The document outlines demand side management (DSM) strategies aimed at optimizing energy usage among consumers and improving the efficiency and reliability of power distribution. It highlights key initiatives, regulations, and case studies in India for reducing electricity consumption and shifting demand to off-peak periods, emphasizing the need for innovative practices and technologies. Concerns regarding rising power prices, environmental impacts, and the financial health of distribution companies are also addressed, along with a detailed discussion on implementing DSM regulations and strategies.

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 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

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