India: ESCO Concept for Wheel Producer
Wheels India, one of the world’s largest wheel manufacturers for commercial vehicles, is profiting from one of the few ESCO projects in India. The Energy Service Company (ESCO) Aspiration Energy has been delivering heat from a 1,365 m² vacuum collector field for almost two years now. The solar-heated water at 75 °C is used to degrease the wheels prior to final painting, a process which had been supplied by oil boilers before causing high energy costs. According to Aspiration Energy, the solar field saved as much as Indian Rupee (INR) 7 million in fuel oil over the first 18 months in operation. The promising results have convinced the wheel producer to plan the installation of additional solar water heating systems in factories across the country, from Haryana state to Uttar Pradesh, Uttarakhand, Maharashtra and Tamil Nadu. Photo: Aspiration Energy
Wheels India thought the ESCO concept to be very attractive for minimising costs and risks. The total investment of INR 21 million was financed fifty-fifty by the ESCO and Wheel India, the owner of the solar system (see the table below). The wheel producer refinances his investment of INR 10.5 million through accelerated depreciation (INR 6.5 million) and by subsidies of INR 7.5 million from different sources.
Aspiration Energy, on the other hand, is refinancing its loan through a 5-year-contract in which the wheel manufacturer agreed to pay 70 % of the saved oil costs to the ESCO in order to cover loan payments. Annual savings are estimated to be close to INR 0.4 million per month, assuming 300 days of normal sunlight. Aspiration Energy will receive 60 times INR 0.28 million over the term of the contract, which adds up to INR 16.8 million. The revenues cover the costs for the loan, interest, maintenance and profit.
| Total project costs | INR 21 million | |
| Partners Wheel India and Aspiration Energy share the investment costs | INR 10.5 million | INR 10.5 million |
| Aspiration Energy will recover invested money over 60 months @ INR 0.28 million/month, including interest on loan, maintenance and profit | INR 16.8 million | |
| Wheels India is refunded through accelerated depreciation | INR 7.5 million | – |
| Wheels India gets 30% subsidy benefit and some additional grants under UNDP project | INR 6.5 million | – |
Refinancing the total investment costs of INR 21 million (EUR 1 = INR 82)
Source: Aspiration Energy
Should Wheels India request to cancel the contract before the 5 years are over, the company will have to pay the entire amount as applicable for 5 years. This practically binds Wheels India to the contract with the ESCO, which has the added advantage of ensuring that the system is being maintained properly.
Bright future for ESCO projects in India
Aspiration Energy commissioned the project in late 2012, using vacuum tube collectors which “have a higher efficiency than flat plate collectors”. The company installed 105 collectors of 13 m² each on the rooftop, totalling 1,365 m². Bhoovarahan Thirumalai, CEO of Aspiration Energy, adds that “the mounting on the factory roof was a real challenge, as we had to come up with an intelligent structural design to ensure leak-proof perforation on the truss roof and distributed weight with less than 40 kg per m².”
Thirumalai and his team have already realised five ESCO projects and foresee a bright future for their sales model. The Ministry of New and Renewable Energy (MNRE) honoured the pioneer role of Aspiration Energy by presenting it with the Award 2013 for the successful development of an ESCO in the field of solar thermal technology.
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Photo courtesy: Aspiration Energy
