|Grant||Multilateral Fund of the Montreal Protocol||USD 1 million||1%||Energy Efficiency|
|Grant||GEF||USD 6.3 million||8%||Energy Efficiency|
|Equity||Public, private sector and financial intermediary (IDBI)||USD 70 million||84%||Energy Efficiency|
|Carbon finance||Public-private carbon fund||USD 5.9 million||7%||Energy Efficiency|
|Total:||USD 213 million||100%|
The India Chiller Energy Efficiency Project (CEEP) seeks to improve energy efficiency of building chillers (a major source of power demand) and accelerate phasing out of ozone depleting substances by providing an incentive to overcome upfront capital cost barrier of replacement and upgrade of older CFC-based chillers by more efficient non-CFC-using ones. Despite potential 40% improvement in energy consumption indeed, most building owners/managers have not embraced early or even timely replacement of outdated chillers given higher upfront capital requirement, perceived technology risks and high opportunity costs.
The objective is to replace a total of 370 chillers (out of a total market size of about 1,200 chillers), over a period of 3 years, with an average incentive of 20%, leading to an estimated (direct and indirect) 13 MtCO2e reduction in GHG emissions over 20 years. It draws on an innovative combination of GEF and MLP resources (up-front subsidy for early adopters of new chiller technology) and carbon revenues (contributing to a revolving fund to support replacement of additional chillers). This project illustrates how a limited upfront provision (less than 10%) of highly concessional resources (mostly from GEF) can potentially mobilize a much larger amount of resources (total cost of replacement estimated at about US$80 million) with greater transformation impact (more than 25% of chillers are targeted), building on synergies and maximizing effectiveness of resources use and increasing their leverage. A similar project is being prepared in the Philippines while Indonesia has expressed also its interest.
Funds from the MLF are being used to structure the project and build capacity for implementation.
Grant funds from both GEF and MLF are being used to provide an up-front subsidy to chiller owners to encourage them to invest in the new equipment. Before incentives are disbursed to chiller owners, they must agree to render any future carbon credits and the related payments to the project.
These future carbon credits will be transferred to the project and the resulting revenue will be managed by the implementing agency (Industrial Development Bank of India - IDBI) as further incentive payments to replace additional chillers.
Of the targeted 370 chillers (out of a total market size of about 1200 chillers), 185 of them will be supported by the funding from GEF and 30 by the funding from the MLF. Another 155 chillers will be replaced through carbon credits earned from those units replaced by GEF and MLF and from chillers replaced in the subsequent years of the project by CDM revenues.
This is an on-going project and lessons learned will be posted upon project completion.
This is an on-going project and best practices will be posted upon project completion.