ESCO Model for Energy Efficiency in Kerala

Why in news?

Kerala's Energy Management Centre (EMC) is promoting the Energy Service Company (ESCO) model to encourage energy efficiency projects in institutions and industries, especially amid a monsoon-season power crisis.

Key points

1. 1The ESCO model allows energy efficiency projects without upfront capital investment from the implementing entity.
2. 2ESCO companies undertake investment and implementation, recovering costs from verified energy cost savings.
3. 3This model helps modernise energy systems, reduce operating costs, and lower emissions.
4. 4Priority is given to large commercial buildings, hotels, hospitals, and industries like chemicals, pharmaceuticals, and textiles.
5. 5EMC acts as the State Designated Agency (SDA) for Bureau of Energy Efficiency (BEE) programmes in Kerala.

Background & context

Energy efficiency is crucial for sustainable development and reducing reliance on fossil fuels. The ESCO model is a performance-based contract where ESCOs provide services to improve energy efficiency, and payment is based on the achieved savings. The Bureau of Energy Efficiency (BEE) is a statutory body established under the Energy Conservation Act, 2001.