.
Cost parameters
Current Market price of LED luminaries 150 Rs/Watt

Cost of installation 5 Rs.


Excise duty on production of LED bulbs 5%
(post union budget 2011-12)
Other duties ((post union budget 2011- 0%
12)
Current market price of CFL 10.00 Rs./watt
Current market price of ICL 0.25 Rs./watt
Current market price of T8 1.15 Rs./watt
Current market price of T12 1.00 Rs./watt
Other parameters
Life of LED 25000 Hours
Life of ICL 2000 Hours
Life of CFL 6000 Hours
Life of T12 5000 Hours
Life of T8 10000 Hours
% of lamps defaulting every year 1%
No. of days in a year 365 Days

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Hours of operation per day 5 Hours


Life of LED bulb 14 Years
Life of ICL bulb 1 Years
Life of CFL 3 Years
Life of T12 3 Years
Life of T8 5 Years

For the purpose of simplification lead time of 1 year has been assumed for distribution of LED luminaries in these
projects. This may depend upon the institutional capacity set up for implementing such projects.

Replacement of T12 luminaries


Considering three T12 lamps per every household, this project generates an aggregated demand of 15 million 4ft
linear LED lights that can replace the existing T12 luminaries. The bulk discount available as per the information
provided by the suppliers is around 30%. Apart from this the mandatory domestic manufacturing may also provide an
additional 5% price reduction on account of the duties levied on the existing LED bulb components imported from
different parts of the world.

Based on the parameters and assumptions shown above, a detailed cash flow statement has been developed for
project cycle of 14 years (see appendix-IV). The project IRR is calculated as 9% with a payback period of nine years.
Clearly the economic attractiveness of this demand aggregation strategy is dependent on the bulk order discount
availed by the manufacturers under a competitive global bidding scenario. Therefore the sensitivity of the project IRR
has been analysed with different possible ranges of the price reductions provided by manufacturers in such scenarios
(see figure-36). This sensitivity chart shows that the project IRR becomes attractive (18%) at 60% discounts on the
capital costs.

Replacement of CFL luminaries


Considering two CFL lamps per every household, this project generates an aggregated demand of 10 million LED
lights that can replace the existing CFL luminaries. The bulk discount available as per the information provided by the
suppliers is around 30%. Apart from this the mandatory domestic manufacturing may also provide an additional 5%
price reduction on account of the duties levied on the existing LED bulb components imported from different parts of
the world.

Based on the parameters and assumptions shown above, a detailed cash flow statement has been developed for
project cycle of 14 years (see appendix-V). The project IRR is calculated as 9% with a payback period of eight years.
Clearly the economic attractiveness of this demand aggregation strategy is dependent on the bulk order discount
availed by the manufacturers under a competitive global bidding scenario. Therefore the sensitivity of the project IRR
has been analysed with different possible ranges of the price reductions provided by manufacturers in such scenarios
(see figure-37). The sensitivity chart shows that the project IRR becomes attractive (20%) at 60% discounts on the
capital costs.

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Figure 36: Price reduction vs. Project IRR for demand aggregation projects replacing T12 luminaries

Discount vs Project IRR


35%

30%

25%

20%

15% Project IRR

10%

5%

0%
35% 50% 55% 60% 65% 70% 75%

Figure 37: Price reduction vs. Project IRR for demand aggregation projects replacing CFL luminaries

Discount vs Project IRR


45%
40%
35%
30%
25%
20% Project IRR

15%
10%
5%
0%
35% 50% 55% 60% 65% 70% 75%

Replacement of ICL bulbs


Considering one ICL bulb per every household, this project generates an aggregated demand of 5 million LED lights
that can replace the existing CFL luminaries. The bulk discount available as per the information provided by the
suppliers is around 30%. Apart from this the mandatory domestic manufacturing may also provide an additional 5%
price reduction on account of the duties levied on the existing LED bulb components imported from different parts of
the world.

Based on the parameters and assumptions shown above, a detailed cash flow statement has been developed for
project cycle of 14 years (see appendix-VI). The project IRR based on these cash flows is calculated as 61% with a
payback period of two years. Clearly the economic attractiveness of this demand aggregation strategy is dependent on
the bulk order discount availed by the manufacturers under a competitive global bidding scenario. Therefore the
sensitivity of the project IRR has been analysed with different possible ranges of the price reductions provided by
manufacturers in such scenarios (see figure-38).

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Figure 38: Price reduction vs. Project IRR for demand aggregation projects replacing ICL luminaries

Discount vs Project IRR


180%
160%
140%
120%
100%
80% Project IRR

60%
40%
20%
0%
35% 50% 55% 60% 65% 70% 75%

Demand aggregation in Commercial buildings


The government of India through BEE has initiated an energy building programme with an objective to identify and
implement energy efficient measures in the public sector commercial/administrative buildings across the country.
Energy audits of more than 450 buildings have been completed across the country with the coordination of state
designated agencies11. Lighting is one of the key energy consuming components in these buildings with an average of
20% of the overall energy consumption. Several energy efficient lighting technologies (including LEDs) have been
recommended so far to reduce the lighting load in these buildings. The demand for LED based general lighting may
be aggregated in all of these buildings and further in all of the public sector administrative office buildings across the
country. For illustrating the scope of this demand, the central government offices alone in the country occupy a floor
space of 1.24 million sqm as per the data presented in the task I of this assignment. Further the total space lighting
demand in the central government offices is 0.013392 Giga Watts in 2008. Assuming 90% of this demand is met by
T12 fluorescent lamps, one can estimate that the current stock of the same is around3lakh luminaries. The lighting
demand generated can be significant to drive price reductions and competition among the LED manufacturers. With
appropriate policies and enhanced institutional setup (utilities, central and state level nodal agencies) put in place the
government can develop and implement a scheme that is similar to the bundling of DSM programs in residential
buildings category. Such a scheme should primarily focus on demand aggregation strategies and integrate LED based
general lighting solutions into the existing lighting market of the public sector office buildings across the country.

Apart from this, under the Energy Conservation Act 2001, Government of India has launched Energy Conservation
Building Code (ECBC) on a voluntary basis. ECBC sets the minimum energy performance standards for large
commercial buildings after taking into account the five major climatic regions of India. Once made mandatory, the
state governments will be responsible for enforcing ECBC through local municipal authorities, which also enforces
building bye laws. In addition to this, the state governments may propose LED based lighting solutions also as
additional mandatory specification in ECBC thus aggregating demand at the state level. Further a central institutional
set up can bundle such demand aggregation projects across several states for both public and private large
commercial buildings.

The economic analysis presented in this section considers a hypothetical scenario aggregating demand across the
central government office buildings through integration of LED based lighting solutions in the energy efficient
building program of BEE. The total aggregated demand will be 3 lakh T12 luminaries to be replaced with LED linear
lamps in a one year lead time. Table-35 presents the whole set of assumptions in terms of aggregated demand, energy

11 Energy efficient building programme, BEE


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use by various lamps, prices of luminaries, cost of energy saved, life assessment etc. considered for the above
mentioned economic analysis.

The economic analysis presented here are not relevant to any particular stakeholder. The overall costs and benefits of
demand aggregation projects (as whole) are being considered to evaluate the cash flows. Cash flows relevant
particular stakeholders may be developed based on the business models proposed to implement such projects.

Table 35: Assumptions for demand aggregation in central government offices

Parameter Value Unit


Demand aggregation parameters
Aggregated volume of T12 luminaries 3,00,000 No. of luminaries
Lead time for lamp installation 1 Year

Energy use parameters


T12 50 Watts
LED fixture equivalent to T12 24 Watts
Electricity tariff 5.5 Rs/kWh

Monetary savings to DISCOM from


peak load reduction 1.00 Rs/kWh
Tariff increase for commercial 5% per year
establishments
Current base line for electricity CO2 0.85 kg/kWh
emission in India

Price of one CER 10 Euro


Exchange rate of 1 Euro 63.4 Rs.
Cost parameters
Current Market price of LED luminaire 150 Rs/Watt

Cost of installation 5 Rs.


Excise duty on production of LED bulbs 5%
(post union budget 2011-12)
Other duties ((post union budget 2011- 0%
12)
Current market price of T12 1.00 Rs./watt
Other parameters
Life of LED 25000 Hours
Life of T12 5000 Hours
% of lamps defaulting every year 1%
No. of days in a year 365 Days
Hours of operation per day 8 Hours
Life of LED bulb 9 Years
Life of T12 2 Years

The bulk discount available as per the information provided by the suppliers is around 20%. Apart from this the
mandatory domestic manufacturing may also provide an additional 5% price reduction on account of the duties levied
on the existing LED bulb components imported from different parts of the world.

Based on the parameters and assumptions shown above, a detailed cash flow statement has been developed for
project cycle of 9 years (see appendix-VII). The project IRR is calculated as 18% with a payback period of five years.
LED Demand Aggregation Study Page 59 of 82
Final Report

Clearly the economic attractiveness of this demand aggregation strategy is dependent on the bulk order discount
availed by the manufacturers under a competitive global bidding scenario. Therefore the sensitivity of the project IRR
has been analysed with different possible ranges of the price reductions provided by manufacturers in such scenarios
(see figure-39). The sensitivity chart shows that the project IRR becomes attractive (31%) at 50% discounts on the
capital costs.

Figure 39: Price reduction vs. Project IRR for demand aggregation in central government buildings

Discount vs Project IRR


70%
60%
50%
40%
30% Project IRR

20%
10%
0%
25% 50% 55% 60% 65% 70% 75%

The economic feasibility parameters estimated in a variety of demand aggregated cases presented previously in this
task (both for residential and commercial buildings) have been summarised in table-36.

Table 36: Summary of economic analysis of demand aggregation strategies

Demand Conventional
Consumer Aggregated Price Project Payback
aggregation technology
category volume reduction IRR period
strategy replaced

50% (with
CDM 5 years
Integration of LED benefits)
lighting into the BPL 40 watt
5 million 35% 43%
second phase of households incandescent
RGGVY scheme (without
CDM
benefits)

T12 9% 9 years
Bundling of Utility Non BPL
5 million 35% CFL 9% 8 years
driven DSM programs households
Incandescent 61% 2 years

Integration of LED
Central
lighting in energy
government 3 lakhs 25% T12 18% 5 years
efficient building
buildings
program of BEE

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The production and supply


scenario of LED lighting systems
This section of the study will give a general understanding of the LED manufacturing processes, raw materials, key
components of LED lighting systems and their availability, production capacities and also the major players in the
production of LED lighting systems. The analysis is presented for both the domestic and global LED
production/supply industry describing the key componenets of the value chain.

LED is an abbreviation for Light-Emitting Diode and is a semiconductor light source and works on the principle of
electroluminescence - a phenomena in which an object emits light when under the influence of electricity. The
phenomena itself was discovered in 1927 by the British experimenter H. J. Round. The first LED was developed in
1927 by the Russian Oleg Vladimirovich Losev and it emitted light in the infrared spectrum. However, no practical use
of the discovery was made until several years later when in 1962, Nick Holonyak Jr. fabricated the first LED capable of
emiting light in the yellow spectrum of the visible light. He is credited to be the father of the light-emitting diode.
Ever since, the LED has been used as indicator light in several appliances.

Recent developments in the LED technology has permitted the use of LED as traffic lights, remote controls, aviation
lighting etc. The development of White-Light LEDs capable of producing high intensity white light have further
enhanced the spectrum of their usage in room lighting, lamps, automotive lighting etc. The fabrication process of
white-light LEDs and the raw materials involved are presnet below.

White-Light LED
There are two ways in which white light can be produced using an LED. The concept of the two methods is explained
below.

1. RGB systems

These systems employ the principle of mixing different colors (mainly Red, Green and Blue RGB) to obtain
white light. Theoritically, this method has the highest quantum efficiency (ratio of the number of emitted by
the LED system, to the number of electrons incident on the system). However, since the blending and
diffusion of different colors is controlled exactly, the quality of white light produced is often poor. There is a
trade-off between higher luminous efficiency (ratio of luminous flux to power) and the color rendering
capability which is the ability of the light source to reproduce the colors of various objects faithfully as
compared to an ideal or natural light source.

This method is relatively expensive as it requires the different colored LEDs to be electronically controlled
and hence is not widely in use.

2. Phosphor based LEDs

This method is based on the principle of using the light from an LED to excite a phosphor. The resulting
phosphorence produces white light. Usually a blue light LED is used. A typical Phosphor based LED typically
consists of a blue LED encapsulated in a phosphor coated epoxy. Cerium-doped Yttrium Aluminium Garnet
(Ce3+:YAG). The color rendering capability of this method is better than the previous method. However, the
efficiencies are typically lower than the RGB systems. The method is also relatively inexpensive and less
complex and hence commercially more in use.

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Components of LED luminaires12


Components without a power source or driver

LED refers to a pn junction semiconductor device (also referred to as chip) that emits incoherent UV, visible, or
infrared radiation when forward biased.

LED Package refers to an assembly of one or more LEDs that includes wire bond or other type of electrical
connections (thermal, mechanical, or electrical interfaces) and optionally an optical element. Power source and ANSI
standardized base are not incorporated into the device. The device cannot be connected directly to the branch circuit.
The current prices of LED packages is around 13$/kilolumens for cool white and 18$ /kilolumens for warm white
LEDs. These prices may be expected to drop by a factor of 10 by 2020.

LED Array or Module refers to an assembly of LED packages (components), or dies on a printed circuit board or
substrate, possibly with optical elements and additional thermal, mechanical, and electrical interfaces that are
intended to connect to the load side of a LED driver. Power source and ANSI standard base are not incorporated into
the device. The device cannot be connected directly to the branch circuit.

Subassemblies and systems (including a driver)

LED Lamp refers to an assembly with an ANSI standardized base designed for connection to an LED luminaire. There
are two general categories of LED lamps:

Integrated LED Lamp refers to an integrated assembly comprised of LED packages (components) or LED arrays
(modules), LED driver, ANSI standard base and other optical, thermal, mechanical and electrical components.
The device is intended to connect directly to the branch circuit through a corresponding ANSI standard lamp-
holder (socket).

Non-Integrated LED Lamp refers to an assembly comprised of an LED array (module) or LED packages
(components) and ANSI standard base. The device is intended to connect to the LED driver of an LED luminaire
through an ANSI standard lamp-holder (socket). The device cannot be connected directly to the branch circuit.

LED Light Engine consists of an integrated assembly comprised of LED packages (components) or LED arrays
(modules), LED driver, and other optical, thermal, mechanical and electrical components. The device is intended to
connect directly to the branch circuit through a custom connector compatible with the LED luminaire for which it was
designed and does not use an ANSI standard base.

LED Driver refers to a device comprised of a power source and LED control circuitry designed to receive input from
the branch circuit and operate a LED package (component), an LED array (module) or an LED lamp.

Power Supply refers to an electronic device capable of providing and controlling current, voltage, or power within
design limits.

LED Control Circuitry refers to electronic components designed to control a power source by adjusting output
voltage, current or duty cycle to switch or otherwise control the amount and characteristics of the electrical energy
delivered to a LED package (component) or an LED array (module). LED control circuitry does not include a
power source.

LED luminaire refers to a complete lighting unit consisting of LED-based light emitting elements and a matched
driver together with parts to distribute light, to position and protect the light emitting elements, and to connect the
unit to a branch circuit. The LED luminaire is intended to connect directly to a branch circuit.

12 Illumination Engineering Society of North America; Solid state lighting R&D, Multi Year program plan, US DoE, March, 2011

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Figure 40: Components of LED luminaire

Each of these components is discussed in detail in the following section.

LEDs

It is the heart of the LED light and consists of the semiconductor junction. It is currently manufactured by very few
companies and each has a patent for manufacturing the same. As discussed in the sections above, the major
components required to manufacture wafers for white light LEDs are Indium, Gallium, Nitrogen, Yttrium,
Aluminium and Cerium. The occurrences, ores and major producers of the above mentioned metals is detailed in the
section below:-

Indium

Indium is a rare earth metal occurring predominantly in the zinc sulphide ore mineral, sphalerite 13. The average
recoverable Indium in the Zinc deposits ranges from 1 ppm to 100 ppm. The major producing countries of Indium are
presented in the table below. As can be seen from the table-39, China leads the production of Indium.

Table 37: List of countries producing Indium13

Country Production (in metric tonnes)


2009 2010
United States - -
Belgium 30 30
Brazil 5 5
Canada 40 35
China 280 300
Republic of Korea 70 80

13 U.S. Geological Survey, Mineral Commodities Summaries, January 2011


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Russia 4 4
Japan 67 70
Peru 25 25
Other countries 25 25

Gallium

Gallium is a soft, silvery, metallic poor metal existing as a brittle solid at room temperature. It has a melting point
slightly above the room temperature. Semiconductor use is almost the entire (about 95%) world market for Gallium.
However, other uses are yet to be discovered14. Elemental Gallium does not occur in nature. It mainly occurs as
Gallium (III) salt in Bauxite and Zinc ores, Bauxite being the major source.

Most Gallium is produced as a by-product of treating bauxite ores and the remainder is produced from zinc-
processing residues. Data on the production of primary Gallium are unavailable because data on the output of the few
producers are considered to be propriety. The table-40 below shows the estimates of the production capacities of
primary Gallium by the US Geological Survey.

Table 38: Production of primary Gallium world3

Year Production (in metric tonnes) Countries


Major producers: China, Germany, Kazakhstan and Ukraine
2009 106
Minor producers: Hungary, Japan, Russia, Slovakia
Major producers: China, Germany, Kazakhstan and Ukraine
2010 79
Minor producers: Hungary, Japan, Russia, Slovakia

Refined Gallium production was estimated at 103 metric tonnes which included some scrap refining. China, Japan
and the United States were the principle producers.

Nitrogen

Nitrogen occurs freely in the atmosphere and is the major component of the air (78%). Hence, its production is easy
and is not analysed in this report.

Yttrium

Yttrium is a silvery white metal often classified as a rare earth element (REE). It is chemically similar to lanthanides
and is almost found combined with them. It is difficult to separate from the REEs and is normally concentrated with
the heavy rare earth elements (HREE). There are four main sources of REE14.

Carbonate and fluoride containing ores such as Bastnsite.

Monazite

Xenotime

Ion absorption clays or Lognan clays

The following table gives the present production and the future reserves for Yttrium 13.

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Table 39: Production of Yttrium - world

Country Mine production (in metric tonnes of Yttrium oxide, Y2O3) Reserves
2009 2010
United States - - 120000
Australia - - 100000
Brazil 15 15 2200
China 8800 8800 220000
India 55 55 72000
Malaysia 4 4 13000
Sri Lanka - - 240
Other countries - - 17000

China is the major producer of Yttrium and also has the highest available reserves for the same. India also has a
substantial production and reserves for the metal. According to the U.S. geological survey, the world resources of
Yttrium are probably very large13.

The most important use of Yttrium is in making phosphors such as the red ones used in Television set cathode ray
tubes (CRT) displays and in LEDs.

Aluminium

Aluminium is a silvery white metal of the Boron family. It is the third most abundant element on earth after Oxygen
and Silicon and is the most abundant metal. Aluminium is a very reactive metal and hence doesnt occur natively. It is
found combined in over 270 different minerals with Bauxite being the chief ore. The below table presents the major
producers of Aluminium

Table 40: world smelter production and capacity of Aluminium13

Country Smelter Capacity (in metric tonnes of Smelter production (in metric tonnes of
metal) metal)
2009 2010 2009 2010
United States 1727 1720 3500 3190
Australia 1940 1950 2050 2050
Bahrain 870 870 880 880
Brazil 1540 1550 1700 1700
Canada 3030 2920 3090 3020
China 12900 16800 19000 18400
Germany 292 370 620 620
Iceland 785 780 790 790
India 1400 1400 1700 2300
Mozambique 545 550 570 570
Norway 1130 800 1230 1230
Russia 3820 3850 4280 4280
South Africa 809 800 900 900

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United Arab Emirates,


1010 1400 1120 1650
Dubai
Venezuela 610 440 625 590
Other countries 4900 5200 6750 6800

According the U.S. geological survey, the world bauxite reserves are enough to meet the world demand for the metal
well into the future. Most of the worlds Aluminium comes form China.

Aluminium is well known for its low density and for its ability to resist corrosion due to the phenomena of
passivation. It finds important applications in the aerospace , transport and the structural industries.

Cerium

Cerium is a soft silvery ductile metal that easily oxidizes in air. It is one of the most abundant of the rare earth
elements. Monazite and Bastnsite are its most important ores. The exact country wise production of Cerium is not
known. However, the details of the production of rare earth are presented in the table below:

Table 41: Mine production and reserves for Rare Earths13

Country Mine production (in metric tonnes)


Reserves
2009 2010
United States - - 13000000
Australia - - 1600000
Brazil 550 550 48000
China 129000 130000 55000000
Common wealth of independent states NA NA 19000000
India 2700 2700 3100000
Malaysia 350 350 30000
Other countries NA NA 22000000

As can be seen from the table above, China leads the worlds production of rare earths. India too has substantial
reserves. The major uses of Cerium are as catalysts and additives to fuels to reduce emissions. They are also used in
the glass and enamels to change their colour.

LED light being a solid state lighting device, needs a chip to control it. This is analogous to the chips used in
computers albeit a lot simpler. Presently, China leads the production of the PCBs used in LED lighting. Currently, a
lot of manufacturers around the world manufacture PCBs for LEDs. According to ELCOMA and the LED
manufacturers we contacted, the production of PCBs is happening is India as well. Both local players and
multinational firms are producing them. They also mentioned that the current production levels are sufficient to meet
the growing global demands of the present and the future.

Voltage drivers

An LED light works on DC current. The supply to domestic and commercial sectors is usually AC current of 230V. The
voltage driver is essentially a step down transformer come rectifier, which steps down the voltage from 230V to the
desired level and converts the AC to DC. According to ELCOMA and the various manufacturers of LED, the
production of these ancillary products has already taken off in India. These materials are supplied locally to the firms
manufacturing the LED products. The production capacity has the potential to match the growth projected by the
demand aggregation strategies. The quality aspects of the products are being worked upon and will meet the requisite
standards within the coming years.
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Thermal management and MCPCBs

Unlike other technology LED luminaires dissipates a lot heat in the form of convection and conduction. Thermal
management of LED lights is very critical for maintaining the lumen output during the life of the luminaire. As the
number of LEDs in an LED light increases, or when the lumen output of the light increases, heat dissipation becomes
a major issue. Metal core printed circuit boards (MCPCBs) have been recently very successful in this area. Currently,
this area is being researched and continually changing. Most of MCPCBs used in India are imported from other parts
of the world.

LED production in India

At present, more than 70% of the components of LED lighting are imported in India. The major components imported
are LED packages, arrays, modules, drivers and MCPCBs. Many of the large scale established manufacturers have
started indigenous production of drivers suitable to Indian conditions. The technology of LEDs is still rapidly evolving
and is in its nascent stage. Since the technology transfer is valued very expensive, most of LED luminaire suppliers in
the country assemble the necessary imported components in various configurations and further sell the products
through organised and unorganised channels.

In order to initiate indigenous manufacturing in the country, the LED manufacturers were of the opinion that the
government needs to provide a suitable policy environment incentivising the manufacturers with tax rebates and a
guaranteed huge demand. The availability of raw materials would also play a critical part in the indigenous
production of LED luminaires.

Manufacturing process
The various steps involved in the manufacture of LEDs are listed below:-

1. Preparation of the semiconductor wafers

An LED is essenially a diode. Hence, the semiconductor core consisting of the p-n junction forms the core of
the LED. The color emitted by the LED is generally governed by the semiconductor and the doping used.
There are various methods of fabricating the semiconductor to the appropriate thickness and the right doping
for the particular color.

The step involves creating a wafer, polishing it and chemical cleaning to remove any impurities. The wafers
are prepared for the next step.

2. Adding epitaxial layers

Here the semiconductor wafers are grown in thickness. Generally materials having the same crystalline
structure as the substrate (initial wafer) below. This method produces exceptionally uniform layers which are
several microns thick. Additional dopants can be added for enhanced efficiency or color. Generally Nitrogen
or Zinc ammonium are the preferred dopants. Nitrogen makes the emitting light a more yellow or green.

3. Adding metal contacts

Metal contacts are then added to the wafers. These determine whether the diodes are to be used singly or in
combination with other diodes. A coating of a photoresist material (sensitive to light) is added to the entire
wafer. A master pattern or mask is then duplicated over the entire wafer. The remainder of the photoresist
material is washed away by exposure to UV light. The metal contacts are then evaporated over the wafer so
that it fills the exposed areas. The entire material is then kept in a furnace so that the metal and the wafers
bond chemically and they donot flake off.

This wafer is then cut out to form individual segments. This is accomplished by either cleaving or by sawing
off with a diamond saw. This step is the most difficult and error prone process, cutting results in far less than
6000 useable LEDs and is one of the biggers factors in limiting production costs.

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4. Mounting and packing

Appropriate metal leads are attached to the segments depending on the manner in which the diode is going to
be used. The entire assembly is sealed in a plastic chamber and is filled with liquid plastic or epoxy. The
Epoxy is cured before the LED rolls out.

As per the above, the major raw materials required in the manufacture of LEDs are:-

1. Semiconductor with dopant

2. Appropriate phosphor compound

The following section details the type of material used.

Raw materials
The following table-37 gives the various types of semiconductors materials and the dopant used to produce different
colors of the LED.

Table 42: Various materials used for different color LEDs14

S. No Color Semiconductor used


Gallium arseide (GaAs)
1 Infrared
Aluminium gallium arsenide (AlGaAs)
Aluminium gallium arsenide (AlGaAs)
Gallium arsenide phosphide (GaAsP)
2 Red
Aluminium gallium indium phosphide (AlGaInP)
Gallium(III) phosphide (GaP)
Gallium arsenide phosphide (GaAsP)
3 Yellow Aluminium gallium indium phosphide (AlGaInP)
Gallium(III) phosphide (GaP)
Indium gallium nitride (InGaN)/Gallium(III) nitride (GaN)
Gallium(III) phosphide (GaP)
4 Green
Aluminium gallium indium phosphide (AlGaInP)
Aluminium gallium phosphide (AlGaP)
Zinc selenide (ZnSe)
5 Blue
Indium gallium nitride (InGaN)
6 Violet Indium gallium nitride (InGaN)
Dual red/blue LEDs,
7 Purple blue with red phosphor
Or white with purple plastic
Diamond
Boron nitride (BN)
8 Ultraviolet Aluminium nitride (AlN)
Aluminium gallium nitride (AlGaN)
Aluminium gallium indium nitride (AlGaInN)
9 White Blue/UV LED with yellow phosphor

For commercial purposes, only white-light LED is used. Indium gallium nitride (InGaN) is the most widely used
semiconductor in white-light emitting LED.

Cerium-doped Yttrium Aluminium Garnet (Ce3+:YAG) is the most commonly used phosphor. Phosphors are
substances that exhibit the phenomena of luminescence i.e., emit light under typical circumstances. They include both

14 Wikipedia.com 2011
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phosphorescent materials and flourescent materials. These are generally transition metal compounds or rare earth
compounds14.

Key players in the manufacturing segment


The following table presents the major producers of LED chips, components and products and fixtures.

Table 43: Leading manufacturers of LED chips, components and fixtures* in the world15

Sales in
Company Country Type
Million USD
Toyoda Gosei 6612 Japan
OSRAM opto semiconductors 621.2 Germany
Veeco 403 USA
Epistar corporation 310.7 Taiwan
LED Chips
CREE 394.1 USA
Seoul semiconductors 284.2 South Korea
Philips Lumileds 75 Netherlands
Seikoh Giken 62.5 Japan
Toyoda Gosei 5796 Japan
Everlight Electronics 309 Taiwan
OSRAM opto semiconductors 621.2 Germany
CREE 394.1 USA
Dow Cowning corporation 2205 USA
Supertex 83 USA
LED Components
Power Integrations 191 USA
Edison Opto Corporations 16.8 Taiwan
Philips Lumileds 75 Netherlands
Rubicon Technology 34.1 USA
GE Lumination 15 USA
CAO group 38 USA
Gentex 653 USA LED Lighting
CREE 394.1 USA products and
fixtures
American Opto Plus LED 450 USA
Teledyne Technologies Inc. 1622.3 USA
Philips Lumileds 75 Netherlands
LEDtronics 40 USA
*This list is not a complete and exhaustive list as there are many other players in the un-organised segment

As can be seen from the above table, the majority of the manufacturers are from the USA, Japan, Taiwan or Europe
(Netherlands/Germany). The actual LED manufacturing process is a very complex one requiring various processes
and varying compositions of the raw materials. The technologies and compositions are normally patented and hence
are not available on the public domain.

We held various meetings with LED manufacturers and ELCOMA (Electric Lamp and Components Manufacturers
Association) in order to obtain the details of the raw materials used for LED manufacture and their production
capacities. The manufacturers assured us that the production capacities of the manufacturing units is substantial to
match the demand forecasted due the the demand aggregation strategies. The raw materials for the production was
however not disbursed to us as it was a patented technology and may cause Intellectual Property rights violations.

15 Lighting industry: Structure and Technology in the Transition to Solid State Susan Sanderson et al
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LEDs under the SEEP project


Under the National Mission for Enhanced Energy Efficiency (NMEEE), focus is laid on shifting the consumer
behaviour towards energy efficient products by introducing innovative measures of reducing the product cost.
Typically a new technology costs reasonably higher than the existing technologies and hence its penetration is
extremely low. In spite of the marked benefits of using the new technology, companies generally price them higher to
recover the R&D costs involved in developing it. Under the Market Transformation for Energy Efficiency (MTEE)
component of NMEEE, BEE aims to make energy efficient products affordable and hence increase their penetration.

With a view on the objectives of MTEE and NMEEE, the Super-Efficient Equipment Programme (SEEP) was
launched. Development and an accelerated introduction of efficient products in the market is the main objective of
this programme. Under this, replacement of standard lighting equipment Incandescent Bulbs (ICLs) and CFLs
would be replaced by higher efficiency products like LED lighting equipment. In order to achieve this, financial
support and support for innovation for development of technology and commercialization would be required.

Since a handful of manufacturers account for more than 70-90% of the overall market for LEDs in India, BEE
proposes to incentivize these manufacturers by compensating them towards the incremental costs of the product so
that these products are available to the common man at an affordable price. For example, if the cost of the new
efficient technology is Rs. X while the cost of the existing old inefficient technology is Rs. Y, it is proposed that the
incremental cost, i.e, Rs. (X-Y) be paid to the manufacturers so that they are able to sell the new technology at the
price of the existing old inefficient technology (Rs. Y). This would benefit ensure that the manufacturers do not lose
out on their margins, while the government benefits from this by the reduction in the consumption of electricity and
the emission of Green House Gases (GHGs).

It is also proposed to implement few demonstrative projects wherein the total cost of the project would be borne
entirely by BEE. The costs could be recovered from the consumers as a part of their reduced consumption or by the
sale of the Carbon Credits or through Clean Development Mechanism (CDM). This would however require a suitable
Monitoring and Verification (M&V) protocol to be in place.

The manufacturers, apart from the increased sales, would also enjoy wide scale publicity and a huge share in the
market. The Government or the utility would benefit from the reduced consumption and reduced GHG emission,
while the consumer benefits from the reduced electricity bills. Thus it is a three way win-win-win scenario.

Conclusion
The market for interior illumination purposes in residential and commercial building categories is enormous. This
market in India is estimated to increase by approximately 82% in residential buildings and 54% in commercial
buildings over the next two decades. The current share of the lighting market penetrated by LED lighting is about
0.1% only. This clearly indicates the scale of huge market potential yet to be captured by LED based lighting solutions.
The benefits of LED lighting are also huge and accrue to a variety of stakeholders. The annual energy savings potential
and GHG reductions are to the tune of 29,850 GWh and 25.6 million tcO2 respectively. The peak demand supply gap
faced by many utilities across the country may well be avoided. Apart from this India currently being the third largest
source of greenhouse gas (GHG) emissions could rapidly move towards becoming a leader in the adoption of super
efficient technologies. Also considering a dynamic future market for lighting with rapid improvements in efficacy/life
and price reductions, it is estimated that by 2021 LED technology will penetrate 57% of the market in commercial
buildings and about 33% of the market in residential buildings. By 2031 more than 80% of the lighting market will be
captured in both the building categories. The market penetration of LED in the future will be more aggressive in
commercial buildings as compared to the residential buildings.

However, in the present scenario there are many barriers for adopting LED based lighting solutions. The high initial
cost and lack of confidence among the consumers are the key problems faced. Demand aggregation as recommended
by government of India could be one of the key strategies to kick start the market penetration in large scale. This
could also motivate the key players in the industry to set up production/manufacturing facilities in the country. With
properly structured demand aggregation projects LED lights can be procured at extremely competitive prices with
discounts 30% to 50%. Discounts of 50% or more in the near future may be very economical for replacing all the

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conventional technologies for all categories of consumers. The LED technology is still emerging and there is
significant potential for growth in the efficacy, cost effectiveness and life of the fixtures.

Recommendations and suggested roadmap


A core committee may be set up consisting of MoP, BEE, EESL, FOR, BIS and NMCC officials to discuss the feasibility
of integrating LED lighting into the second phase of RGGVY scheme. REC may provide the services of implementing
agency of this strategy. The procurement guidelines under the RGGVY scheme may be used to procure the LED
luminaries under the guidance of BEE/EESL. REC may also initiate a global bidding mechanism for procurement of
LED luminaries. A robust monitoring and evaluation process may be designed and implemented by an independent
agency (like NPC).

The core committee may also discuss the formation of a centralised institutional mechanism under the chairmanship
of Secretary, MoP for implementing bundled utility driven LED lighting programs. The EESL may provide the
services of implementing agency with the co-ordination state designated agencies and DSM cells of the utilities.

The core committee may also discuss the possibility of integrating both of these demand aggregation strategies with
mandatory domestic manufacturing. This integration should be done in a phased manner as the present scenario is
not favourable to the manufacturing industry to initiate indigenous production of LEDs. R&D of LEDs should be
promoted aggressively to avail the benefits of this evolving technology. R&D may also create cheaper scenarios for
Technology transfer and indigenous production of LEDs.

Timelines

Activity Timeline
Constitution of core committee December. 2011
Demand aggregation of LED luminaries for RGGVY March, 2012
scheme by REC
Design of Global bidding mechanism for LED lamps in July, 2012
RGGVY scheme by REC with support of BEE/EESL
Formation of CIM for bundled utility DSM programs December, 2011
Demand aggregation for bundled DSM programs by EES March, 2012
Global bids for LED light procurement by EESL August, 2012

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Appendix-I: Forecasting floor area in the residential buildings of the country

Population Urbanization Household Size Household Area Electrification Floor Area in sq.m.
Year
('000 persons) % Urban Rural Urban Rural Urban Rural Urban Rural Total
2011 1210193.42 30.00 4.1 4.6 47 52 94% 60% 3903.847844 5764.940526 9668.79
2012 1208116.00 30.20 4.1 4.6 47 52 95% 62% 3964.951849 5929.252636 9894.20
2013 1223581.00 30.50 4 4.5 47 52 96% 64% 4200.838056 6308.751007 10509.59
2014 1238887.00 30.70 4 4.5 47 52 97% 66% 4325.967927 6567.706698 10893.67
2015 1254019.00 30.90 4 4.5 47 52 98% 68% 4452.862836 6829.004023 11281.87
2016 1268961.00 31.10 4 4.5 46 51 99% 70% 4483.977748 6956.04321 11440.02
2017 1283600.00 31.40 4 4.4 46 51 100% 72% 4625.809441 7368.999403 11994.81
2018 1298041.00 31.60 3.9 4.4 46 51 100% 74% 4838.031789 7635.999951 12474.03
2019 1312240.00 31.80 3.9 4.4 46 51 100% 76% 4921.909415 7904.421986 12826.33
2020 1326155.00 32.10 3.9 4.4 46 51 100% 78% 5021.026854 8161.844457 13182.87
2021 1339741.00 32.30 3.9 4.4 46 51 100% 80% 5104.069687 8431.432837 13535.50
2022 1352695.00 32.50 3.9 4.4 45 50 100% 82% 5072.60625 8528.89569 13601.50
2023 1365302.00 32.80 3.9 4.4 45 50 100% 84% 5167.142954 8778.643623 13945.79
2024 1377442.00 33.00 3.9 4.3 45 50 100% 86% 5244.875308 9250.323868 14495.20
2025 1388994.00 33.20 3.9 4.3 45 50 100% 88% 5320.915477 9515.836383 14836.75
2026 1399838.00 33.40 3.9 4.3 45 50 100% 90% 5394.760292 9778.226528 15172.99
2027 1409991.00 33.70 3.8 4.3 45 50 100% 92% 5626.977241 10022.18324 15649.16
2028 1419472.00 33.90 3.8 4.2 45 50 100% 94% 5698.432989 10522.03898 16220.47
2029 1428303.00 34.10 3.7 4.2 45 50 100% 96% 5923.597172 10779.57278 16703.17
2030 1436507.00 34.40 3.7 4.2 45 50 100% 98% 6010.034692 11016.50378 17026.54
2031 1444110.00 34.60 3.7 4.1 45 50 100% 100% 6076.971 11540.69312 17617.66
Source: Census of India, 2006; World Bank, 2008

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Appendix-II: Summary of lighting aspects of building energy audit reports


Annual
Avg annual Lighting Lighting Installed
Built up Connected EPI Lighting electricity No. of No.
Type of electricity load share in interior No. of
Building area load (kWh/sq load consumed incan. of
building consumption share energy LPD FTLs
(sq m) (kW) m/month) (kW) by lighting bulbs CFLs
(kWh) % % ( W/sq m)
(kWh)

BHEL 11388 1127 670000 4.9 96 50 8.43 0 1500 0


SMT FOREST
Hospital 26091 890 2000000 6.38 176.4 773779 24.9 0 5100 1420
HOSPITAL
NANDA DEVI
Hostel 35 721680 36 49171.52 233 370 0
HOSTEL
BSNL Office 4500 1713000 31.33 72.38 13 12.6 0 645 49
IGFNA 6391 156450 2.04 51.24 26 8.02 5 467 201
IIP 16780 1003 2078760 10.32 122.337 13 6.64 15 1184 140
NIVH 188 55.5 38 181500 0 932 42
ONGC 1488 174240 70.03 11 0 1800 0
SECRETARIAT Admin. 16357.73 490 0 1880 102
VPKAS 23463 281544 22 0 266 0
BBMB 63305 201 409572 48 24.5 47 172800 5 3 768 635
PPHQ 55377.44 745 312120 86.7 11.64 5.54 0 2257 117
GMHC 341524.7 5077 5902594 644.16 12.7 22 6.4 676 15140 86
PUNJAB Educational
485243.9 2774 9982346 504.5 19 23 3.06 219 11571 667
UNIVERSITY university

Type of Built up Connected Avg annual EPI in Lighting Lighting Lighting Annual Installed No. of No. of No.
Building
building area in load kW electricity kWh/sq load kW load share in electricity interior incan. FTLs of

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sq m consumption m/month share % energy consumed LPD in bulbs CFLs


kWh % by lighting W/sq m
kWh
PUNJAB &
HARYANA Court 167131.4 2891 291 10 10 37 6507 1663
HIGH COURT
JLN HOSPITAL Hospital 19045 1364 1551420 125 15 6.56 154 2229 191
BIDHAN SABHA 608000 3600 1.3 315 23 0 3269 1621
KAR BHAVAN 292000 0 615 0
SMS HOSPITAL Hospital 3561 7370000 450 480 0 0
COLLECTORAT
300 484248 2.7 49 22 181 894 154
E BUILDING
MBG
HOSPITAL &
Hospital 19045 2000 9.88 250 31 13.13 842 4631 463
RNT MEDICAL
COLLG
VITT BHAVAN 563 545000 0 700 0
RAJASTHAN
3712 5622125 12 52 3069 2297
SECRETARIAT
RAJINDRA
Hospital 67877 3000 3314077 4.06 777 25.9 11.4471765 500 2050
HOSPITAL
CIVIL
Admin. 45000 1563 2705338 5 238 15 24 637914 5.28888889 5524 460
SECRETARIAT
MG HOSPITAL Hospital 750 12.08 90 2897568 0 1500 0
Total / average 8.18 9.07
Source: Energy efficient building program of BEE

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Appendix III: Cash flow statement for demand aggregation for BPL households
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Number of programmes 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total no. of LED luminaries
distributed 1000000 1000000 1000000 1000000 1000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cumulative stock of luminaries 0 1000000 2000000 3000000 4000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 4000000 3000000 2000000 1000000

Capital cost
Total cost of procurement of LED
lamps (Rs in crores) (48.8) (48.8) (48.8) (48.8) (48.8) - - - - - - - - - - - - - -
Total cost of installation (Rs in
crores) (0.5) (0.5) (0.5) (0.5) (0.5) - - - - - - - - - - - - - -
Total capital investment (49.3) (49.3) (49.3) (49.3) (49.3) - - - - - - - - - - - - - -

Energy savings
Energy use in baseline (in million
kWh) 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365 365
Energy use after project
implementation (in million kWh) 365 308.425 251.85 195.275 138.7 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 138.7 195.275 251.85 308.425
Energy savings (in million kWh) 0 56.575 113.15 169.725 226.3 282.875 282.875 282.875 282.875 282.875 282.875 282.875 282.875 282.875 282.875 226.3 169.725 113.15 56.575
Annual emissions reduction in
thousand tCO2/CERS - 48.09 96.18 144.27 192.36 240.44 240.44 240.44 240.44 240.44 240.44 240.44 240.44 240.44 240.44 192.36 144.27 96.18 48.09

Inflow
Revenue from energy savings (Rs
in crore) 0 19.80125 39.6025 59.40375 79.205 99.00625 99.00625 99.00625 99.00625 99.00625 99.00625 99.00625 99.00625 99.00625 99.00625 79.205 59.40375 39.6025 19.80125
Revenue from CERs (Rs in crore) - 3.05 6.10 9.15 12.20 15.24 15.24 15.24 15.24 15.24 15.24 15.24 15.24 15.24 15.24 12.20 9.15 6.10 3.05
Avoided cost of ICL replacements
(Rs in crore) 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
Total Revenue (Rs in crore) 5.00 27.85 50.70 73.55 96.40 119.25 119.25 119.25 119.25 119.25 119.25 119.25 119.25 119.25 119.25 96.40 73.55 50.70 27.85

Outflow
O&M - (0.88) (1.76) (2.63) (3.51) (4.39) (4.39) (4.39) (4.39) (4.39) (4.39) (4.39) (4.39) (4.39) (4.39) (3.51) (2.63) (1.76) (0.88)

Net benefits
Profit before tax (PBT) (44.25) (22.28) (0.30) 21.67 43.64 114.86 114.86 114.86 114.86 114.86 114.86 114.86 114.86 114.86 114.86 92.89 70.92 48.95 26.97
PBT (without CDM benefits) (44.25) (25.33) (6.40) 12.52 31.45 99.62 99.62 99.62 99.62 99.62 99.62 99.62 99.62 99.62 99.62 80.70 61.77 42.85 23.92
Project IRR 50%
Payback period 5.00
Project IRR (without CDM benefits) 43%

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Appendix IV: Cash flow statement for demand aggregation of LED replacements
for T12 luminaries
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Total no. of LED luminaries
distributed 15000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cumulative stock of luminaries 0 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000 15000000

Capital cost
Total cost of procurement of LED
lamps (Rs in crores) (3,510.0) - - - - - - - - - - - - - -
Total cost of installation (Rs in
crores) (7.500) - - - - - - - - - - - - - -
Total capital investment (3,517.5) - - - - - - - - - - - - - -

Energy savings
Energy use in baseline (in million
kWh) 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75 1368.75
Energy use after project
implementation (in million kWh) 1368.75 657 657 657 657 657 657 657 657 657 657 657 657 657 657
Energy savings (in million kWh) 0 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75 711.75
Annual emissions reduction in
thousand tCO2/CERS - 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99 604.99

Inflow
Revenue from energy savings (Rs
in crore) 0.00 336.30 353.12 370.77 389.31 408.78 429.22 450.68 473.21 496.87 521.71 547.80 575.19 603.95 634.15
Revenue from CERs (Rs in crore) - 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36 38.36
Avoided cost of T12 replacements
(Rs in crore) 75 0 0 0 75 0 0 0 75 0 0 0 75 0 0
Total Revenue (Rs in crore) 75.000 374.66 391.47 409.13 502.67 447.13 467.57 489.03 586.57 535.23 560.07 586.16 688.55 642.31 672.50

Outflow
O&M - (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00) (54.00)

Net benefits
Profit before tax (3,442.50) 320.66 337.47 355.13 448.67 393.13 413.57 435.03 532.57 481.23 506.07 532.16 634.55 588.31 618.50

Project IRR 9%
Payback period 9.00

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Appendix V: Cash flow statement for demand aggregation of LED replacements for
CFL luminaries
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Total no. of LED luminaries
distributed 10000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cumulative stock of luminaries 0 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000

Capital cost
Total cost of procurement of LED
lamps (Rs in crores) (877.5) - - - - - - - - - - - - - -
Total cost of installation (Rs in
crores) (5.000) - - - - - - - - - - - - - -
Total capital investment (882.5) - - - - - - - - - - - - - -

Energy savings
Energy use in baseline (in million
kWh) 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75 273.75
Energy use after project
implementation (in million kWh) 273.75 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25 164.25
Energy savings (in million kWh) 0 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5 109.5
Annual emissions reduction in
thousand tCO2/CERS - 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08 93.08

Inflow
Revenue from energy savings (Rs
in crore) 0.00 54.33 57.04 59.89 62.89 66.03 69.33 72.80 76.44 80.26 84.28 88.49 92.92 97.56 102.44
Revenue from CERs (Rs in crore) - 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90 5.90
Avoided cost of CFL replacements
(Rs in crore) 150 0 0 0 150 0 0 0 150 0 0 0 150 0 0
Total Revenue (Rs in crore) 150.000 60.23 62.94 65.80 218.79 71.93 75.24 78.70 232.34 86.16 90.18 94.39 248.82 103.46 108.34

Outflow
O&M - (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50) (13.50)

Net benefits
Profit before tax (732.50) 46.73 49.44 52.30 205.29 58.43 61.74 65.20 218.84 72.66 76.68 80.89 235.32 89.96 94.84

Project IRR 8.93%


Payback period 8.00

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Appendix VI: Cash flow statement for demand aggregation of LED replacements
for ICL bulbs
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Total no. of LED luminaries
distributed 5000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cumulative stock of luminaries 0 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000 5000000

Capital cost
Total cost of procurement of LED
lamps (Rs in crores) (438.8) - - - - - - - - - - - - - -
Total cost of installation (Rs in
crores) (2.500) - - - - - - - - - - - - - -
Total capital investment (441.3) - - - - - - - - - - - - - -

Energy savings
Energy use in baseline (in million
kWh) 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5 547.5
Energy use after project
implementation (in million kWh) 547.5 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125 82.125
Energy savings (in million kWh) 0 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375 465.375
Annual emissions reduction in
thousand tCO2/CERS - 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57 395.57

Inflow
Revenue from energy savings (Rs
in crore) 0.00 219.89 230.88 242.43 254.55 267.28 280.64 294.67 309.41 324.88 341.12 358.18 376.09 394.89 414.63
Revenue from CERs (Rs in crore) - 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08 25.08
Avoided cost of ICL replacements
(Rs in crore) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5
Total Revenue (Rs in crore) 7.500 252.47 263.46 275.01 287.13 299.86 313.22 327.25 341.99 357.46 373.70 390.76 408.67 427.47 447.21

Outflow
O&M - (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75) (6.75)

Net benefits
Profit before tax (433.75) 245.72 256.71 268.26 280.38 293.11 306.47 320.50 335.24 350.71 366.95 384.01 401.92 420.72 440.46

Project IRR 61%


Payback period 2.00

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Appendix VII: Cash flow statement for demand aggregation in central government
buildings
Year 0 1 2 3 4 5 6 7 8 9
Total no. of LED luminaries
distributed 300000 0 0 0 0 0 0 0 0 0
Cumulative stock of luminaries 0 300000 300000 300000 300000 300000 300000 300000 300000 300000

Capital cost
Total cost of procurement of LED
lamps (Rs in crores) (81.0) - - - - - - - - -
Total cost of installation (Rs in
crores) (0.150) - - - - - - - - -
Total capital investment (81.2) - - - - - - - - -

Energy savings
Energy use in baseline (in million
kWh) 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8 43.8
Energy use after project
implementation (in million kWh) 43.8 21.024 21.024 21.024 21.024 21.024 21.024 21.024 21.024 21.024
Energy savings (in million kWh) 0 22.776 22.776 22.776 22.776 22.776 22.776 22.776 22.776 22.776
Annual emissions reduction in
thousand tCO2/CERS - 19.36 19.36 19.36 19.36 19.36 19.36 19.36 19.36 19.36

Inflow
Revenue from energy savings (Rs
in crore) 0.00 15.54 16.32 17.14 17.99 18.89 19.84 20.83 21.87 22.97
Revenue from CERs (Rs in crore) - 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23
Avoided cost of T12 replacements
(Rs in crore) 1.5 0 0 1.5 0 0 1.5 0 0 1.5
Total Revenue (Rs in crore) 1.500 16.77 17.55 19.87 19.22 20.12 22.57 22.06 23.10 25.69

Outflow
O&M - (1.08) (1.08) (1.08) (1.08) (1.08) (1.08) (1.08) (1.08) (1.08)

Net benefits
Profit before tax (79.65) 15.69 16.47 18.79 18.14 19.04 21.49 20.98 22.02 24.61

Project IRR 18%


Payback period 5.00

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