Even as a monsoon-season power crisis in Kerala has restated the importance of efficient energy use, the State government agency Energy Management Centre - Kerala (EMC) has invited institutions and industrial and commercial establishments to make use of the Energy Service Company (ESCO) model for implementing energy efficiency projects.

What makes the ESCO model attractive is that entities can implement energy efficiency improvement projects without upfront capital investment. The ESCO undertakes the investment and implementation of the selected energy efficiency measures, and the project cost is recovered from the verified energy cost savings that are generated.

“This approach enables facilities to modernise energy systems, reduce operating costs and lower emissions while minimising the financial burden of initial investment,” according to the EMC, which is also the State Designated Agency (SDA) for Bureau of Energy Efficiency (BEE) programmes in Kerala.

Project cost

The ESCO recovers the project cost through a percentage of the savings in energy cost made by the establishment by implementing such projects, R. Harikumar, Director, EMC - Kerala, said. The projects are cleared subject to their viability and the agreed contractual arrangement.

For the current programme, the EMC is giving priority to large commercial buildings, hotels, hospitals, and industries that focus on chemicals, pharmaceuticals, textiles, food and beverage processing, metals and engineering. Minimum indicative requirements include a monthly energy expenditure of ₹25 lakh or above; heating, ventilation and air conditioning (HVAC) system capacity of 500 TR (Ton of Refrigeration) or above; and significant hot-water demand with potential for heat-pump applications.

Producing only 30% of its electricity requirement, Kerala is currently battling a peak demand shortage with power curbs on a limited scale. Increase in electricity demand, low water storage in the reservoirs for hydro generation on account of poor southwest monsoon rainfall and the rise in the nationwide demand for electricity due to El Nino-linked warm temperatures have been cited as reasons.

Published - July 26, 2026 03:48 pm IST