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Final Report
ClimateWorks
Foundation
October 2011
Final Report
Table of Contents
Executive Summary 5
Abbreviations 7
List of Tables 9
List of Figures 9
Background 11
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
Conclusion 45
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
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.
Abbreviations
BEE: Bureau of Energy Efficiency
BLY: Bachat Lamp Yogana
BPL: Below Poverty Line
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
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
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).
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.
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.
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
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.
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.
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.
Approach 1: Approach 2:
Using total floor area and allowable Using total connected load and load
lighting power density distribution profile
The following sections will detail the methodology and various sources of information adopted in approaches 1
& 2 to estimate the required parameters.
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.
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
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.
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
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
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.
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.
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.
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.
Sector Residential
Table 9: Total space lighting demand (in Giga watt) in commercial buildings
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.
250
R = 0.9953
200
150
100
50
0
1992-93 1997-98 2002-03 2007-08
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).
70
60
50
40
30
20
10
0
1992-93 1997-98 2002-03 2007-08
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%.
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.
Commercial buildings
Others
ICT & 18% Space
Entertainm cooling
ent 45%
17%
Lighting
20%
Table 11: Space lighting demand estimation for the year 2011
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.
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
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.
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005 2010 2015 2020 2025 2030
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.
Residential Buildings
LED
0%
Incandescent
lamps
25%
T12 tube
light -
electronic
choke
T5 tubelight T8 tube light - T8 tube light - 4%
4% electronic magnetic
choke choke
6% 11%
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%
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.
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.
National
Share in Normal wattage per Stock of fixtures
Technology General specification demand in
load fixture (in watts) (in millions)
kW
National
Share Normal wattage per Stock of fixtures
Technology General specification demand in
in load fixture (in watts) (in millions)
kW
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.
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.
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
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
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
Compact
Technology Bin Incandescent Fluorescent LED Total
fluorescent
Table 18: Estimation of annual lighting service intensity for year 2011
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.
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.
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.
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.
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
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.
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
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
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.
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)
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
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.
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.
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)
It can be observed that if the grid emission factors follow the aggressive path, the GHG emission reduction potential
actually decreases.
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:
Figure 25: Penetration of LED in Market Share of Conventional Technology in Commercial and Residential
Sector
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
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
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.
Price Technology
Roadmap
Step 1
Roadmap
Step 2
Future Technology Maximum Saving
Market Share Potential
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.
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.
7000
6000
5000
4000
Value of industry (in
3000 Million INR)
2000
1000
0
2005 2006 2007 2008 2009 2010
Year
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
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.
800
700
Qty Million pieces
600
500
200
100
0
2003 2004 2005 2006 2007 2008 2009 2010
Year
500
Qty Million pieces
400
300
Demand for CFL
200 Manufacturing capacity
100
0
2003 2004 2005 2006 2007 2008 2009 2010
Year
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.
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:
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
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.
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.
Figure 34: Bulk order discounts available on the current market price of LEDs
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.
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
10 The economic case to stimulate LED lighting in India, Ministry of Power, Government of India, 2010
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.
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.
Figure 35: Sensitivity of Project IRR with the price reductions provided by manufacturers
60%
40%
20%
0%
35% 50% 55% 60% 65% 70% 75%
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
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.
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.
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.
Figure 36: Price reduction vs. Project IRR for demand aggregation projects replacing T12 luminaries
30%
25%
20%
10%
5%
0%
35% 50% 55% 60% 65% 70% 75%
Figure 37: Price reduction vs. Project IRR for demand aggregation projects replacing CFL luminaries
15%
10%
5%
0%
35% 50% 55% 60% 65% 70% 75%
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).
Figure 38: Price reduction vs. Project IRR for demand aggregation projects replacing ICL luminaries
60%
40%
20%
0%
35% 50% 55% 60% 65% 70% 75%
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
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.
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
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.
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
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.
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.
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.
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
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.
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.
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.
Monazite
Xenotime
The following table gives the present production and the future reserves for Yttrium 13.
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
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
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:
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.
LED Demand Aggregation Study Page 66 of 82
Final Report
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.
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:-
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.
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.
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.
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:-
Raw materials
The following table-37 gives the various types of semiconductors materials and the dopant used to produce different
colors of the LED.
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
LED Demand Aggregation Study Page 68 of 82
Final Report
phosphorescent materials and flourescent materials. These are generally transition metal compounds or rare earth
compounds14.
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
LED Demand Aggregation Study Page 69 of 82
Final Report
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
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.
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
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
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
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%
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
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
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
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
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