Demand Side Management

1. Demand Side Management NPTI Faridabad

2. 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

3. 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 Supply Demand

4. 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 Supply Demand

5. Present scope for improving system’s energy efficiency Supply Side Focus of DSM as per definitionSupply side management

6. DSM: myth vs reality?  Distribution network side actions (not DSM)  Distribution loss control  Load shedding  Use of renewable energy  End-use side actions (DSM)  Curtail usage hours  Use of efficient devices  Use of solar devices  Don’t use at all  Power factor correction TPP EHT S/S 132 KV LT S/S Loads End-Use 66 KV 11 KV 415 V DISCOM

7. • 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: Two Main Flavors

8. • 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. DSM - Energy Efficiency

9. 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.

10. • 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. QUESTION: What are some examples?

11. 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).

12. Need for DR? 0 100 200 300 400 500 600 700 800 900 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Demand(MW) Time (Hour) 2012 Peak… 100 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.

13. DSM is mix of long term demand reduction and short term demand management Energy Efficiency Consumption Optimized Optimized schedule Temporarily reduced Time of use/day tariff DR Permanent Hours/Day Second/Hours Timing System impact What happens to automation need? Metering and Communication need?

14. DSM strategies typically include... Aim Impact on peak demand Impact on energy 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 known as flexible load shape may reduce Promotion of applications requiring electricity – electric vehicles may increase Increasing load during off peak hours (load levelling) No change Increases

15. Training of Trainers for Capacity Building of DISCOM 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.

16. Training of Trainers for Capacity Building of DISCOM Why are we concerned (2) – constraints in capacity addition Infrastructure Resource Technical Regulatory • Environment Clearances • LandAcquisition • Political & Social* • Equipment Supply • Transmission • Construction Equipment • Transmission Evacuation • Rail & Road Connectivity • FuelAllocation • Fuel Prices • Market Competition • FuelAvailability • Human Resources • Financial Closure • Geological Surprises* Identified Conventional Capacity Addition Constraints * Uncontrollable constraints

17. Training of Trainers for Capacity Building of DISCOM Why are we concerned (3) – rising power prices Continuous increase in fuel cost Increase in land price Increasing Operating and Maintenance Cost Increasing environmental compliance cost  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 environmental compliance is made stringent. Case 1 Long term bid prices – INR/Unit

18. 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.

19. Why are we concerned (5) - DISCOM’s Poor Financial Health (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. Aggregate Losses (Without accounting for Subsidy) – All Utilities Aggregate Losses (Subsidy Received Basis) – All Utilities

20. How does DSM affect the power purchase price? Price of Electricity P PDR Supply Demand DemandDR Quantity Price Reduction Demand Reduction QQDR Economic Benefit USIload Time USIload Time USIload Time Demand Reduce/shift demand during peaks Time Limit of generation/ network capacity Reduce/shift demand Demand Reduction Price Reduction

21. Importance of DSM across various consumer segments Agriculture Residential Commercial Industry Existing tariff Low Medium High Very High Subsidy by Government High Applicable for low end consumer None None Savings potential High High Medium Medium Incentive for consumer to invest in Energy Efficiency (proportional to tariff) Low Medium High Very High

22. IEA 2011(a); “Energy Provider-Delivered Energy Efficiency”, © OECD/IEA 2013 Globally, Regulations have emerged as the main drivers of DSM

23. Legislations and policies supporting DSM in India • Energy Conservation Act  Standards & Code (Appliances, Buildings)  Mandatory activities (Energy return filing, Energy Audit) • Electricity Act  National Electricity Policy  National Tariff Policy  Draft DSM regulation prepared by FOR  State level DSM regulation • National Mission on Enhanced Energy Efficiency  Energy reduction target (PAT)  Achieving energy performance benchmark (SEEP) Deepening commitment; moving from legislation to regulations, programs, and schemes 2008 2001 2003

24. Energy Conservation Act, 2001  EC Act 2001 provides for Legal Framework, Institutional Mechanism & Regulatory mechanism for Energy Efficiency, Conservation & related matters  Establishment of BEE: Under Sec 3(1) of the act, a statutory body Bureau of Energy Efficiency (BEE) was created on March 2002.  BEE’s mission is to develop Policy & Strategies to reduce Energy Intensity of India.  Major intervention areas: Regulatory, Market Transformation, Fiscal measures, Financial Incentives. Specify energy conservation norms for appliances, equipments, buildings and industries Promote innovative financing of energy efficiency projects

25. The Indian Electricity Act, 1910 The Electricity Supply Act, 1948 Evolution of Electricity Act in India 1910 - present  Basic framework for electric supply industry  Provision for license (state govt.) for electric supply for specified area  Mandated creation of SEBs  Private sector participation in generation and transmission  Setting up Central / State Electricity Regulatory Commission After 37 yrs After 49 yrs  Reforms and competition  Protection of consumer interest  Efficient and environment benign policies Electricity Act, 2003 After 5 yrs The Electricity Regulatory Commission Act, 1998

26. Provisions of EA 2003 to promote efficiency in supply and demand side EA Act, 2003 SECTION 23: ….... for maintaining the efficient supply, securing the equitable distribution of electricity…. SECTION 62: …..terms and conditions for determination of tariff to depend on “the factors which would encourage competition, efficiency, economical use of resources, good performance and optimum investment” SECTION 42(1): …the duty of a distribution licensee to develop and maintain an efficient, coordinated and economical distribution system in his area of supply…. SECTION 86(2): ….State Commission shall advise the State Govt. on 'promotion, competition, efficiency and economy in activities of the electricity Industry’

27. Reference of DSM in National Electricity Policy, 2005 CLAUSE 5.9.6: • Adoption of Suitable load management techniques. • Differential tariff structure. • Adherence to energy efficiency standards by utilities. CLAUSE 5.9.2: BEE would make available the estimated conservation and DSM potential, its staged implementation along with cost estimates for consideration in the planning process. CLAUSE 5.9.4: • Initial approach would be voluntary and self-regulating with emphasis on labelling of appliances. • Gradually moving towards setting standards. • 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 5.4.9: The SERCs should encourage use of pre-paid meters. In the first instance, ToD meters for large consumers with a minimum load of one MVA are also to be Encouraged.

28. Evolution of DSM Regulations Pre 2010 Discussion on DSM regulations by States; FOR draft paper in 2008 Maharashtra notifies DSM Regulations Model DSM Regulations by FOR DSM regulation notified in 14 states Apr 2010 May 2010 2010 - current Draft DSM regulation in many others states Became a guiding regulation for ERCs to follow

29. 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.

30. 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 DSM Cell Load Research & Baseline data Formulation of DSM Plan Seeking approval to DSM Plan & Program 1 month 6 month 1 year At least 6 months before start of next MYT control period AfterDSMnotification

31. Role of DISCOM and ERC Role of SERC Role of Distribution Licensee Directs licensee: DSM Cell constitution, conduct DSM related activities, setting DSM objectives and goal/target setting Issues guidelines: Cost effectiveness, EM&V Develops mechanisms: to recover DSM costs, incentives to DISCOMs Provides approval: DSM plan, DSM project implementation Follow ERCs order: Constitute DSM cell, conduct load research and load survey, design and develop DSM plan and projects Seek ERCs approval: Action Plan, DSM program Implement DSM programs: as per ERC’s approved plan Monitor and Report: Implementation progress, savings

32. DSM process framework

33. DSM objective and target setting DSM objective • Power shortage mitigation • Seasonal peak reduction • Cost effective energy savings • Lowering the cost of electricity • Reduction in emissions of GHG DSM target setting • Percentage reductions in load growth • Savings in kW, kWh • Savings as a percent of total resources / investment to meet load Key Consideration - Load profile - Consumer mix - Technical potential Key Consideration - National EE objectives - Consistent with BEE’s plan

34. 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

35. 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.

36. 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.

37. 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 Ceiling Fan Color TV Computer Direct Cool Fridge Submersible Pump Distribution Transformer Domestic Gas Stove Frost Free Fridge Industrial Motor Monoset Pump Office Automation Product DG Set Water Heater Ballast Solid state Inverter TFL Diesel Engine-pump set

38. 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.

39. 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

40. ■ 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 Municipal DSM

41. Agriculture DSM: ▀ Aim: Reduce energy consumption & losses through replacement of inefficient 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

42. DSM Potential (1/2) Technical Potential Economic Potential Achievable Potential Ideal scenario which sums all energy efficiency measures that are feasible given technology limitations. The fraction of the technical potential that is cost-effective. The fraction of the economic potential that is attainable given actual program infrastructure and societal and market limitations.

43. Expected outcome from the activities of DSM cell Activities of DSM cell Expected Outcome Load research Load duration curve, Load mix, Seasonal variation. Market survey Usage pattern, existing penetration of EE, inclination to shift towards EE. Potential estimation Technical and economic potential, Input for goal setting. Action plan preparation Prioritization of DSM measures, Implementation process and schedule. DSM program preparation and regulatory filing Designing a cost-effective program, mechanism of cost recovery, implementation strategy and schedule. DSM implementation Selection of implementation partners, project implementation, awareness creation. Monitoring and Reporting Progress reporting of savings achieved.

44. • A permanent reduction in energy use. Energy savings are in place all the time & driven mainly by equipment upgrades, such as new lighting system. 4/18/2016 44 Energy Conservation Energy Efficiency Demand Response • Saving energy by taking an action that often becomes a habit. e.g. Turning of lights when you leave the room • 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. Demand Response, Energy Conservation and Energy Efficiency provide an alternative to new generation, helping stabilize the grid, and can help avoid blackouts. Need for Shift in Focus – Demand Side

45. Thank You