Asian Development Bank Invests US $200M in LED Light Upgrade in India

A new $200 million Asian Development Bank (ADB) loan will finance installation of millions of energy-efficient lights in streets and homes and energy-efficient water pumps in farms across India, leading to energy savings of around 3,800 gigawatt-hours per year, equivalent to the annual output of two 300-megawatt coal-fired power stations. 

"Energy efficiency is by far the least costly option to ensure or expand energy access while still cutting deadly greenhouse gas emissions and other pollutants," said Hun Kim, Director General of ADB's South Asia Regional Department. "With India one of the world's largest and fastest-growing economies, getting the country firmly on a path of low-carbon growth will have an impact not only at home but for the rest of the world too."

ADB will provide the funds to Energy Efficiency Services Ltd. (EESL), a joint venture between four public sector bodies - the National Thermal Power Corporation, Powergrid Corporation of India, Power Finance Corporation, and Rural Electrification Corporation - established in 2009. EESL will use the ADB funds, alongside another $200 million of its own, to finance energy service activities, which often have trouble accessing commercial finance for energy-saving projects.

EESL will make loans available for installing light-emitting diode (LED) municipal streetlights, energy-efficient domestic lights and fans, and energy-efficient agriculture water pumps. The entire $400 million project will install 1.5 million LED street lamps, 42 million LED household lamps, ceiling fans and LED tube lights, and 225,000 new pumps. Lending will be made available in Andhra Pradesh, Goa, Karnataka, Maharashtra, Rajasthan, Telangana, and Uttar Pradesh, as well as other states going forward. 

ADB hopes the success of these subprojects will attract more investment into energy efficiency. EESL has an ambitious longer-term target of installing 4.5 million streetlights, 700 million LED bulbs, and 6 million energy-efficient pumps by 2020 that would require investment of more than $12 billion. 

Under the recently agreed Paris climate agreement, India has committed to cutting the energy intensity of its economy by 33% from 2005 levels by 2030. A recent ADB study estimated that achieving an intermediate reduction of at least 20% by 2020 would require investing about $68 billion in energy efficiency measures in India alone. 

The Indian government's National Mission for Enhanced Energy Efficiency has already launched several initiatives  to enhance energy efficiency in energy intensive businesses and hopes to unlock the market for energy efficiency projects that is estimated at more than $11 billion or Rs740 billion. Using more LED lights and fans in homes and institutions will mean energy savings of 80%, LED streetlights bring savings of 50%, and efficient water pumps will save 30% of energy.  

ADB has also committed to doubling its annual financing for climate change mitigation and adaptation in the region to $6 billion by 2020.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

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