India needs an energy disclosure policy

Prime Minster Narendra Modi, after his recent review of the Indian power sector, advised the Union Ministry of Power to ensure that the Discoms (distribution companies) publish their performance parameters periodically so that the people know how their provider fares in comparison to the peers.

It is anticipated that these performance disclosure requirements may be included in the proposed Electricity (Amendment) Bill 2020. This is a move in the right direction and can become more effective if extended to end-users of electricity as well.

India loses a considerable portion of the electricity it generates at the supply end which the PM’s advice for transparency will help understand in nuanced detail and aid development of effective remedies and solutions. But given the asymmetrical distribution, much of the power ends up in the kitty of a privileged section of society that has been documented to waste it as well.

A separate legislation was enacted in 2001 to address this wastage on the consumer end. The Energy Conservation (EC) Act 2001 established the Bureau of Energy Efficiency (BEE) with the mandate of setting and enforcing energy consumption standards with periodic energy audits for major energy consumers (referred to as designated consumers in the EC Act). Discoms and commercial establishments, along with various industries, are designated consumers.

BEE notified the standardixed rules to the EC Act only in 2012, where it laid down the requirement of establishing energy consumption and performance baseline for consumer entity and matrix of tracking improvement annually. The rules were amended in 2016 and again in 2018 but core requirements for reporting and verifying energy performance improvement remained unchanged.

Part of what PM Modi has advised the power ministry must already exist with BEE if they have been at their job and can be published right away. But a quick assessment of the implementation of the EC Act and Rules in the commercial building or establishments (only designated consumers whose performance by individual entities is in the public domain) paints a rather dull image.

Rise and fall of star ratings

BEE issues Energy Saving Certificates to most designated consumer entities to track and ensure compliance with the EC Act. But for existing commercial buildings or establishments, BEE developed a star rating programme, in the same spirit as the star labeling for appliances. It was launched in 2009 and was limited to daytime office typology and was to eventually extend to cover all commercial building typologies.

The voluntary nature of the programme doesn’t meet the requirement of the periodic energy saving audit needed by every existing designated consumers under the EC Act. But it was a commendable initiative.

The star rating used the Energy Performance Index (EPI), the formula for which was later inscribed in the EC Rules. Buildings were rated against a benchmark that varied with climatic zones and awarded 1-5 stars based on fixed slabs. Buildings with EPI higher than the benchmark were denied rating. These ratings are subject to renewal each year and upon failure to comply, the rating can be forfeited.

BEE has been publishing the EPI and star rating earned by each rated building on its website.

BPO offices, hospitals, and retail malls were added to the programme later, in a staggered fashion. But they used different formulas than one defined in the EC Rules, which led to confusion and criticism.

In fact, there have been a lot of criticisms of the rating for the computation EPI, arbitrary nature of the benchmarks, exclusion of on-sight renewable energy among others but it was nevertheless appreciated as a policy that, for a change, disclosed actual energy performance. It paved the way to benchmark energy consumption among buildings and identifying wastages.

It has been letting people know (however partially) how they fare in comparison to their peers, something PM Modi is seeking now. But the rating programme has almost been abandoned by BEE.

In the inaugural year of the star rating programme, 22 office buildings got rated. The number grew to 68 buildings in 2010. But the programme has lost steam since and only 11 buildings were rated in 2019.

Over a decade later, just 225 buildings have been rated (according to the data available on BEE’s website). Daytime office buildings have, by far, seen the highest participation, with 145 buildings being rated, followed by BPO offices with 45 buildings being rated. In 2019, BEE has signed a Memorandum of Understanding with the Central Public Works Department to star rate their buildings.

Efficiency needs disclosure, disclosure needs rating

Globally, legislations like the EC Act, that aim to track and improve energy performance of various consumers, have incorporated disclosure of energy performance as an integral part of their mandate.

These policies not only seek energy consumption information but an assortment of details regarding physical infrastructure, operation and management to establish peers, fair comparisons and realistic reduction targets.

Understanding the importance of energy performance data and behavioral gains to be made via peer-to-peer comparison, India Cool Air Action Plan prepared by the environment ministry has recommended disclosure of energy performance of commercial buildings.

And rating is an effective tool to make use of the standardised data collected through disclosure policies to understand the baseline performance of different consumers and setting up of energy performance targets.

BEE needs to revisit, revive, and expand its star rating system for all designated consumers, especially buildings. It can’t be kept voluntary and confidential.

Public disclosure of energy performance is not only needed to aid energy efficiency and climate target accounting but also to build public confidence in energy efficient technologies and strategies. Something that has stymied the wide-scale adoption of recommendations like Energy Conservation Building Codes for new construction.

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