Perform Achieve and Trade (PAT)

 

The Perform Achieve and Trade scheme is a market-based mechanism to enhance energy efficiency in the ‘Designated Consumers’ (large energy-intensive industries and facilities).  The scheme includes the following project steps:

  1. Goal setting: Set a specific energy consumption (SEC) target for each plant, depending on level of energy intensity (specific energy consumed = energy use / output) of that plant. The target will specify by which percentage a plant has to improve its energy intensity from the base line value in a period of three years.
  2. Reduction phase: Within a three-year period (2009-2012) the designated consumers try to reduce their energy intensity according to their target.
  3. Trading phase: Those consumers who exceed their target SEC will be credited tradable energy permits. These permits can be sold to designated consumers who failed to meet their target. Designated Consumers who fail to achieve their target have to compensate this failure by buying permits. If they fail to do either of this, they may have to pay penalties.

The energy consumption reported by designated consumers is based on audit by any of the BEE accredited agencies. The BEE may verify correctness of reported values.

The PAT Scheme is specific to the Designated Consumers only (except Railways). The PAT scheme is evolved in order to incentivise industry to achieve better energy efficiency target in a cost-effective manner. Identified industries are required to improve their SEC within specified period of three years or face penalty provisions under the mandate of the government. At the same time it provides incentive to efficient industries to trade their additional certified energy savings (that beyond the assigned target) can be with other designated consumers who could use these certificates to comply with their SEC reduction targets.

Energy Savings Certificates (Escerts) – How will it work?

Designated consumers will be given Specific Energy Consumption (SEC) targets to meet over a period of three years. If they succeed in meeting the threshold for the energy saving, they will have no obligation to buy ESCerts from others through the PAT mechanism. Those who have surpassed the target (i.e. achieved additional savings above the benchmark) will  qualify for earning Energy Saving Certificates (ESCerts), which could be traded with DCs  falling short of their targets. 

PAT Legal Framework 

The operational guidelines for the PAT framework to be implemented are embedded in the various sections of the Act as under 

Furnish report of energy consumption to the Designated Authority of the State as well as to BEE (section 14(k)) Designate or appoint an Energy Manager who will be in-charge of submission of annual energy consumption returns of the Designated Agencies and BEE (section 14 (l)) Comply with the energy conservation norms and standards prescribed under section 14 (g) of the Act Purchase Energy Saving Certificates (ESCerts) for compliance to section 14 (g) in the event of default.

The Act has been amended with the addition of new sub-section 14A to enable this and section 14A(2) allows such trading. EScerts are defined by adding a new sub-section 2(ma).

Monitoring and Verification of compliance by Designated Energy Auditors (DENA) which will be prescribed the Government/ BEE under section 14A/13 (p) of the Act Excess achievement of the target set would entail issuance of ESCerts under section 14A(1) Penalty for non-compliance being Rs. 10 lakhs and the value of non-compliance measured in terms of the market value of tons of oil equivalent by inserting a new section 26(1A) BEE to be the overall regulator and dispute resolution agency and Energy Efficiency Service Ltd. (EESL) to be the process manager

Key features of the Energy Saving Certificates

Energy Savings Certificates (ESCerts) issued to units where energy-efficiency improvements is in excess of targets EScerts can be traded and used for compliance purposes Trading can be carried out bilaterally or on special platforms created on the power exchanges ESCerts will be maintained in the DEMAT form and each ESCert will be equivalent to 1 Metric Tonne of Oil Equivalent (MTOE).

Conclusion 

PAT is a unique mechanism for institutionalizing energy efficiency. PAT has been rolled out from April 2011 and is targeted at savings 9.78 million metric tonnes of oil equivalent (mMTOE), which amounts to an avoided capacity of 5623 MW over a period of three years.

Many operators have more than one unit for the energy consumption. BEE has not yet provided guidelines for the exact boundary setting for the units Experts are divided over keeping the Energy efficiency improvement targets as “unit specific or at entity level. Clear methodologies are needed for the same. There is a great heterogeneity within each sector. Target Setting Energy Consumption Norms under the PAT mechanism may not be feasible with a single standard at sector level.