This presentation explains the concept of Electical Demand Side Management and shows how to implement it in industries. It was prepared for energy auditor training in Nepal in the context of GIZ/NEEP programme. For further information go to EEC webpage: http://www.eec-fncci.org

1. ELECTRICITY DEMAND
SIDE MANAGEMENT
AND
END USE EFFICIENCY
D. Pawan Kumar

2. PRESSURE POINTS OF CONTEMPORARY
ELECTRIC UTILITIES:
 Peak demand and energy crisis in many
utilities due to ever rising demand
supply gap
 Need for optimization of generation
and network utilization
 Regulator led energy efficiency
mandates
 Strong lobbying from environmental
groups
 Resource constraints and customer
demands for cheaper rates
 Increased operational flexibility needs
 Competition, thanks to reform process
and open access

3. TRADITIONAL UTILITY PLANNING
PROCESS, NEEDS & TOOLS
Supply side alternatives
Capital Costs
Fuel costs
Other O& M costs
Load
forecasting
Generation
Planning
Production
Costing
Financial
Analysis
Rate
Allocation
Iterate as
necessary
Need to Predict & Provide for:
Long Term Planning
More Lead time
Rising Costs
Environmental Impacts
Tools: Least Cost Planning
&
Demand Side Management

4. LEAST COST PLANNING:
“How much energy efficiency could we achieve if all the
potential end-use energy efficiency were achieved which is
economically competitive with conventional forms of
energy”--- Roger Sant W. -- The Energy Productivity Center
Four basic steps of Least Cost Planning(LCP)are:
Understand how energy is used (end-use energy)
Identify technical potential of high end-use efficiency
Evaluate the benefits and costs from societal perspective
Apply engineering & economic analysis
Introduced to persuade energy planners & policy makers that there
is sizeable potential to improve EUE with following considerations
•Customer & Utility Considerations
•Financial commitments involved
•Program Implementation
•Monitoring & Evaluation

5. WHAT IS DEMAND SIDE MANAGEMENT ?
“DSM is planning, implementation & monitoring of Utility
activities designed to influence consumer use of electricity in
ways that will produce desired changes in the magnitude
and pattern of load either directly caused or indirectly
stimulated by the utility.”
---Clark W. Gellings, Electric Power Research Institute
Broad purview of DSM
 will influence customer use
 must achieve selected objectives
 should be evaluated against non - DSM alternatives
 identify customers response
 evaluation process
How to achieve DSM?
• Load Management
• End Use efficiency Improvement
• Development & Promoting EET’s.

6. DSM LINKAGES-INDUSTRY SECTOR
Peak Clipping
Valley Filling
Load Shifting
Strategic
Conservation
Strategic Load
Growth
Flexible Load
Shape
P.F and LF
Improvement
Lighting system
Process utilities
Process
modernization
Drives
Furnaces
Devices & controls
Specific menu of
energy efficient
technologies to
match each end
use option
Alternative
pricing like TOU
tariffs
Regulatory
measures
Incentives for
EET’s
Energy Service
Companies
promotion
Designing
customized DSM
programs
Utility Load
Shape
Objectives
DSM Implementation
Methods
Industry sector
potential End
Uses
DSM
Technology
Options

7. DSM FRAME WORK
DSM OBJECTIVES
DEFINED/REDEFINED
DSM ALTERNATIVES
IDENTIFIED
DSM PROGRAM
IMPLIMENTED
DSM PROGRAM
MONITORING
DSM EVALUATION
& SELECTION

8. BROAD OPTIONS AND TECHNOLOGIES
FOR INDUSTRIAL DSM
 Tariff and revenue related
 Static metering, reactive power billing, maximum demand
charges, TOU tariffs, incentives etc.
 Low /medium cost technical retrofits in:
 Plant/Process utilities, drive side modernization ,furnace controls
and automation.
 Illumination system improvement options including:
 LEDs, CFLs, low loss ballast's, microprocessor based controls,
high efficiency reflectors etc.
 New plant / large capital measures
 Process r & m, retrofits, adoption of distributed controls,
automation etc.
 Energy Management Techniques
 monitoring & targeting, EM staff training & motivation,
mandating and sponsoring energy audits

9. EVALUATION OF DSM OPTIONS
 As seen from the above, various identified end use
efficiency,DSM measures, offering energy and demand
saving opportunities qualify to be assessed for supply side
impact, benefits and costs,(as cost of saved capacity and
cost of saved energy).The results relate to local utility
attributes and considerations .
 These are then compared with alternative, corresponding,
supply (utility) side costs of capacity addition and long
run marginal cost of generation.
 Only those options of DSM are shortlisted, which are
cheaper than supply side costs.
 To arrive at cost of saved capacity CSC,and cost of saved
energy, following relations, criteria can be adopted.

10. RELATIONS AND CRITERIA…..
» Capital recovery factor (CRF)
= d × (1 + d)n
/ [(1 + d)n
- 1]
where d = utility discount rate & n = measure life
» Total DSM measure cost
= initial cost × [ 1 + (1/(1+d/100)m
) + (1/(1+d/100)2m
+
…...)
where d = utility discount rate & m = device life &
the series includes all terms where exponent is less than
the measure life
» Cost of saved capacity (CSC) Rs/kW or Rs/kVA=
(Total measure cost (Rs))
((Saved capacity kVA or kW × PCF) / (1-TDLF) (CUF))
» Cost of saved energy (CSE) Rs/kWh=
(Total measure cost (Rs) × CRF)
(Annual Energy Savings (kWh))

11. …...RELATIONS AND CRITERIA
 T & D loss factor of local HT & EHT segment for measures
relates to HT or EHT segment end use = TDLF (HT)
 T & D loss factor of local LT segment for measures relates
to LT segment end use= TDLF (LT)
 Capacity utilization factor (CUF)is also PLF of the local
power plants.(A low CUF say in hydro power plants as
against base load thermal plants can influence measure
cost benefits)
 Peak Coincidence Factor (PCF), indicates proportion of
the end use equipment actually operational, during system
peak hours.
 Utility discount rate, is denoted here as, d.
 Each DSM measure cost is assessed for a measure life of 25
years, for parity with considered utility plant life in
account books, and equals the net present value of measure
cost for 25 years of measure life where m is number of
replacements within 25 years, and d is the discount rate.

12. NEXT STEPS IN DSM PROCESS:
 Analyze and merit rate each of the choices, where the
cost of saved capacity & cost of saved energy of DSM
measure is less, as compared to cost of capacity
addition and long run marginal cost of
generation(being utility side SSM costs).
 Once all the DSM interventions are merit rated, the
logical next step is the development of Detailed
Project Reports and plans for implementation of
short listed DSM interventions, in a programmatic
manner, adopting a standard project management
cycle.

13. ILLUSTRATIVE CASE STUDY OF DSM OPTION EVALUATION…..
(APPLICATION OF LIGHTING VOLTAGE REGULATORS IN
MUNICIPAL WATER PUMP HOUSES)
 The Fluorescent tube manufacturers list the rated or nominal
wattage on any given tube as the objective wattage which the tube
should dissipate under prescribed conditions of operation.
 The actual wattage, invariably higher, however depends upon
factors such as supply voltage.
 A lighting voltage controller operates on the well known principle
that reduction in input power can be achieved by voltage
optimization without significant drop in light output.
 A typical device operates by bringing in, an impedance across the
lighting circuit, to control supply voltage and current.
 The lighting voltage controllers are modular in configuration and
can be used on lighting circuits and are applicable for Sodium
Vapor and Mercury vapor lamps as well.
 Based on end user feedback, Energy Savings of 10% and Demand
Savings of 15% are envisaged through application of the Lighting
Voltage controllers.

14. Lighting System kW Load = 24
PF of Lighting circuit = 0.85
Lighting system kVA Load = 28.2
Hours of annual operation = 8760 (indoor application)
Peak coincidence factor = 1.0
Utility discount rate = 0.09
End User Electricity Cost = Rs.2.46/kWh
Demand Charges = Rs.170/kVA
Capital Recovery factor = 0.102
 Transmission and Distribution Loss Factor for HT Industry (TDLF) = 0.3132
Capacity Utilization Factor (CUF) = 0.725
Energy Savings (kWh) scope = 10%
Demand Reduction (kVA) scope = 15%
Investment in Rs/kVA rating = 1800
Measure Life, Years = 25 Years
Device life, hours = 100,000
 Total Measure Cost = Rs.71,144 ,being initial investment + discounted costs of
future replacements over measure life period
….APPLICATION ANALYSIS RESULTS IN A MUNICIPAL
WATER PUMPING STATION……

15. Present annual energy consumption kWh = 181332
 Annual electricity savings, kWh@ 10% = 18133
Annual Demand savings @ 15% = 4 kVA * 12 months
 Rupee value of annual electricity (kWh) savings = Rs44608
 Rupee worth of annual demand (kVA) savings = Rs8160
Total annual savings = Rs52768
 Investment for lighting controller (Rs.1800/KVA*Lighting system kVA Load)
= 50800
Simple Payback Period Years =
(Investment/Rupee value of annual electricity cost savings)
= less than 1 year
…END USER COST BENEFITS…..

16. Cost of Capacity saved (CSC) in Rs/kW=
(Total Measure Cost (Rs.)) / ((kW Capacity Saved*PCF)/ (1-TDLF)(CUF))
= (71144) /((2.4 * 1)/ (1-.3132)( 0.725))
= Rs. 14760 / kW
Cost of Energy Saved (CSE) in Rs. /kWh=
(Total Measure Cost(Rs.)*(CRF)/(Annual Electricity Savings in kWh)
= (71144 * 0.102)/(18133)
= Rs. 0.40 / kWh
The end user simple payback period of less than 1.0 Year, alongside attractive utility side
costs of Rs. 14760 per kW saved capacity ,as against utility side cost of Rs 40,000 per kW of
capacity addition; and, Rs0.40/kWh cost of saved energy, as against Rs 2.00/kWh average
utility cost of supply, render the DSM measure a win-win option.
The state Utility / DISCOM could develop a DSM program for all municipal pump houses
in its coverage area and incentivize stakeholders suitably.
It may be appreciated that a well designed DSM program can address energy efficiency
improvement at macro level, considering all local factors.
 Analytics in an iterative manner, for sensitivity factors like peak coincidence factor,
TDLF,CUF, discount rate, can be attempted for customized, localized, program design for
various options.
…..SUPPLY SIDE COSTS.

17. GENERIC DSM MEASURES IN LOAD
MANAGEMENT, PROCESS/PLANT
UTILITIES IN INDUSTRY SECTOR…
 Power factor improvement
 Conventional ballast's on
FTL’s replaced by low loss
ballasts
 Adoption of energy efficient
CFL’s/LEDs ,Magnetic
induction lamps, LPSV, HPSV
lamps…
 Adoption of Lighting voltage
controllers
 Motor Soft starters/Energy
savers adoption
 Replacement of old pumps by
high efficiency pumps
 Replacement of old fans by
high efficiency fans
 Application of VSD’s, cogeneration
etc, for EE
 Replacement of old compressors,
chillers, by energy efficient
compressors, chillers.
 Distribution system upgrades in
water pumping, compressed air,
chilled water systems for EE
 Material handling system upgrades
for EE.
 Adoption of distributed control
systems, process automation for EE
 Furnace, heater upgrades for EE.
 Replacement of old rewound motors
by new high efficiency motors.
motors………

18. BARRIERS TO DSM…
 Limited Information & Awareness
 Lack of adequate infrastructure
 Perceived risk of implementing new EE technologies
 Absence of codes/standards on EE.
 Lack of reliable and credible service organizations that
can provide full range of project implementation services
 Limited Availability Of Capital for financing EE Projects
 High costs for consumers to implement EE projects
 Administered energy tariffs which distort economics.
 Absence of any regulatory mandate to review all options
on DSM & Supply Side Management to develop a least
cost capacity expansion plan

19. ….BARRIERS TO DSM
 Problems with quality of power
 Lack of experience in planning, designing &
implementing DSM programs
 Absence of load research information, databases
on energy end use segments, reliable data on
peak coincidence factors etc.
 Lack of resources specifically allocated for EE
 Lack of adequately skilled staff to initiate EE
measures
 Inadequate participation and attention from
Govt. and policy makers….

20. ENABLERS FOR DSM MARKETS – A
WISH LIST:
 Regulators and utilities start introducing the
concept of LCP,DSM in the power sector planning
frame work
 Developing nations initiate programs on EE in
electricity generation, transmission, distribution
and industry sectors
 Developing nations initiate design and adoption
of appropriate energy conservation laws and
regulations, efficiency standards & labeling,
rational electricity pricing and incentive schemes
for EE
 Regulators and utilities initiate regular load
research and development of customer databases
on energy use and efficiency improvements for
analytics and planning.
 Promotion of energy conservation through mass
media - based awareness campaigns

21. CONCLUSIONS
 DSM is a viable, win-win cost effective alternative to SSM.
 There is a good case for DISCOMs to develop customized
DSM programs for end users like industry clusters,
agricultural pump sector, municipal water pumping, street
lighting, PSU townships, industrial estates, special
economic zones, commercial buildings etc., due to diffused
yet significant bulk nature of these end user entities and
energy efficiency margins.
 •DISCOMs may also consider developing customized DSM
programs, involving distribution upgrades, automation,
kVAh billing, static metering, TOD tariffs etc, to bridge
demand supply gaps efficiently, without revenue losses.
 Current crunch times at utilities call for load research
and comprehensive re-visit to various end use segments for
structured DSM program design and implementation,
which could be highly cost effective, as against supply side
capacity augmentation initiatives.