Demand Side Management

NPTI Faridabad
Slide Header
• Wikipedia
Actions that influence the quantity or pattern of use of energy
consumed by end users.
• World Bank
Systematic utility and government activities designed to change the
amount and/or timing of the customer’s use of electricity for the
collective benefit of the society, the utility and its consumers.
• Forum of Regulators (India)
“Demand Side Management” means the actions of a Distribution
Licensee, beyond the customer's meter, with the objective of altering
the end-use of electricity - whether it is to increase demand,
decrease it, shift it between high and low peak periods, or manage it
when there are intermittent load demands - in the overall interests of
reducing Distribution Licensee costs.

2
What is Power Distribution Business?
Meet the demand with Efficiency and Reliability so that Demand and
Supply on the electricity grid will be in balance at all times
 Efficiency Means : Low power cost, low loss, low operational cost, best
customer services

 Reliability Means : Power Quality and Availability

Demand
Supply
What is Power Distribution Business?
Meet the demand with Efficiency and Reliability so that Demand and
Supply on the electricity grid will be in balance at all times
 Efficiency Means : Low power cost, low loss, low operational cost, best
customer services

 Reliability Means : Power Quality and Availability

Demand
Supply
Present scope for improving system’s energy efficiency

Supply Side

Supply side management Focus of DSM as per definition

DSM: myth vs reality?
TPP

132 KV

EHT S/S
 Distribution network side actions
(not DSM)
66 KV  Distribution loss control
 Load shedding
 Use of renewable energy
LT S/S
11 KV
DISCOM

 End-use side actions (DSM)

Loads  Curtail usage hours
 Use of efficient devices
415 V  Use of solar devices
 Don’t use at all
 Power factor correction
End-Use
DSM: Two Main Flavors
• Energy efficiency (EE)
– Permanent reduction in consumption
across the load curve.
– Provides same or better energy service with
fewer kWh.

• Load Management (or Demand

Response)
– Temporary reduction in consumption at
times of system peak.
– May be associated with curtailment of
service.

Change: Technology, Price, Behavior,

Standards
DSM - Energy Efficiency
• Permanent reduction in consumption.
• Occurs across most hours of the load curve.
• Provides same or better energy service with fewer kWh.
– Example: replacing incandescent lighting with fluorescent
lighting.
– Example: replacing low-efficiency motor with high-efficiency
model.
• Reduces electric system energy usage and fuel needs.
• May or may not reduce system peak demand and
capacity needs.
Defining Energy Efficiency
• Energy efficiency is a way of expressing the energy
performance of an energy-consuming device or system.
• Energy efficiency generally relates energy consumption to
some other measure:
– GJ per unit of production output
– kWh per m2 per year (typical for buildings)
– kWh per 100 kg of ice (ice makers)
– lumens per watt (for lighting)
– kilometers per liter (automobiles)
• In some cases, energy efficiency is expressed without
reference to anything else.
– Example: for electric motors energy efficiency is expressed as %
conversion of electricity to useful work.
QUESTION: What are some examples?
• Replacing inefficient end-use technologies with more-
efficient models (non star with star labeled appliances).
• Retrofitting whole buildings with insulation, better
windows, better equipment to improve efficiency.
• Operating buildings and industrial plants more efficiently via
advanced use of information and control systems.
• Installation of efficient equipments and appliances at the
very first stage.
Defining Demand Response
• Demand Response refers to changes in electric usage by
end-use customers from their normal consumption
patterns in response to changes in the price of energy
over time or to incentive payments designed to induce lower
electricity use when prices are high or system reliability is
in jeopardy. DR salient features:
– Temporary reduction in consumption.
– Reductions targeted at a few specific hours, typically coincident with
system peak.
– May be associated with curtailment of service (but may not be
perceived or experiences as curtailment).
Need for DR?
900
100
800
700
600
Demand (MW)

500
400
300
200
100
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Time (Hour)
2012 Peak…

It can be seen that 100 MW demand occurs for 3 to 4 hours. The

possibility of shifting or reducing it needs to be evaluated.
DSM is mix of long term demand reduction and short term demand
management
What happens to automation need?

System Metering and Communication need?

impact

Temporarily
DR
reduced

Optimized Time of use/day

schedule tariff

Consumption Energy
Optimized Efficiency
Timing

Permanent Hours/Day Second/Hours

DSM strategies typically include...
Aim Impact on peak Impact on energy
demand demand
Reduce the overall energy
demand (energy conservation)

‘Clip’ demand at peak load

periods (load levelling)

Shifting to off peak hours (load

levelling) No change

Induce change in load as per

supply (load controlling) also may reduce
known as flexible load shape
Promotion of applications may increase
requiring electricity – electric
vehicles
Increasing load during off peak No change Increases
hours (load levelling)
Why are we concerned (1) – unserved demand
 Peak and energy shortage at around
5%.
 About 300 million consumers are not
connected to grid.
 Average load shedding of 6-10 hours
in many states.
 According to World Bank estimates,
almost 7 % of annual sales of Indian
firms is lost as a result of electrical
outage, compared to 3 % across the
world.
 Additional peak or base load
generating capacity, transmission and
distribution facilities required to serve
the unmet demand.

Training of Trainers for Capacity Building of DISCOM

Why are we concerned (2) – constraints in capacity addition
Identified Conventional Capacity Addition Constraints

Regulatory Resource

• Fuel Allocation
• Fuel Prices
• Market Competition

• Environment Clearances • Fuel Availability

• Land Acquisition • Human Resources
• Political & Social* • Financial Closure
• Geological Surprises*

• Equipment Supply
• Transmission
• Construction Equipment
• Transmission Evacuation
• Rail & Road Connectivity
Infrastructure Technical
* Uncontrollable constraints

Training of Trainers for Capacity Building of DISCOM

Why are we concerned (3) – rising power prices
 Average electricity prices are
highest in India amongst the
BASIC countries.
 Increasing trend in tariff bids by
generators in competitive bids
over the last 3-4 years.
 Average price will tend to
increase due to the increase in
land cost, O&M, and fuel cost.
 Prices will increase further if Case 1 Long term bid prices – INR/Unit
environmental compliance is
made stringent.
Continuous
Increase in land
increase in fuel
price
cost

Increasing Increasing
Operating and environmental
Maintenance Cost compliance cost

Training of Trainers for Capacity Building of DISCOM

Why are we concerned (4) – environmental impact

 As of July 2014, coal-based power plants accounted for

140GW, i.e. almost 65% of the total installed capacity
while contributing 73% in the total generated electricity.
 Out of the total 1,100 million tonne of GHG emissions from
the energy sector in 2007, emissions from electricity
generation was 719 million tonne (CO2-eq) and 90% of
this came from coal power plants.
 SPM, NOx, SOx and Hg are the other critical air pollutants
of concern from a coal power plant.
 About 80 GW coal power addition is planned in the 12th
five year plan.
 Other environmental impacts during mining and
transportation.
Training of Trainers for Capacity Building of DISCOM
Why are we concerned (5) - DISCOM’s Poor Financial Health

Aggregate Losses (Without Aggregate Losses (Subsidy

accounting for Subsidy) – All Utilities Received Basis) – All Utilities

(Source: PFC)

 Aggregate losses of the utilities with and without subsidy received basis increased over the
years.
 Performance of the utilities has been varying - states of West Bengal, Sikkim, Delhi and
Kerala have earned profits (without subsidy) on aggregate basis during the year 2011-12.
 However most states increased tariffs in last 2 years in spite of elections. Also a number of
ailing states accepted FRP which puts stringent conditions on utilities to improve
performance.
How does DSM affect the power purchase price?

Reduce/shift Demand Price

demand Reduction Reduction

Price of
USI load

Reduce/shift
Demand

Electricity
demand during Demand
peaks Economic DemandDR
Benefit Supply
Limit of
generation/ P
Price
network capacity Reduction

PDR

Demand
Reduction

TimeTime QDR Q Quantity

Importance of DSM across various consumer segments

Agriculture Residential Commercial Industry

Existing tariff Low Medium High Very High

Applicable for
Subsidy by Government High low end None None
consumer

Savings potential High High Medium Medium

Incentive for consumer

to invest in Energy
Low Medium High Very High
Efficiency (proportional
to tariff)
Globally, Regulations have emerged as the main drivers of DSM

IEA 2011(a); “Energy Provider-Delivered Energy

Efficiency”, © OECD/IEA 2013
Legislations and policies supporting DSM in India
• Energy Conservation Act 2001

 Standards & Code (Appliances, Buildings)

 Mandatory activities (Energy return filing, Energy Audit)
• Electricity Act Deepening
commitment;
 National Electricity Policy 2003
moving from
legislation to
 National Tariff Policy regulations,
programs,
 Draft DSM regulation prepared by FOR and schemes

 State level DSM regulation

• National Mission on Enhanced Energy Efficiency
2008
 Energy reduction target (PAT)
 Achieving energy performance benchmark (SEEP)
Energy Conservation Act, 2001

 EC Act 2001 provides for Legal Framework,

Institutional Mechanism & Regulatory mechanism
for Energy Efficiency, Conservation & related Specify energy
conservation norms for
matters appliances, equipments,
buildings and industries
 Establishment of BEE: Under Sec 3(1) of the act, a
statutory body Bureau of Energy Efficiency (BEE) was
created on March 2002. Promote innovative
financing of energy
 BEE’s mission is to develop Policy & Strategies to reduce
efficiency projects
Energy Intensity of India.

 Major intervention areas: Regulatory, Market

Transformation, Fiscal measures, Financial Incentives.
Evolution of Electricity Act in India 1910 - present

The The
The Indian Electricity Electricity
Regulatory
Electricity
Electricity Supply Act, 2003
Act, 1910 Act, 1948 Commission
Act, 1998
After 37 yrs After 49 yrs After 5 yrs

 Basic  Mandated  Reforms and

framework for creation of SEBs competition
electric supply  Setting up
 Private Central / State  Protection of
industry
sector Electricity consumer interest
 Provision for
participation in Regulatory
license (state  Efficient and
generation and Commission
govt.) for electric environment
transmission
supply for benign policies
specified area
Provisions of EA 2003 to promote efficiency in supply and demand side

SECTION 23: ….... for

maintaining the efficient
supply, securing the equitable
distribution of electricity….

SECTION 62: …..terms and

conditions for determination of SECTION 42(1): …the duty of
tariff to depend on “the factors a distribution licensee to
which would encourage develop and maintain an
EA Act, efficient, coordinated and
competition, efficiency, 2003
economical use of resources, economical distribution
good performance and system in his area of
optimum investment” supply….

SECTION 86(2): ….State

Commission shall advise the
State Govt. on 'promotion,
competition, efficiency and
economy in activities of the
electricity Industry’
Reference of DSM in National Electricity Policy, 2005
• NEP calls for the use of the most efficient technologies and more
funding for R&D
• The Policy emphasizes the need for conservation & DSM including a
national awareness campaign

CLAUSE 5.9.6: CLAUSE 5.4.9:

CLAUSE 5.9.2: CLAUSE 5.9.4: • Adoption of The SERCs
BEE would make • Initial approach
available the Suitable load should
would be management encourage use of
estimated voluntary and
conservation and techniques. pre-paid meters.
self-regulating • Differential In the first
DSM potential,
with emphasis tariff instance,
its staged
on labelling of structure. ToD meters for
implementation
along with cost
appliances. • Adherence to large consumers
estimates for • Gradually energy with a minimum
consideration in moving efficiency load of one MVA
the planning towards setting standards by are also to be
process. standards. utilities. Encouraged.
Evolution of DSM Regulations
DSM
Maharashtra regulation
notifies DSM notified in 14
Regulations states

Pre 2010 Apr 2010 May 2010 2010 - current

Discussion Draft DSM

Model DSM
on DSM regulation in
Regulations
regulations many others
by FOR
by States; states
FOR draft
paper in 2008 Became a
guiding
regulation for
ERCs to follow
Key features of Model DSM Regulation, 2010
• Constitution of DSM cell
• DSM process framework
• Roles and responsibility of distribution licensee and ERC
• DSM objective and target setting
• Timeline of activities
• Indicators for cost effectiveness
• Mechanism for cost recovery
• Incentives to distribution licensee
Note: The regulation aim to provide a guiding document to the States while
preparing DSM Regulations. Modifications/additions may be required to
incorporate State specific conditions/attributes. ERC may also need to
issue detailed guidelines to DISCOMs to properly explain the requirements
and modality of execution.
Constitution of DSM Cell
• Every Distribution Licensee has to constitute a DSM cell
within 1 month from adoption of DSM regulations
• Other activities to be done by DSM cell in a time bound
manner are also specified

1 month DSM Cell

After DSM notification

Load Research &

6 month Baseline data

1 year Formulation of DSM Plan

At least 6 months
before start of next Seeking approval to DSM
MYT control period Plan & Program
Role of DISCOM and ERC
Role of Distribution
Role of SERC
Licensee

Directs licensee: DSM Cell Follow ERCs order: Constitute DSM

constitution, conduct DSM related cell, conduct load research and load
activities, setting DSM objectives and survey, design and develop DSM
goal/target setting plan and projects

Issues guidelines: Cost effectiveness, Seek ERCs approval: Action Plan,

EM&V DSM program

Develops mechanisms: to recover Implement DSM programs: as per

DSM costs, incentives to DISCOMs ERC’s approved plan

Provides approval: DSM plan, DSM Monitor and Report:

project implementation Implementation progress, savings
DSM process framework
DSM objective and target setting
DSM objective
• Power shortage mitigation Key Consideration
- National EE objectives
• Seasonal peak reduction
- Consistent with BEE’s
• Cost effective energy savings plan
• Lowering the cost of electricity
• Reduction in emissions of GHG
DSM target setting
Key Consideration
• Percentage reductions in load growth - Load profile
• Savings in kW, kWh - Consumer mix
- Technical potential
• Savings as a percent of total resources /
investment to meet load
Mechanism for cost recovery
• Distribution Licensee shall identify the net incremental
costs, if any, associated with planning, design and
implementation of programmes
• Distribution Licensee may propose methodology for
recovery of net incremental costs through tariff or any other
mechanism
• In order to qualify for cost recovery, each program must be
i. Approved prior to implementation
ii. Implemented in accordance with the approved
program plan and
iii. Implemented cost effectively

Source: 2008 FOR report on DSM indicated consideration of higher return on investment for DSM – 2% for subsidized and 1% for
subsidizing category
Specifics not detailed in the Model DSM regulation
• DSM cell – Team’s desired Strength, Expertise, Experience
not indicated
 Objectives – Primarily based on shortage and savings.
What about reliability, affordability, sustainability?
• Goal/Target setting – no mention of economic potential
• Cost effectiveness – parameters not defined. Individual
measures vs bundled measures or whole programs
• Performance Incentive to DISCOMs – not defined
• Implementation Mechanism – utility driven or through
payment made to implementing party for resultant energy or
load reductions

Let us see how other states have customized the Model DSM regulation
and have made it specific.
Different channels through which DSM has been implemented in India

• National Level programs for different consumer

categories:
– Implemented by BEE (Standards & Labeling, PAT)
– Designed by BEE and implemented by States / DISCOMS (ECBC,
AgDSM, MuDSM)
• State level programs:
– Implemented by DISCOMs (Rebate based replacement, Load
shifting, Demand response, DSM Bidding).
– Implemented by ERC (Time of Day tariff, Power factor penalty).
– Implemented by State designated agencies (mainly in the form of
policies).
• Programs by EESL:
– Multi utility programs (Distribution Efficient Lighting Program).
– State/DISCOM/Municipality focused programs.
Standards & Labeling program
■ Aim: To provide customers an informed choice about the energy
savings & thereby cost saving potential.
■ Features: Enables consumers to distinguish energy efficient
product through a comparative or an endorsement label.
■ Coverage / Status: 17 Nos. Equipments / Appliances
(to increase to 27 Nos. by 12th Five year Plan)
■ Implementation: Mandatory notification, voluntary participation.
■ Load strategy: Strategic conservation
■ Cost recovery of investment: Product price

Room Air Conditioner Distribution Transformer DG Set

Ceiling Fan Domestic Gas Stove Water Heater
Color TV Frost Free Fridge Ballast
Computer Industrial Motor Solid state Inverter
Direct Cool Fridge Monoset Pump TFL
Submersible Pump Office Automation Product Diesel Engine-pump set
Perform Achieve Trade (PAT)
• Aim: A market-based mechanism to make improvements in EE
in energy-intensive large industries & facilities.
• Features: Mandatory Specific Energy Consumption reduction
target.
• Coverage: 478 large industries from 8 sectors.
• Implementation: Mandatory notification by MoP which is
implemented by covered participants.
• Load strategy: Strategic conservation.
• Cost recovery of investment: Energy savings, certificate
trading, product price.
Energy Conservation Building Code
▀ Aim: To inculcate practice of energy efficient design, construction & operation in new buildings
▀ Features: Minimum energy performance standards in terms of Energy Performance Index
(kWh/sq.m/yr)
▀ Coverage: 1) Connected load of 100kW or contract demand of 120kVA.
▀ Implementation mode: Notification by state govt. for amendment in building bye-laws which is to be
adopted by building developers
▀ Load Strategy: Energy Conservation
▀ Current status: 10 states notified. Over 300 ECBC Compliant buildings built till date
 Municipal DSM
■ Aim: To improve overall EE of Urban Local Bodies, leading to substantial
savings in electricity, cost & make municipality self sustainable.
■ Feature: 1) Identification of energy saving potential in municipalities
(building, street lighting & water pumping system)
2) Demonstration of best practice and new technologies.
■ Coverage: DPRs prepared for 138 urban local bodies targeting street lighting
and water pumping.
■ Implementation: By Municipalities (self or through ESCOs).
■ Load Strategy: Energy Conservation
■ Cost recovery of investments: Shared Savings in case of ESCO
Agriculture DSM:

▀ Aim: Reduce energy consumption & losses through replacement of in-

efficient pump with star rated pump.
▀ Feature: Mandatory use of star label EE pump-sets in new agriculture
connections.
▀ Coverage: Agriculture Pumping System
■ Implementation: By DISCOM through PPP i.e. ESCO
■ Load Strategy: Energy Conservation
▀ Cost recovery of investment: Shared Savings in case of ESCO
 DSM Potential (1/2)
Ideal scenario
Technical which sums all
Potential energy efficiency
measures that
are feasible given
Economic technology
Potential limitations.
The fraction of
the technical
potential that is
cost-effective.
Achievable The fraction of
Potential the economic
potential that is
attainable given
actual program
infrastructure and
societal and
market limitations.
Expected outcome from the activities
of DSM cell
Activities of DSM cell
Load research
Market survey
Potential estimation
Action plan preparation
DSM program preparation and
regulatory filing
DSM implementation
Monitoring and Reporting
Expected Outcome
Load duration curve, Load mix, Seasonal variation.
Usage pattern, existing penetration of EE, inclination
to shift towards EE.
Technical and economic potential, Input for goal
setting.
Prioritization of DSM measures, Implementation
process and schedule.
Designing a cost-effective program, mechanism of
cost recovery, implementation strategy and
schedule.
Selection of implementation partners, project
implementation, awareness creation.
Progress reporting of savings achieved.
 Need for Shift in Focus – Demand Side
Demand Response
• Demand response – A reduction or shift in
energy use during critical periods for short
duration delivered immediately. Demand
response is only needed occasionally and just
for a few hours during the critical time.

Energy Conservation
• Saving energy by taking an action that often
becomes a habit. e.g. Turning of lights when
you leave the room

Energy Efficiency
• A permanent reduction in energy use.
Energy savings are in place all the time
& driven mainly by equipment upgrades,
such as new lighting system.

Demand Response, Energy Conservation and Energy Efficiency provide an

alternative to new generation, helping stabilize the grid, and can help avoid blackouts.
4/18/2016 44
Thank You