The Centre has set up a green fund with an initial contribution of Rs. 2 crore to promote and implement energy efficiency and conservation programmes in the States, a Power Ministry official said.

“It is important to work with the States in the direction of energy conservation. In order to implement energy conservation measures in a more effective way and with the involvement of different States, the State Energy Conservation Fund has been created with an initial amount of Rs. 2 crore,” Director of the Bureau of Energy Efficiency, part of the Power Ministry, Ajay Mathur said.

The State Energy Conservation Fund will be built with contributions from the States that will chip in at least Rs 2 crore each towards the initiative, Mr. Mathur added.

Although the plan has been put to action, the Fund would be fully operational only by fiscal 2011-12, Mr. Mathur told PTI.

However, several States have already sent requests for grants from the Fund. “So far, we have received proposals from Kerala, Haryana, Rajasthan and Chhattisgarh, which we are evaluating. Other States have also evinced interest in this direction.”

Further the States have also indicated the creation of a State Defined Agency (SDF) for energy conservation on the lines of the Bureau of Energy Efficiency.

SDF will help the Special Economic Zones, Small and Medium Enterprises (SMEs) and other areas become more energy efficient.

To meet the rising power demand, the government has targeted generating 1 lakh MW in the XII Plan Period (2012—17). The government also believes that energy conservation will be able to save about 25,000 MW.