Assessment of the market potential for a financing programme on energy efficient residential buildings in India

In the midst of a rising demand for the construction of new buildings and a considerable increase in electricity consumption, the Indian residential building sector offers both cost and energy savings potentials. To set minimum standards for energy efficiency (EE) in buildings, the Bureau of Energy Efficiency (BEE) prepared a first draft of the Energy Conservation Building Code for residential buildings (ECBC-R) in January 2018. The draft is further developed with the support from the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Besides this code, various voluntary certification schemes for green buildings such as the Green Rating for Integrated Habitat Assessment (GRIHA), the Indian Green Building Council (IGBC), and the Leadership in Energy and Environmental Design (LEED) have gained considerable attention. To enhance further progress, adequate financing schemes and clear standards for EE in residential buildings are required.

In this context, the State Bank of India (SBI), supported by the KfW, plans to design and implement a housing programme to finance EE in residential buildings. Through a credit line, SBI would provide loans to project developers and individuals for EE measures in buildings. To prepare for such a programme, an overview of the current housing sector in India is required. Moreover, proper EE standards need to be defined so that they comply with KfW requirements, while also considering the Indian market conditions.

adelphi performed this assessment by preparing an overview of the Indian housing market and comparing the EE housing certificates commonly used in India with the help of the EnEff:ResBuild India toolkit. This toolkit, which was used to assess a building’s energy performance and energy savings, has been developed by the Fraunhofer Institute and The Energy and Resources Institute (TERI) in cooperation with the KfW. In addition, the characteristics of the target groups and possible critical risks of the potential housing programme were analysed. Based on the results, recommendations for adequate EE minimum requirements for residential buildings that meet KfW standards were provided. This analysis has been used to support the appraisal of a potential credit line for EE buildings in India.