Expand the use of LED bulbs in Indian households to improve energy-efficiency

Executive Summary

Pay-as-you-save (PAYS) is a model in which a utility or other service -provider covers up-front financing of cost-saving activity and passes this on to the customer over time through a voluntary tariff. The customer’s total tariff remains equal or lower as a result of the cost-savings action.
PAYS originally emerged as a model in which a utility’s customer chooses improvements to be made to gain service utilization efficiency (for example, the acquisition of a smart meter, or more efficient light bulbs), and the utility pays a contractor to make the improvements. The customer accepts a voluntary tariff from the utility through which the contractor’s cost is repaid, and this voluntary tariff is, in turn, offset by the customer’s savings. The utility has certainty in recovery and reduces its load, and the client benefits from costs cost savings without having to pay up-front for the improvement.
A successful and frequently cited example of the PAYS model is the Affordable LEDs for all program, implemented by the Indian company Energy Efficiency Services Ltd (EESL). It was implemented to develop the use of LEDs in the country and achieve energy efficiency, as LED lights provide better illumination and are 50-55% more efficient than traditional yellow lights. EESL works with consumers through pay-as-you-save mechanisms, with utilities through on-bill financing, and with manufacturers through annuity financing for municipal street lighting. This model is now being expanded by EESL to other geographies including the UK and Saudi Arabia, to scale-up demand-side measures.