Why you shouldn’t be bedazzled by Modi’s LED claims

Prime Minister Narendra Modi is proud of the government’s scheme to distribute millions of low-cost, energy efficient LED bulbs. And why not: Modi told the Lok Sabha on 7 Feb that the distribution of 21 crore LED bulbs had helped households save ₹11,000 crore in electricity bills. Even the name bears his unmistakable imprint: “Unnat Jeevan by Affordable LED for All”, whose acronym is UJALA, Hindi for illumination.

Unfortunately, these numbers are mostly fiction.

First, a brief history.  As with many other schemes that Modi has hogged the credit for, UJALA was designed and piloted by the UPA under the much less catchy name DELP (standing for — I kid you not — “Demand Side Management-based Efficient Lighting Programme”). DELP followed in the footsteps of the semi-successful Bachat Lamp Yojana that had resulted in the sale of 2.9 crore CFL bulbs at a price of ₹15 each and, the government contends, boosted demand nationwide by driving market prices down. In 2013, the UPA decided to apply this strategy to pricier but even more energy-efficient LED bulbs; while the first scheme was subsidised by carbon credits, DELP would be paid for by power distribution utilities out of the savings generated by shifting from incandescent to LED bulbs.

A Nov 2013 pilot project in Puducherry led to the distribution of 6.5 lakh LED bulbs to 2.5 lakh households at a subsidised price of ₹10 each. The government’s bulk order of 6 lakh LED bulbs caused the price to fall from ₹800 per bulb in 2012 ₹Rs 310, proof that the concept worked. As the chart below shows, successive orders caused bigger and bigger price drops, falling most recently (and controversially) to ₹38.

Screen Shot 2017-04-20 at 3.36.54 PM

There’s no question that the Modi government has taken UJALA forward, scaling it up with sales of 23 crore LED bulbs (as on 21 Apr). But if you think this was in any way a brainchild of Modi’s, or that Power Minister Piyush Goyal did much more than implement a roadmap already laid out for him, think again.

Still, how does it matter who came up with the idea, as long as it benefits the nation, right? The problem is that the claim of financial and energy savings is based on dodgy maths.

The government’s claims are based on a Sep 2015 PricewaterhouseCoopers (PwC) study that it sponsored, that looked at LED usage during pilot projects in Puducherry and in four Andhra Pradesh districts. The report stated that, once you factor in defective and unused bulbs, each LED bulb would produce an average saving of 134 kilowatt hours a year. Which translates into the savings Modi claimed in the Lok Sabha.

Multiply this by 77 crore LED bulbs, the planned total under UJALA, and you have a saving of 20,100 megawatts of peak load demand, equivalent to five ultra-mega power projects costing US$15-20 billion (₹97,000-1,29,000 crore), for only ₹3-4,000 crore. What’s not to like?

The issue is, the PwC study made overly strong assumptions to attain these savings. It assumed that all 77 crore 7-watt LED bulbs would replace 60-watt incandescent bulbs (which is fine) and, more problematically, that each would be used for an average of 8 hours/day, 320 days in a year, equal to 2,560 hours/year. Now this is perfectly reasonable if you live in Leh, India’s northernmost district, and every day is the winter solstice when you get 10 hours of proper daylight, and everyone sleeps only six hours; then you might conceivably leave all your LED lights on for 8 hours. But, seriously?

Indeed, a 2008 World Bank study calculated that a light bulb will be used 913 hours/year. Even the state-owned Energy Efficiency Services Ltd (EESL) that actually runs UJALA assumes that a light bulb is used for 3.5 hours/day, 300 days/year, for a total of 1,050 hours. These more conservative figures translate into savings that are only 36-41% of what Modi claimed in the Lok Sabha.

More reason to take a dim view of the Modi government’s claims.

Update 25 Apr

The state-owned EESL, which oversees LED bulb distribution, took issue with this analysis in a lengthy rebuttal carried on BloombergQuint on 23 Apr. EESL disagreed that LED bulb usage should be taken as 3.5 hours/day rather than 8 hours/day, pointing out that the former figure was recommended by the United Nations Framework Convention on Climate Change for carbon credits when actual usage data are unavailable.

EESL stated that a nationwide survey of 35 DISCOMs, and a study by PwC in Andhra Pradesh, showed that LED bulbs are used for 5-6 hours/day, and that “a conservative estimate of 5 hours has been taken for calculation”. Furthermore, it said that an Andhra Pradesh government monitoring survey carried out by “two leading educational institutions” found that actual usage was even higher at 8 hours/day.

Since EESL has not provided copies of these reports, it is difficult to independently verify these claims. For one, it is erroneous for EESL to state that “5 hours has been taken for calculation” when the original PwC report cited, and available on the government’s UJALA website, clearly states on Table 24 that bulbs are assumed to be operating 8 hours/day, 320 days/year.

It was also widely reported on 21 Feb 2016 that the Andhra Pradesh government-sponsored study of the districts of Guntur, Anantapur, Srikakulam and West Godavari (the same ones covered by PwC), by Andhra University in Vishakhapatnam and the Hyderabad-based Engineering Staff College of India, found that the actual average energy saving per LED bulb was 73.7 kilowatt hours (kWh), considerably lower than the 133.6 kWh that PwC projected. Assuming that both reports used the same methodology, this suggests that the actual LED bulb savings are 55 percent of what the government claims.

After the original analysis was published, Twitter user Somnath Mukherjee pointed out that the PwC study assumed an electricity price of ₹3.50/kWh, which may have further inflated the projected financial savings from LED adoption.

Consider the electricity tariffs offered by the Uttar Gujarat Vij Company Ltd in northern Gujarat. Depending on whether you are a rural, urban or “below poverty line” user, your first slab of 50 kWh/month of electricity costs somewhere between ₹1.50 and ₹3.50 per kWh; with nighttime usage between 10 pm and 6 am attracting a charge of ₹2.60/kWh. The true cost of the electricity used by LED bulbs, in northern Gujarat at least, is likely less than ₹3/kWh for the first slab in which the bulk of households will fall, rather than the assumed ₹3.50/kWh. This suggests that savings may in fact be inflated at two compounding levels: (1) the calculation of average use of a bulb and (2) the rupee savings per hour of usage.

To sum up, these inconsistencies need to be clarified, and I look forward to EESL releasing the methodology and findings of the various studies mentioned above. Until then, there is still reason to believe that the government’s projection of savings from LED bulb adoption is based on dodgy maths.

5 thoughts on “Why you shouldn’t be bedazzled by Modi’s LED claims

  1. swamy

    do you think this would be the reason that would tip the balance over? or is there more time to go on that?

    I wonder how true your last line in this article is. There are many more heinous things that can be attributed to the man, the party, and the environment of the state he hails from.

    This is, in my opinion, not the reason to start changing your views of the man. I think the hard lines are already drawn, those that love him will love him as a bhakt [ desh might come a distant second], those that hate him will not change their mind anymore.

    i, for one, am waiting to start hearing loud sounds any day now.

  2. swamy

    i am definitely dazzled by Mr Urjitbhai Ji Patelbhai Ji this morning.

    A man, who does not want to open his mouth in india, finds enough courage and reason to open his mouth and spew some wisdom in USA.

    Well, I am very happy that his voicebox has not stopped working.

  3. swamy

    I am today bedazzled by the claim of the RBI Governor Mr UrjitBhai Ji PatelBhai Ji, that no minutes of the meetings were kept since January 2016, on the issue of demonetization.

    Is anything written or filed by the current government, and its interactions with various entities, or is it all oral instructions?

    Basically, they are saying that there will be no evidence, hence there will be no future cases about any issue during their period of administration.

    I congratulate the civilization that has brought us to this state of affairs, and offer my encouragement to the powers that be, for future endeavors.

    On the other hand, i am happy that someone [in some sort of authority] is reading your posts, and is making efforts to contest the claims you make, even though they will not offer raw data to support their claims.

    This is an interesting situation, faith based policy. And it took only 3 years to come to that stage.

    Admirable.

  4. swamy

    I would like to advise you to be careful when taking on His Excellency The Andhra Pradesh Chief Minister.

    His excellency seems to be very anxious to use IT act, and other sundry laws to kidnap his critics [using his police force].

    Recently, their police kidnapped a facebook page operator [named political punch], picked him up secretly from his home in hyderabad, and took him across to their new capital amaravati, crossing state borders, and using 4-5 vehicles for that journey.

    They then had to let him go the next day, probably without any case. This means they just wanted to intimidate him.

    Unless you want a free ride to their capital, tread carefully.

    His excellency will also have multiple consultancy firms, and multiple data sets. If one does not suit you, His excellency can provide you with another.

    His excellency could also offer you incentives, and add you to His stable of reporters, who propagandize on behalf of the state. The state PR division will give fully written columns, you just need to add your name, and publish it.

    Good luck.

  5. swamy

    There he goes again.

    His excellency, the Andhra pradesh chief minister has managed to arrest another facebook poster on SC/ST atrocity section.

    That is currently the best section to arrest people, which results in immediate arrest, and carries the maximum penalty. possibly a minimum burden of proof too.

    Even if the case may not be proved or is thrown away, it first results in harassment of an individual. Fear is the motive, His excellency does not like critics.

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