TheCityFix Labs India, launched in Hyderabad on October 8 in partnership with the Financing Sustainable Cities Initiative and Citi Foundation, is focused on finding innovative ways to connect India’s rapidly growing urban areas with basic services, like water, waste management and energy. One important element to this puzzle is building efficiency.

India’s buildings are silent power guzzlers. According to a 2018 survey conducted by the Ministry of Statistics, Planning and Implementation, residential and commercial buildings consume 29 percent of the country’s total electricity. As our cities grow, building energy demand is poised to balloon. According to the Global Buildings Performance Network, by 2030 India will have an addition of 35 billion square meters of new buildings. This growth will bring with it an increase in greenhouse gas emissions, with commercial buildings alone expected to produce 1.37 gigatonnes of CO2 equivalent by 2030.

Improving energy efficiency requires immediate attention because India is building now, and inefficiencies in new buildings will be locked in for the next 20-30 years.

Innovation and Entrepreneurship

There are four major types of building energy efficiency solutions:

1. Construction technology solutions, which promote better materials, improved building design and technologies for construction;
2. Energy efficient appliances and equipment, which can reduce household energy use significantly;
3. Renewable technology solutions, like rooftop solar; and
4. Monitoring and IT enabled solutions, including smart meters, the Internet of Things, and building energy management systems.

Construction is perhaps the most challenging solution type in India today. The unorganized nature of the sector, comprised of builders and contractors of varying sizes, capabilities, and capacities, and the lack of skilled construction workers, most of whom are migrant laborers, makes innovation and the implementation of sustainable building practices difficult. Builders lack incentives in training workers for construction projects that can run from a couple of months to several years.

The general perception among developers, buyers and investors is that efficiency does not increase the building’s value as an investment. Split incentives aggravate this, since the developer does not see value in providing this information to prospective buyers when electricity bills are paid by occupants.

Targeted Support

Since 2007, India’s Bureau of Energy Efficiency has launched several initiatives. They introduced the Energy Conversation Building Code (ECBC), empaneled several energy service companies (ESCOs that provide a range of energy efficiency solutions, and continued to build capacity for enforcement of existing regulations. However, these initiatives turned out to be non-starters, largely because mandating and enforcing the ECBC was the responsibility of state governments and municipalities, which resulted in inconsistent enforcement.

In order to address this, targeted implementation support in pilot cities or states might be a useful way forward. This could take the form of a phased approach of implementation and enforcement based on levels of institutional preparedness in different cities with the gradual addition of more geographies. In addition, a comprehensive strategy involving implementers, consumers, financial institutions and the private sector is crucial to encourage capacity building and dissemination of information, promote financial products and services, and facilitate innovation and entrepreneurship.

Capacity Building and Awareness

One of the key challenges is the lack of information available to building owners and residents on building energy performance. There is also a significant gap in testing, standardization and certification of green buildings. In the absence of certificates or ratings, buyers are unable to make informed choices and remain unconvinced on the savings of more efficient buildings and the costs of less efficient buildings.

Lack of technical expertise and inadequate supply chains make it difficult for implementation agencies to embed the ECBC into building bye-laws, as compliance by the industry and the government’s ability to enforce needs to go hand in hand.

Strengthening implementation capacity and increasing consumer awareness will help maintain consistency and standardization, as well as drive demand for energy efficient solutions.

Financing Mechanisms

Although several ESCOs were empaneled by the Bureau of Energy Efficiency, their access to finance continues to be hampered by the poor bankability of projects, which is dependent on reliable and verified energy consumption baselines to assess potential energy and costs savings. Financial products and instruments such as different types of equity, debt and grants are needed to help mitigate risks associated with the high initial investment.

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If we move forward with current standards, enforcement, architecture, and information and communications technology as they stand today, building owners and residents in India will face higher energy costs and high electricity consumption for decades, at the same time worsening air pollution and climate change impacts. Through TheCityFix Labs, WRI India is facilitating multi-stakeholder collaboration to help cultivate innovation in buildings as well as water, waste and energy. Bringing new solutions to scale could improve the lives of millions.

For more information on TheCityFix Labs India, visit wricitieshub.org/thecityfix_labs_india.

A version of this blog originally appeared on WRI India’s blog.

Sumedha Malaviya is a Senior Project Associate for Energy Efficiency with WRI India’s Energy Program.

Sanjoy Sanyal is a Senior Associate for Clean Energy Finance with WRI India’s Energy Program.

Monica Jain is an EPP consultant for Urban Development at WRI India Ross Center in Bangalore.