Need for an energy disclosure policy
Editorial Notes

[Editorial Notes] Need for an energy disclosure policy

BEE needs to revisit, revive, and expand its star rating system for all designated consumers, especially buildings and the voluntary and confidential clause needs to be removed.
By IASToppers
June 12, 2020

Contents:

  • Introduction
  • Need for the move
  • Bureau of Energy Efficiency
  • Concept of BEE star rating
  • Rise and fall of star ratings
  • Disclosure of energy performance
  • Conclusion

Need for an energy disclosure policy

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Introduction:

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

Need for the move:

  • India loses a considerable portion of the electricity it generates at the supply end which needs effective remedies and solutions.
  • Due to the asymmetrical distribution of electricity, much of the power ends up in the bags of a privileged section of society that has been documented to waste it as well.
  • These performance disclosure requirements are anticipated to 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.
  • 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.
  • Discoms and commercial establishments, along with various industries, are the major energy consumers or the designated consumers.

Bureau of Energy Efficiency:

  • Bureau of Energy Efficiency was established by the Government of India on March 1, 2002, under the provision of Energy Conservation Act, 2001.
  • It is a statutory body under the Ministry of Power, Government of India.
  • BEE assists the government in developing policies and strategies related to Energy.
  • To promote energy efficiency and conservation, BEE introduced star rating system (varying from 1-5) for various electrical appliances as well as the commercial buildings.
  • The star rating system is a labelling system, under which the manufacturer is required to place a label indicating how much electricity the is likely to consume under pre-set conditions.

Concept of BEE star rating:

  • 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 consumer under the EC Act.
  • 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.

Rise and fall of star ratings:

  • BEE has been publishing the EPI and star rating earned by each rated building on its website including the ratings of BPO offices, hospitals, and retail malls etc.
  • But the ratings used different formulas than defined in the EC Rules, which led to confusion and criticism.
  • 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 etc.
  • Nevertheless, the policy was appreciated as 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. But the rating programme has almost been abandoned by BEE.
  • In the inaugural year (2009) of the star rating programme, 22 office buildings got rated.
  • The number grew to 68 buildings in 2010. But the programme has lost steam now 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).

Disclosure of energy performance:

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

Conclusion:

BEE needs to revisit, revive, and expand its star rating system for all designated consumers, especially buildings and the voluntary and confidential clause needs to be removed.

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. The wide-scale adoption of recommendations like Energy Conservation Building Codes for new constructions are the need of the hour.

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