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in energy consumption indeed, most building owners/managers have not embraced early or even timely replacement of outdated chillers given higher upfront capital requirement, perceived technology risks and high opportunity costs.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.