UJALA: Promoting use of energy efficient products?

India faces a stiff challenge of building an adequate power generation capacity while addressing environment concerns. It becomes imperative for the country to promote energy conservation and use of energy efficient electronic products as it would reduce power consumption and lower the pressure for capacity expansion.

Under - Unnat Jeevan by Affordable LEDs and Appliances(UJALA), the government intends to distribute energy efficient appliances at subsidized rates across the country. Presently, the government is distributing LED Lamps, Tubelights and five star rated fans.

How does UJALA Benefit?

Broadly, the government claims that there are three benefits from the UJALA programme. First, the use of energy efficient products reduces electricity consumption.

This would lead to monetary savings for consumers due to lower bills and energy savings for the country at large. Second, more than half of the country's power generation capacity comes from coal based thermal power plants.

These plants have an adverse environmental impact due to high CO2 emissions. Thus, energy savings can also contribute immensely towards reducing the increase in carbon emissions. Third, the main reason why consumers refrained from purchasing LED lamps/tubes earlier was the high initial cost. The reduced cost of lamps under the UJALA scheme because of bulk buying by the government has enabled the government to provide them to the public at affordable prices.

For instance, the price paid by government for procurement dropped by 85 percent from Rs. 310 per lamp in February 2015 to less than Rs. 40 in November 2016.

Similarly, the retail price of LED lamps has also decreased sharply in a span of few months.

Improving on the Bachat Lamp Yojana (BLY)

At least for LED lamps, the UJALA programme is not a novel intervention by the government. Earlier, the government used to run the Bachat Lamp Yojana (BLY) under which CFL lamps used to be distributed to the public at reduced prices.

As the CFL lamps were replacing power intensive incandescent lamps, the government could recover the cost of lamps through the sale of Certified Emission Rights (CERs). But, the scale at which the government has been able to implement UJALA is much larger as compared to the BLY.

How has been the progress so far?

Until now, the government has managed to distribute more than 23.5 crore LED lamps across the country through the local network of distribution companies.

This is already leading to annual monetary savings of more Rs. 12,200 crores. There has also been a reduction in carbon emissions of more than 2.4 lakh tonnes.

The distribution of LED tubelights and fans has not started in all the states currently. Presently, more than 21 lakh tubelights and more than 8 lakh fans have been distributed under the programme.

The five star rated (energy efficiency rating) are distributed at around Rs. 1100 as compared to the market price of more than Rs. 1500.

Conclusion

The Power Ministry should try to introduce a mechanism for monetization of emission reductions similar to the structure of the BLY. The sale of CERs can help in further reducing the cost to the consumer. We believe that the government should not broaden the scope of UJALA beyond these three products.

In line with the government's overall objective of 'Minimum Government, Maximum Governance', the programme should be limited to these essential electronic products. Moving forward, the government should initiate a holistic awareness programme for energy conservation.

(Nitin Mehta is managing partner, Ranniti Consulting and Research. Pranav Gupta is an independent researcher)