Demand Side Management (DSM) is an approach used mainly by Utilities to modify consumers’ energy consumption through a set of programmes to meet the utility’s load-shape objectives. Such interventions are classified as strategic conservation, peak clipping, load shifting and valley filling. It is proven that DSM programmes can reduce overall electricity consumption, as well as peak demand by at least 20-40%. Demand to the tune of 20-30% can easily be shed by using efficient appliances alone.
Future Cooling demand will be one of the largest drivers for power demand, as evidenced by the average daily load in Mumbai and Delhi in summer and winter. Commercial and residential sectors are known to contribute to the heating and cooling demands and both these sectors are showing exponential growth in consumption.
Source: Lawrence Berkley National Laboratory – Average Daily Load Curves in Mumbai and Delhi for summer and winter
DSM in India
Based on the Central Electricity Authority’s Load Generation Balance Report for 2016-2017, India’s electricity sector had an energy deficit of 2.1% and a peak deficit of 3.2% in 2015-2016. Even though the CEA report anticipates an energy surplus of 1.1% and peak demand surplus of 2.6% for 2016-2017, this may not be sufficient to meet the anticipated increase in demand with “Power for All” and accelerated economic growth. Meeting the energy demand only through an increase in supply may affect energy security and have adverse environmental impacts. Therefore, large scale DSM programmes serve as a key strategy for India to address power paucity.
DISCOMs often are financially stretched with low revenue collection and paying high prices for generation and power purchase to meet power shortage and peak demand. By adopting and running DSM programmes, Distribution Companies (DISCOMs) can reduce energy consumption through energy efficiency and improve their collection efficiencies resulting better balance sheets. The State Electricity Regulatory Commissions (SERC) have notified regulations and issued directives in tariff orders to DISCOMs to implement DSM programmes. In the context of the cost-plus tariff-setting process followed in India, SERCs have even granted DISCOMs to include DSM programmes in their power purchase planning and Aggregate Revenue Requirements (ARR) filed from time-to-time concurent with the multi-year tariff setting process. During the past six years, over 18 states have notified DSM regulations. Although more than 8 states in India have undertaken DSM programmes such as distribution of solar water heaters, energy efficient bulbs and so on, the DSM programmes in Maharashtra have been the most successful. Maharastra Electricity Regulatory Commission notified the first-ever DSM regulations in 2010. DISCOMs such as Reliance Infrastructure and Tata Power have been running DSM programmes addressing cooling needs of consumers.
DSM programmes addressing Energy Efficiency in Cooling
Reliance Infrastructure (RInfra) has been implementing a pilot incentive programme for Air Conditioners from February 2014 – January 2016. RInfra offers its residential and commercial customers incentives to buy discounted 5-star split ACs as ACs constitute 60% of commercial consumers energy consumption and residential consumption in higher tariff brackets. The aim of the programme is providing incentives for the purchase of 1500 5-star split ACs replacing windows ACs and bridging the price gap between 3-star and 5-star split ACs. Under the programme, each commercial consumer was allowed to purchase a maximum of three 5 star split ACs. RInfra would benefit from energy savings and reducing peak load demand. Godrej Appliances won the bid to participate in the ACs replacement program of RInfra. RI had negotiated with Godrej Appliances for the price of ACs, installation and removal and safe disposal of replaced old window ACs. Approximately Rs. 2 crores were budgeted for the programme. RInfra reports submitted to the Commission in Maharashtra suggest energy savings from the programme to be about 10% and for commercial consumers that purchased the 5 star split AC, the first years savings could be in the range of 236 kWh and 477 kWh.
Tata Power Company – Distribution (TPC-D) in Mumbai and Delhi has also been undertaking various DSM programme under the campaign ‘Be Green’ in Mumbai and Delhi and has been running appliance exchange programmes including decorated ceiling fans and 1.5 tonnes Air Conditioners and refrigerators. The programme offers 40-60% discount to consumers and in turn the consumer saved 30%-50% energy costs. This programme is highly successful and has removed 20,000 power guzzling appliances. The old appliances are collected and safely disposed and replaced with 5 star rated appliances. The DSM programme has been funded through Load Mangement Charges or recovered through ARR. A large scale DSM programme of this kind would require a huge budget.
Both RInfra and Tata Power programs provided sufficient market triggers to scale-up the EE appliances. One of the IIT-Bombay report also states the other benefits of the program that include higher awareness, supply-chain engagement etc.
The Thermal Energy Storage Programme (TES) for commercial consumers in Mumbai was pioneered by Tata Power. The central AC plants were run in the nights and water was converted to ice and stored in the ice tanks. During the day, AC plants were turned off and the building was cooled by the energy stored in ice. Through TES, the DISCOM had a flatter load curve, improved load factor and power factor. The consumers benefited from the time of the Day (ToD) tariff incentive and also received a rebate of Rs. 1/kWh for their night power consumption. Tata Power created awareness amongst its consumers on TES and provided an online measurement and verification for chillers connected with the TES. By January 2014, Tata Power had achieved load shift of 3.6 MUs and had 15000 tonnes of refrigeration capacity in the TES programme.
To manage peak demand, TPC-D also runs a manual demand response programme of voluntary load curtailment for commercial and industrial consumers with connected load of 500 kVA. Consumers interested in such a voluntary load curtailment program signed an MoU. The individual consumers received calls from TCP-D aggregator to curtail their load. The duration of the load curtailment is up to 2 hours each time and could happen up to 50 times in a year. TPC-D triggered the DR events based on peak power pricing and expected transmission constraints. The aggregator also helped the consumer to identify loads that could be curtailed by conducting energy audits. Through the aggregator, TPC-D paid each consumer Rs.2.25/kWh for each curtailed unit. Using baseline from load profile of 4 out of 5 similar work-days (sans holidays and weekends), TPC-D compared load curtailment data.
Last year (2015) Tata Power Distribution Delhi (TPDDL) launched a pilot Auto Demand Response (AutoDR) programme in partnership with Honeywell and IBM in Delhi. 173 industrial and commercial consumers with load greater than 100 kW and a consolidated connected load of over 400 MW are participants in the programme. Their aggregated peak demand is over 67 MW. 111 kilowatt feeders that are fed from 40 substations are involved in this programme.
India Auto DR Market Potential (Regionwise)
Source: Lawrence Berkley Lab – Open Automated Demand Response: Industry Value to Indian Utilities and Knowledge from the Deployment
Honeywell did an assessment of AutoDR opportunities in India and their findings are:
- Three regions of India contribute to 90% of the country’s peak demand and they are the Northern, Western, and Southern regions.
- On the assumption that 50% of peak demand arises from commercial and industrial sector and 50% from residential and rural sectors, it is estimated that DR market size just in the commercial and industrial sector is 3.81 ~ 7.63 gigawatts (GW). Therefore, the DR response market size in the aforementioned three regions is 3.39 ~ 6.78 GW
DISCOMS in the near future can register home air conditioners for DR program. Air Conditioners equipped with smart controls for DR can automatically increase the set-point temperature to reduce power consumption during peak time. Based on research conducted by LBNL, there is potential to reduce instantaneous power consumption by as much as 50% by increasing the set-point temperature.
Large scale national level DSM programmes have been executed by Bureau of Energy Efficiency (BEE) initiatives – Domestic Lighting Development Programme (DELP) and Streetlight National Programme (SNLP) in collaboration with Energy Efficiency Services Limited (EESL) that resulted in 25.3 million units of energy savings and reduced carbon emissions by over 47,000 tonnes per year.
Tapping energy savings through DSM programme is a sure fire way of ushering in energy efficiency and reducing power demand. The potential for DSM programmes in India is high. As mentioned in the study by Prayas, it has remained at a pilot scale due to lack of awareness, resources and skills at the DISCOM level. DSM programmes in cooling can reduce peak load, flatten load curve and improve power quality and load quality. It should be pursued actively and BEE (through the large super- ESCO EESL) can play an integral role in rolling out national DSM programmes targeting reduction in cooling load by providing incentives right from upstream to phase out HFCs and downstream for purchase of 5 star rated energy efficient RACs, Thermal Storage Systems for the commercial and industrial sector, undertaking large scale AutoDR programmes. The DISCOMS can learn from each other through the DSM Forum platform created by Price Waterhouse Coopers (PWC); share their experience and develop strategies for scaling up DSM programme in India to large scale. Towards this effort SSEF, AEEE and IIT Bombay are disseminating information through newsletters to DISCOMS and other key stakeholders, creating awareness on the latest developments in DSM and promoting discussion in the Utility CEO and DSM-India forum. In turn, DISCOMS can undertake customer education that can assist them to participate actively in DSM programmes and contribute to energy saving and accrue cost saving.