Promoting energy efficiency and renewable energy in selected micro, small and medium enterprises (MSME) clusters in India

Promoting energy efficiency and renewable energy in selected
micro, small and medium enterprises (MSME) clusters in India

             GEF :    
              BEE :    


The project aims to develop and promote a market environment for introducing energy efficient technologies, and enhance the use of renewable energy technologies in process applications in five sectors - ceramic production, hand tool production, foundries, brass production, and dairy production, in a total of 23 MSME clusters. The goal is to improve the productivity and competitiveness of units, reduce the overall carbon emissions and improve the local environment.


The project works at cluster levels as well as at the policy level to achieve its aim with the following components:

  1. Increase capacity of suppliers of energy efficiency/renewable energy product suppliers/service providers/finance providers.
  2. Increase the level of end-use demand and implementation of energy efficiency and renewable energy technologies and practices by MSMEs
  3. Scale up the project to a national level.
  4. Strengthen policy, institutional and decision-making frameworks.

Expected Impact

  • 130 foundries implemented a total of 253 measures with a cumulative investment of 30 crore rupees. This resulted in energy savings of nearly 1,600 tons of oil equivalent, reduced greenhouse gas emissions by over 15,500 tons and achieved annual costs savings of 23 crore rupees.

  • The project documented 21 specific techniques, of which 8 typically require investment less than 2 lakh rupees, 7 require investment up to 10 lakh rupees and remaining 6 require over 10 lakh rupees in investment.

  • As part of the project, one foundry invested 44 lakh rupees to replace conventional cupola furnace with energy efficient 12 pulse induction furnace with a payback of 1.6 years only. Another firm installed efficient shot blast machine with 8.9 lakh rupees investment with a simple pay back of 3.7 years. The replacement of old motor with energy efficient IE3 motor achieved another foundry a pay back of 1.4 years on an initial investment of 2.8 lakh rupees. The addition of variable frequency drive to an existing screw compressor at cost of 2.9 lakh rupees achieved a payback in 8 months. Some foundries went further into renewable energy, with one foundry setting up 1 MWh solar plant with cost of 495 lakh rupees and expected pay back in 3.2 years.