More than 11,500 street lights (standard fluorescent, mercury vapor, sodium vapor) were replaced with efficient, T5 fluorescent tube lamps as part of the energy efficient street lighting project by Akola Municipal Corporation (AMC), an Indian Urban Local Body (ULB) in the state of Maharashtra. The project used an energy savings performance contracting approach under which the contractor, Asia Electronics Limited (AEL), financed all investment costs, implemented the project, maintained the newly-installed lamps, and received a portion of the energy savings to recover its investment. Through the project, AMC was able to improve the service level of street lighting with lower costs and lower electricity bills.
The project resulted in annual energy savings of 2.1 million kWh (56%), representing reduced electric bills for the city totaling INR (Indian Rupee) 6.4 million (US$133,000) per year. Since the total project cost was only about INR5.7 million (US$120,000), the project payback period was less than 11 months. Because the project cost was entirely financed by AEL, acting as an Energy Service Company (ESCO), AMC did not have to make any upfront investment or assume performance risks under the project. Under the energy savings performance contract (ESPC), compensation to AEL was based on a shared savings approach under which AMC paid AEL 95% of the energy bill savings over the contract’s 6-year duration. AEL was also paid an annual fixed fee for maintaining the lamps and fixtures.
The project’s success has already led to similar projects being implemented in the states of Maharashtra and Madhya Pradesh. AEL, the World Bank, and Government of India are also pursuing options to mobilize carbon financing under the Clean Development Mechanism (CDM) to further enhance benefits to municipalities from such projects (e.g., Pune, Latur).
ESMAP. 2009. Good Practices in City Energy Efficiency: Akola Municipal Corporation, India - Performance Contracting for Street Lighting Energy Efficiency. ESMAP Energy Efficient Cities Initiative. Washington, DC: World Bank.