The Energy Efficiency Market In India

Day-by-day the energy demand of Indian is growing. The increasing population along with increasing electrical appliances are adding up in this energy demand. Every sector be it food, be it education, be it transportation, and even agriculture, every sector is power-dependent.

As per the survey by IEA, the energy demand which includes the demand as well as the losses is estimated to reach 1566 TWh by 2021-22 and will increase to more than 2047 TWh in 2026-27. The energy demand in 2000 was 450 million Tons of Oil Equivalent (TOE) which further increased to 770 million in 2012 and as per the current rate, it is estimated to reach 1500 million TOE by 2030 or even more. Soon our power requirements will reach a point where just power generation will not be a viable solution.

Simpy just by increasing the power generation capacity as the demand is increasing is not going to help India to reach the point of sustainability.

What is Energy Efficiency Sector?



The Indian Energy Efficiency Market is the biggest market of the Indian Economy as it is the combination of both the electricity generating sector and the electricity consuming sector. It means all the power plants, be it solar, be it thermal, or be it hydro along with all of the electrical appliances are a part of this sector.

Energy Efficiency Service Limited has estimated the market value of Energy Efficiency and Demand Side Management to be INR 1.5 Lakh Crore.

EESL is also seeking to create market access initially for public facilities. Public facilities in India still use the old electrical equipment whose energy consumption is very huge, replacing them with the energy-efficient appliance is going to be a big step towards energy conservation.

EESL has started to invite the innovative business models onboard, also asking the Energy Service Companies to get associated. The innovative energy efficiency programs at the grassroots level like street lighting have helped the organization to grow.

If we compare the growth of the company during FY 2015-16 from FY 2014-15, we see the growth almost equals to 10 times.

Major barriers in the roadmap to achieve the targets of energy efficiency in India

  • Lack of Technology
  • Limited access to Finance
  • Limited Capacity in the Public Sector
  • Government Procurement Regulation
  • Lack of Simplified M&V Protocols
  • Payment Security Mechanism
  • Proper Education to the end-users

How Induction Motors are associated with the Energy Efficiency Market:

If we talk about the motor industry, in India 99% of the motors are either IE1 (first generation) or sub-IE1 (second generation) motors which are highly inefficient as per the present industrial standards. Due to which the 45% of the power generated by India is consumed by motors (both industrial and commercial) only. 45% of the total power generation is a very big share.

To reduce this, the government of India has banned the IE1 and IE2 motors and has asked everyone (individual, organization, and industry) to replace them with IE3 motors which are the next generation energy-efficient.

If India successfully replaces its motors with IE3 motors, the 45% share will be reduced to 35%, a huge drop. But the question is can India do it?

To answer this question, we have to understand the induction motor industry and see how many players there in India are developing the IE3 induction motors as the demand is very high in this particular energy efficiency sector.

As we all know that Induction Motor industry is divided into 2 parts. One is the Industrial motor sector like industrial exhaust fans, specialized motors used in machinery and so on while the other is the residential motor sector like ceiling fans, table fans, cooler motor kit and so on.

Motor Type IE1 IE3
High-Speed Fan 100 Watts 50 – 60 Watts
18 Inch Exhaust 400 Watts 250 Watts
24 Inch Exhaust 500 Watts 350 Watts

Motor to be compared are IE1 v/s IE3

Number of motors: 50

IE1 motors

  • IE1 Parameters: 5.5kW, efficiency 84.7%, loading 70%, 313 days/annum, 20 Hours/day
  • IE1 Annual Energy Consumption: 14,22,272 kWh
    • 50 X (5.5/0.847) X 0.7X313X20

IE3 motors

  • IE3 Parameters: 5.5 kW, efficiency 89.6%, loading 70%, 313 days/annum, 20 hours/day
  • IE3 Annual Energy Consumption: 13,44,922 kWh
    • 50 X (5.5/0.896) X 0.7X313X20)

Annual Energy saving: 77,805 kWh = 5.46%

Monetized Annual Energy Saving @ INR 8/kWh: INR 6,22,440

The above calculation shows why India needs to switch to IE3 Motors, it not only saves energy but also is economical in the long run.

Case Study for Residential Motors:

Motor Type IE1 IE3
Celling FAN 75 Watts 30 Watts
Desert Coolers 150 Watts 90 Watts
Pedestal Fans 50 Watts 30 Watts
Exhaust Fans 250 Watts 150 Watts

If we just see the ceiling fans, the motors of these fans have a power rating of 75 watts which as per the new industry terms are inefficient.

If we assume all of the fans of India run just for 3 hours daily so the total power consumption per day by ceiling fans of India is around 56.25 GW of power.

India is a country where ceiling fans run for at least 7-8 months a year.

Let’s assume for 200 days. So the total power consumed in 1 year by these ceiling fans is around 11,250 GW.

Now let’s add the summer coolers to this calculation.

Coolers are required for at least 4 months in India. The induction motors used in summer coolers consume around 150 watts of power.

So if we assume that all the coolers run for at least 5 hours daily for 4 months, so the total power consumption will be around 270 GW. So just the ceiling fans and the coolers of India consume around 11500 GW of electricity in 1 year.

The point of concern is that India can reduce this power consumption by a very significant range by replacing the IE1 induction motors with IE3 induction motors, but it’s not happening.

Why It’s Not Happening?

2017 GOI Gazette Notice

In 2017 GOI released a Gazette Notice regarding the use of IE1 and sub-IE1 motors.

They stated that by September 2017 India will no longer use these highly inefficient motors and will switch to IE2 motors. But sadly due to lack of manufacturing capabilities and technology, no developer came forward to answer that notification.

Although in the last 2 year, BLDC motors have started to get recognition and it is expected that by 2023 all the IE1 motors based ceiling fans of India will be replaced by IE2 motors

What India is Doing in Energy Efficiency Market?

When we see India in the last 5 years, we can see that India has a broad portfolio of energy efficiency policies and programs which includes regulations, market transformation, fiscal policies, incentive-based instruments, and of course the awareness-raising. Out of all the awareness-raising is the slowest in action that we can be sure of.

Following are some of the government policies which target the energy demand growth:

  • The Smart Cities Mission launched in 2016. India aims to develop 100 smart and energy-efficient cities across the country.
  • The Atal Mission for Rejuvenation and Urban Transformation aims to establish efficient transport systems in 500 cities.
  • India is the first country in the world to have a Cooling Action Plan. The Indian Cooling Action Plan (ICAP) was launched in March 2019 by the MoEFCC. The ICAP provides a 20-year perspective and outlines actions needed to provide access to sustainable cooling.
How Can We Help?

Hope this information about Open Access Solar helps you.

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For more information, please give us a call at 011 4353 6666.

Note: All the calculations used in this article, are just to explain to you the importance of energy efficiency.

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    kamini ornate

    About The Author

    Kamini Gupta is the Content Developer at Ornate Solar. She is a solar enthusiast and has worked with several well-known solar brands and experts in India. She is also a poet and a storyteller and has performed in many open mics events.

    kamini ornate

    About The Author

    Kamini Gupta is the Content Developer at Ornate Solar. She is a solar enthusiast and has worked with several well-known solar brands and experts in India. She is also a poet and a storyteller and has performed in many open mics events.