The Indian government has promoted energy efficiency through initiatives such as equipment labels, outreach activities, and voluntary building codes. Occasionally, it has implemented demand-side management (DSM) pilot programs. Beginning in December 2007, Lawrence Berkeley National Laboratory, in collaboration with the California Public Utilities Commission and the California Energy Commission, signed three agreements to promote DSM programs at India’s national level and in two states, Maharashtra and Delhi. In December 2009, the Indian government announced that the National Mission on Enhanced Energy Efficiency (NMEEE) will be implemented as of April 1, 2010. Four key approaches are envisioned under the NMEEE—creation of a market for tradable energy savings certificates for large industrial customers, market transformation, creation of a financing platform to facilitate energy service company activity, and development of a broader economic framework to support energy efficiency, e.g., tax incentives, public procurement, and similar measures.

This paper for the 2010 American Council for an Energy-Efficient Economy (ACEEE) Summer Study on Energy Efficiency in Buildings focuses on the market transformation approach included in the NMEEE. The authors examine how the NMEEE can foster ongoing efficiency activities in India, such as DSM programs that are initiated by regulatory commissions, administered by utilities, and funded by ratepayers. The study provides an overview of the existing institutions, legal and regulatory framework, availability and capability of the energy efficiency workforce, and the financial infrastructure that can support energy efficiency. Drawing from their experience in India with the design and implementation of DSM programs, the authors identify missing elements that are necessary for delivering energy efficiency and achieving the potential estimated in the NMEEE. They also present a critical review of previous energy efficiency initiatives in India. Finally, for Indian policymakers, the policy brief suggests a road map that incorporates the NMEEE and would be critical for rapidly achieving all cost-effective CO2 reductions through energy efficiency.