Financial Schemes for MSMEs and Case studies on Energy...
Transcript of Financial Schemes for MSMEs and Case studies on Energy...
11 -13 August 2014, Indore
Financial Schemes for MSMEs
and Case studies on Energy
Conservation
Ananda Mohan Ghosh,
Fellow,
TERI
11 -13 August 2014, Indore
Contents
• EC Act 2001
• Nodal Banks /Agencies
• Financial Schemes – NMCP (TEQUP) – CLCSS – CGS
• Credit lines – JICA – KfW – AfD
• CFC Schemes for foundry
• Sizing of Equipment / Utility
• Case Studies on ECMs
• Gaps in SMEs to adopt EE technologies
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Energy Conservation Act - 2001
In order to promote energy efficiency in the country, Energy Conservation Act was enacted in October 2001 and became effective from March 2002. The Act provides regulatory impetus to energy efficiency activities in the country. Under the provisions of the Act, the Government of India set up Bureau of Energy Efficiency (BEE) on 1st March 2002 with the primary objective of reducing energy intensity of the Indian economy.
The Act empowers the Central Government and in some instances the State Governments to:
• Notify as designated consumers (DC)
• Establish and prescribe energy consumption norms and standards for DC
• Direct DC to designate or appoint CEM
• Direct DC to carry out DEA as per instruction
• Ask to furnish status of implementation of ECMs by DCs
• Comply with energy consumption norms and standards
• Prescribe energy conservation building codes
• Direct owners or occupiers of commercial buildings to comply EC building codes
• Direct mandatory display of label on notified equipment and appliances.
• Specify energy consumption standards for notified equipment and appliance.
• Prohibit manufacture, sale, purchase and import of sub standard notified equipment and appliances
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Energy Conservation Act (Amendment) 2010
Main Amendments
• DCs may be issued with energy savings certificate (ESC) for less
consumption
• DCs shall be entitled to purchase ESCs to comply with the prescribed
norms and standards for more consumption
• The value of ESC may be prescribed for per metric ToE of energy
consumed
• ECBC is applicable for commercial buildings with a connected load of
100 kW or contract demand of 120 kVA and above
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Nodal banks/ agencies
SL NO NAMEs
1 Small Industries Development Bank of India (SIDBI)
2 National Bank for Agriculture and Rural Development (Nabard)
3 State Bank of India
4 Canara bank
5 Bank of Baroda
6 Punjab National Bank
7 Bank of India
8 Andhra Bank
9 State Bank of Bikaner & Jaipur
10 Tamil Nadu Industrial Investment Corporation
11 The National Small Industries Corporation Ltd.
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Financial schemes for MSMEs
• National Manufacturing Competitiveness Programme (NMCP)
Scheme
• Credit Linked Capital Subsidy Scheme (CLCSS)
• Credit Guarantee Scheme
• ISO 9000 and ISO 14001 Certification Reimbursement
Scheme
• Financial Assistance for using Global Standard(GS1) in
Barcoding
• Sustainable Finance Scheme
• Subsidies/schemes for undertaking energy audits by various
state governments e.g. Maharashtra, Gujarat etc.
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National Manufacturing Competitiveness Programme (NMCP)
NMCP has 10 components are being implemented through the Public-Private-Partnership
(PPP) mode.
1. Lean Manufacturing Competitiveness Scheme
2. Enabling manufacturing sector to be competitive through Quality Management
/Standards/Quality Technology Tools (QMS/QTT)
3. Promotion of ICT (Information and Communication Technology) in MSMEs
4. Technology and Quality Up gradation Support to MSMEs (TEQUP)
5. Marketing Assistance and Technology Up gradation Scheme
6. Marketing Support/Assistance to SMEs (Bar Code)
7. Design Clinic Scheme for Design Expertise to MSMEs
8. Setting up of Mini Tool Rooms
9. National campaign for building awareness on Intellectual Property Rights (IPR)
10.Support for Entrepreneurial and Managerial Development of SMEs through Incubators
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TEQUP Scheme
• The Ministry of Micro Small and Medium Enterprises (MoMSME) launched the
scheme during May 2010currently in operation during the 12thPlan
• The main objectives of the TEQUP scheme are to sensitize MSMEs on energy
efficiency and encourage and support adoption energy efficient technologies
in the MSME sector to improve the competitiveness and provides support for
• Feasibility study – 75% of the cost (cap to 75 thousand)
• DPR preparation (set of 3) - 75% of the cost (cap to 9 lakh @ 3/DPR)
• EE technology adoption support -25% of the capital cost (cap to 10 lakh &
15% energy saving equipments - ONLY FOR APPROVAL)
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Details of CLCSS
The Scheme aims at facilitating technology up gradation by providing
upfront capital subsidy to SSI units, including tiny, khadi, village and coir
industrial units, on institutional finance (credit) availed of by them for
modernization of their production equipment (plant and machinery) and
techniques (LISTED TECHNOLOGY)
• Launching capital subsidy in October, 2000 – 12% (capital cost
cap to 40 lakh = 4.8 lakh) and revised to 15% since
September 2005 (capital cost cap to 100 lakh = 15 lakh)
• Under the scheme approximately 22000 units have availed subsidy
of Rs. 1146 crore till 31 March 2013.
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Details of CGS
• launched by the Government of India to make available
collateral-free credit to the micro and small enterprise sector
(August 2000)
• Nodal bank - Small Industries Development Bank of India
(SIDBI)
• established a Trust named Credit Guarantee Fund Trust for Micro
and Small Enterprises (CGTMSE) to implement the Credit
Guarantee Fund Scheme
• Covers collateral free credit facility to new and existing micro and
small enterprises for loans up to INR 100 lakh per borrowing unit
(including all –WC, Term loan etc.)
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Details of Credit Lines
• Special credit line to borrow finance from banks / financial institute at very low rate of interest broadly to promote energy efficiency and address various challenges posed by the entry of multinational companies in the domestic market.
• SIDBI has been identified as a Nodal Agency for the releasing of assistance, monitoring, interface and coordination with Financial Institutions, Banks and the Government for such special line of credits scheme.
• List of schemes • JICA – SIDBI financing scheme • KfW – SIDBI financing scheme
• KfW-Energy Efficiency Scheme • KfW-Cleaner Production Scheme • KfW Innovation Finance Programme
• AfD – SIDBI financing scheme
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CFC Scheme for foundry cluster
• A group of at least 25 SME foundry unit register under MSME within a cluster can avail financial support under this scheme to establish CFC for sand reclamation and other common facilities.
• SMEs are encouraged to avail the benefits under the scheme to avoid lengthy procedure of soft intervention for establishing such facilities.
• Other details
Operating authority - The office of Development Commissioner, Ministry of MSME
Eligibility criteria – member of 25 MSME registered units within cluster
Financial support - 70 % by Central Government (Investment capped to Rs 15 Crores = 10.5 crore; and balance 30 % by SPV /State Government)
DSR with assistance of professional expert or institute – 2.5 lakh (report to be submitted by 3 months)
DPR with assistance of professional expert or institute – 5 lakh
• Approval
on positive response from SIDBI after vetting the DPR, Steering Committee will accept
the DPR for execution and release financial grant from Government to SPV through State Government Agency
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Equipment specifications
• Sizing
• Application
• Operational parameters (maximum , minimum)
• Controlling mechanism
• Start from PoU to PoG/Source
• Discussion with suppliers
• Check for unit conversion
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Case study: ECM-1
Replacement of existing inefficient cupola of 2.2 TPH with efficient induction furnace of 450 kW with crucible capacity of 500 kg
Parameters Unit Existing Proposed
Melting furnace (type) Cupola Induction
Melting rate (-) 2.2 TPH 500 kg/batch
Annual melting (MT/year) 1430 1430
Specific Energy consumption
(Unit/MT) 182.5 kg coke 550 kWh
Energy Rate (Rs/unit) 29.5/kg 7.4/kWh
Annual energy cost (Rs in lakh/year) 77 58
Monetary benefits (Rs in lakh/year) - 19
Investment Rs - 30
Payback period year - 1.6
Annual CO2 emission tCO2/year 887.4 700
CO2 avoided tCO2/year - 187.4
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Case study -1: Views of furnaces
Base case (Cupola) Post implementation (Induction)
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Case study: ECM-2
Installation of EE induction furnace
Parameters Unit Value
Capacity kW 175
Crucible Kg 150
Specific energy consumption kWh per tonne 650
Cost benefit analysis
Existing SEC kWh per tonne 850
Proposed SEC kWh per tonne 650
Baseline production tonne per year 432
Annual Saving kWh per year 86,400
Electricity cost Rs per kWh 7.03
Monetary Savings Rs lakh per year 6.07
Investment cost for induction furnace and cooling tower
Rs lakh 12.72
Simple payback period Years 2.2
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Case study : ECM -3
Parameter Unit AC-1 AC-2 AC-3 (VFD)
Capacity cfm
519.13 127.5 210
Existing practice - Main (base AC) Stand by AC NA
Recommended - Discard Base AC Variable load
Specific Power Consumption
kW/cfm 0.414 0.190 0.180
Annual operation hour 7200-850=6350
7200 7200
Energy consumption from loading kWh/year 552450 174420 291600
Unloading time Minute/hour 0 0 15
Energy saved from unloading
kWh/year 0 0 22500
Energy saved kWh/year 108930
Rate INR/kWh 6.77
Monetary saving Lakh/year 7.37
Investment cost INR in lakh 8.48
SPP Year 1.15
Installation of EE compressor with VFD
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Case study: ECM-4
Installation of down size compressor
Present Case Unit Motor of soft water pump
Present drive kW kW 15
Measured kW kW 17.8
Full load efficiency 70%
Full load power kW 21.43
Operating efficiency 71%
Demand factor 0.83
Operating losses old kW 5.19
Proposed Case
Proposed energy efficient motor kW kW 15
Full load efficiency of new drive 91%
Full load power kW 16.43
Operating efficiency of new drive 91%
Demand factor new 1.08
Operating losses new kW 1.58
Savings
Reduction in losses kW 3.61
Operating hours hrs 7,200
Energy savings kWh 25,989
Cost of electricity INR/kWh 7.33
Monetary saving INR/year 1,90,502
GHG emission factor tCO2/MWh 0.89
CO2 avoided t CO2 / yr 23.13
Energy saving per year toe/yr 2.24
Investment INR 39,150
SPP year 0.21
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Case study: ECM-5
Installation of EE raw water pump for induction furnace cooling
Parameters Unit Existing Proposed
Pump efficiency % 27 49
Flow rate m3 per hour 14.1 21.6
Input power kW 6.0 5.5
Annual operating hours hours per annum 4,800 4,800
Annual energy saving kWh per year - 2,277
Monetary benefits Rs per year - 16,006
Investment Rs - 26,381
Payback period years - 1.65
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Case study: ECM-6
Installation of Metal Halide lamp instead of Mercury Vapour Lamp in phase manner
Particulars Unit Existing Proposed
Type of lamp - MVL Metal Halide
Wattage of lamps W 250 150
Design Lumen (Approx.) Lumen 12,500 13,000
Watt loss per ballast W 15 15
No. of lamps to be replaced No. 16 16
Average Operating Hours per day Hours/Days 10 10
Operating day /year No. 300 300
Energy consumption kWh/year 12,720 7,920
Energy savings kWh/year 4,800
Energy Cost Rs/kWh 8.03
Energy cost savings Rs/ year 38,556
Initial retrofitting cost / lamps Rs 3,110
Initial investment cost Rs 49,760
Payback period Years 1.29
GHG emission factor tCO2/MWh 0.89
CO2 avoided t CO2 / yr 4.27
Energy savings toe/year 0.41
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Case study: ECM-7
Installation of T-5 instead of T-12 FTL
Particulars Unit Existing Proposed
Type of lamp - T-12 T-5
Wattage of lamps W 40 28
Design Lumen (Approx.) Lumen 3,200 2,900
Watt loss per ballast W 12 2
No. of lamps to be replaced No. 12 12
Average Operating Hours per day Hours/Days 10 10
Operating day /year No. 300 300
Energy consumption kWh/year 1,872 1,080
Energy savings kWh/year 792
Energy Cost Rs/kWh 8.03
Energy cost savings Rs/ year 6,362
Initial retrofitting cost / lamps Rs 585
Initial investment cost Rs 7,020
Payback period Years 1.10
GHG emission factor tCO2/MWh 0.89
CO2 avoided t CO2 / yr 0.70
Energy savings toe/year 0.07
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Gaps in SMEs-EE technology adoption
• Production capacity expansion gets top priority
• Unpredictability of future business due global economic downturn
• Financial analysis is highly sensitive to the external factors (different
market scenario)
• Change in government regulation/policy (affect the viability of the unit)
• High capital cost, fear of underperformance and disruption of routine
cycle due to troubleshooting
• Low awareness on various financial schemes promoting ECMs
• Shortage of skilled staff and lack of knowledge/information on
technological options
• Force of habits resist any change in routine operating practices
• Low priority segment for EE technology supplier due to perceived notion
of lower scale of business