A smart idea
A distinctive feature of a modern house is an array of electrical and electronic appliances in it. Sunil Sinha, a banker in Meerut, remembers the days when his house had a modest four ceiling fans, six lights, a refrigerator and a colour TV, and he considered them enough of possessions to boast about. That was in the 1990s when Indian economy had just picked up pace. Since then he has added multiple appliances—computers, geysers, mixer, water purifier, air-conditioners, two more TV sets and an extra fridge—lapping up modern urban lifestyle. But all these conveniences have come at a cost. “Monthly electricity usage those days hardly ever crossed 250 units. Nowadays even after our children have moved out we rarely use less than 1,000 units of power in a month,” says Sinha. Today, the 400-million-strong Indian middle class, with growing disposable incomes, has made consumer electronics and appliances a Rs 45,000-crore industry, according to the Consumer Electronics and Appliances Manufacturers Association. A report prepared by the association this year shows the Indian consumer electronics market grew at a compound annual rate of 13 per cent during 2003-13.
Even though the appliance penetration of India is lower than the global standard, its energy consumption is already high and will increase. Indian appliance ownership is at a stage where China was two decades ago (see ‘Much ahead’).
Indian families are yet to buy 70 per cent of the appliances they will own by 2030, according to Daljit Singh, senior research fellow at Pune-based non-profit Prayas, which works on energy among other issues. However, domestic energy consumption in India has increased from 80 terawatt hour (TWh, or a million megawatt hour) in 2000 to 186 TWh in 2012, and constitutes 22 per cent of the total energy consumption, as per the 2013 report of the Central Electricity Authority. If the commercial sector, which includes offices, malls and shops is added, then the total energy consumption by domestic and commercial sector goes up to 257 TWh-or 30 per cent of total electricity consumed in India. At this rate, with rising incomes and urbanisation, the domestic consumption may increase to 1,600 TWh in 2050 if nothing is done to improve the energy efficiency of the appliances, shows a study done by the Ahmedabad-based Centre for Environmental Planning and Technology University for the Global Buildings Performance Network.
About 40 per cent of the energy expenditure and a third of CO2 emissions in the world, as per the United Nations Environment Programme, are attributed to operation and maintenance of buildings, with home appliances contributing a major share.
Prayas’ 2008 calculations show just nine appliances account for almost all the electricity used in Indian houses (see ‘Hungry nine’). Of these four kinds of appliances—lighting fixtures, ceiling fans, TV sets and refrigerators—account for 80 per cent of the electricity consumption. Another estimate in 2010 by the Bureau of Energy Efficiency (BEE), a statutory body under the power ministry, shows that fans use about 34 per cent of the electricity, lighting 28 per cent and refrigerators 13 per cent in a typical house. Air-conditioner (AC) is the biggest energy guzzler but this is not reflected in national averages because very few houses have one (see ‘Slay the guzzler’).
The government took the first step towards energy efficiency by notifying the Energy Conservation Act in 2002. The Act sought efficiency measures and a legal framework to implement them throughout the country. In 2006, BEE introduced star rating of appliances to influence consumer choice and push the market towards improving the energy efficiency of products. Under its Standards and Labeling programme, BEE defined the minimum efficiency performance benchmark for various appliances and decided the bandwidth to award five-star ratings to products. It also made it mandatory for all manufacturers of ACs, refrigerators and tube lights to put BEE ratings on the product, which meant that products with efficiency lower than BEE’s minimum benchmark could not be sold in the market. BEE revises the minimum benchmark every two years and the last revision happened in January 2014.
While the star rating has encouraged a shift towards more efficient models in the case of some appliances, for many others people still buy less expensive but inefficient models. For example, in 2009-10, almost 90 per cent purchases of labelled frost-free refrigerators fell in the four- or five-star category, according to a 2010 report of the National Productivity Council, an autonomous body under the commerce and industry ministry. However, in the case of room ACs, only 14 per cent of the purchases were rated four or five stars, while 55 per cent were rated one or two stars. The sale of five-star ACs has not picked up because they are substantially more expensive than ordinary ACs and are not easily available in the market. In contrast, the average efficiency of refrigerators sold in India before the Standards and Labeling programme was already three-star by standards, which meant the higher efficiency-refrigerators were marginally more expensive. Appliances for which labelling is not yet mandatory, a large fraction of purchases is of unlabelled models. Besides, the energy consumption thresholds for labelled products have not been raised at a desired pace. Experts say one reason for this is the resistance from manufacturers, particularly in the unorganised sector, who may find it difficult to improve manufacturing technologies.
As a result, even eight years after the launch of the star-rating programme, Indian efficiency standards lag behind global levels. Saurabh Diddi, energy economist at BEE and project officer for the programme, thinks the comparison is unfair because the conditions for testing efficiency vary among countries leading to different results. “Additionally, we cannot push the minimum standards drastically higher overnight as it will make the products unaffordable and force many local manufacturers to shut shop,” says Diddi. “We have to be considerate towards the local industry and the purchasing power of the average Indian when deciding the efficiency standards.” Nikit Abhyankar, senior scientific engineering associate at the California-based Lawrence Berkeley National Laboratory, which has an India-specific energy programme, does not agree. “The spike in prices is momentary. We have analysed the Indian market and found that prices of ACs and TV sets in India in absolute terms have fallen since the introduction and subsequent tightening of minimum efficiency standards,” he says.
Cost sensitivity of the Indian market and stiff competition have a way of making manufacturers adjust and innovate to keep prices low, he adds.
Room for super efficiency
Industry is already ready with several super-efficient products, which use much less power than even the five- star-rated ones. These products, which can easily be called seven- or eight-star, can go a long way in improving the energy security of the country. To get the measure of what super-efficient products can do take the government’s rural electrification scheme. Under this, the government is providing families with solar panels of 40 Watt capacity and a regular electric bulb which pretty much uses up the entire 40 Watt of power. “Today we can operate an LED colour TV, a table fan, two LED light fixtures, a phone charger and a digital radio-cum-watch with 40 Watt of electricity, which is the same power a single incandescent bulb consumes,” says Abhyankar (see graph ‘40 Watt is a lot’). “All the products are commercially available in major markets, including that in Africa, but not in India as policies are not pushing for them.”
The challenge is to create incentives for super-efficient products, while quickly upgrading the star rating system to push the baseline. This will remove inefficient appliances from the market and encourage long-term energy savings. This can also be achieved with the cross subsidy mechanism, under which lower efficiency products can be charged higher and the differential utilised to subsidise higher efficiency products, suggests Delhi-based non-profit Centre for Science and Environment (CSE). “For the manufacturers the excise duty should be made inversely proportional to the star rating of the product,” adds Piyal Sengupta, product manager, air conditioners, Godrej Appliances.
Let us look at how three major appliance markets-ceiling fans, lights and air-conditioners-can make the transition.