This story is from November 18, 2017

Electricity consumption in Indian homes a journey towards UJALA

Electricity consumption in Indian homes a journey towards UJALA
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BY- Aditya Chunekar
Lighting is the most basic use of electricity at home. Lighting’s share in the total residential electricity consumption is estimated to be in the 18%- 27% range. In 2013, about a billion-and-a -half lighting devices were sold in India; half of them being incandescent bulbs followed by CFLs (31%), tubelights (16%) and a negligible share of LED bulbs.
The following year, the government launched a programme to promote LED bulbs in Indian households and later named it UJALA (Unnat Jyoti by Affordable LEDs for All).
This is because LED bulbs consume less electricity, last longer, and do not contain mercury. The programme, arguably the world’s largest, has sold over 27 crore LED bulbs with no subsidy from the government. How did the programme change India’s lighting industry and consumer behaviour? What part of programme design worked and what can be improved? Answers to these questions can improve future programmes designed to better energy efficiency in India.
Innovative programme:Energy Efficiency Services Ltd (EESL), a public sector company, is responsible for implementing the UJALA programme. The company bought LED bulbs in bulk from manufacturers through multiple rounds of competitive bidding. The large volumes and assured sales incentivised the manufacturers to drop the bidding price from Rs 310 per LED bulb in the first round to as low as Rs 38 in later rounds. EESL sold these bulbs to consumers through contract vendors in co-ordination with the local electricity distribution companies (discoms), bypassing the retail supply chain and further bringing down the final distribution price. As a result, the current price of LED bulbs under UJALA is Rs 70, about half the price of the LED bulbs available in the shops. Yet, there is no subsidy from the government or the discoms. EESL also conducted innovative marketing campaigns to create public awareness.
Sales up, prices down: The UJALA programme transformed the LED lighting industry in India. Demand for LED bulbs has gone up by 50 times in the three years since 2014, while the retail market price (for bulbs sold beyond UJALA) has dropped to a third. The fall in prices can be attributed to the economies of scale achieved due to substantial demand creation by the UJALA programme, in keeping with the global trend of reduction in prices of the LED chips. India’s LED bulb manufacturing capacity has also grown substantially, with about 176 registered manufacturing units in India.

Incandescent bulbs: The increased demand for LED bulbs seems to replace the demand for CFLs instead of incandescent bulbs. Around 810 million incandescent bulbs were sold in 2016, a 5% drop over previous year’s sale, whereas the sales of CFLs have dropped by a third since their peak in 2013. The surveys corroborate this trend as we find that a considerably large proportion of the UJALA LED bulbs were used to replace CFLs, followed by incandescent bulbs and tubelights. The more the people replace CFLs with LEDs, lesser the savings that are actually realized. The samples of households in Pune were distributed across different income classes. A typical LED bulb saved 2.5 times more in a low-income household compared to a highincome household. This makes a case for programme to focus more on low-income households.
Bulb quality important: Our surveys foundthat 2% of LED bulbs failed in Pune within a year since the programme’s launch, while 14% of the LED bulbs failed in Puducherry three years after the launch. The bulbs sold in Pune carried a 3-year warranty, while the bulbs sold in Puducherry carried a warranty of 8 years. However, very few households got their faulty bulbs replaced. Lower expectations from a government programme and higher tolerance levels for faults in low-cost LED bulbs, ignorance about warranty, and hassles in process were cited as reasons for not replacing the faulty bulbs under warranty. To conclude, UJALA has created a large and sustainable market for LED bulbs in India using the no-subsidy, bulk procurement model. Demand for LED bulbs has increased manifold and the retail market price (for the LED bulbs sold beyond UJALA) has dropped by a third. It has also created a significant awareness about LED bulbs, further contributing to increasing demand. Going ahead, EESL can ensure stricter monitoring and evaluation of the programme. It can also focus on low-income households and small commercial establishments that are still buying incandescent bulbs.
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