Demand Side Management (DSM) is an approach to reduce energy consumption through a set program whereby the consumer energy consumption is modified to meet the utility load demand by various methods such as peak clipping, load shifting and valley filling. DSM concept originally started from California to meet the electricity demand. California Public Utility Commission (CPUC), European utilities developed several DSM programs such as the use of efficient appliances, commercial load scheduling, restricting residential appliances usage, price incentives, and tariff structure. It is well proven that DSM programs can reduce overall electricity consumption, as well as peak demand by 20-40%. A planned approach to design and implementation of DSM allows key stakeholders to keep track of the strategies, incentives and regulations developed.
Identifying need for DSM
The all India peak power requirement and the annual energy requirement have been growing at 4.9% & 5.3% CAGR respectively in the past eight years. Despite this enormous growth in the demand, India’s power supply scenario has been improved significantly in the recent times. According to Central Electricity Authority1, 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 anticipates energy and peak demand surplus for 2016-2017, this may not be sufficient to meet the expected increase in demand for “24×7 Power for All”. Meeting the energy demand only through an increase in supply may affect energy security and have adverse environmental impacts. Therefore, Energy Efficiency gained through large-scale DSM programs is a key strategy for India to address power shortage.
To initiate DSM in India, a few pilot projects have been launched by State Regulatory and private utilities. The Ministry of Power, through BEE, has launched Unnat Jyoti by Affordable LEDs for All (UJALA) formerly known as Domestic Lighting Development Programme (DELP) and Streetlight National Programme (SNLP) with the collaboration of Energy Efficiency Services Limited (EESL). The UJALA2 initiative has become the model DSM program for Indian utility driven entirely by market-based mechanism. The program currently delivering 82 million kWh of energy saving per day that translate into more than INR 33 crore in energy cost saving per day, and 6,000 MW of avoided peak demand.
Barriers in India
India started with renewable resources, but till date, there is little giving importance to energy efficiency program. DSM has great potential in India for industry (10-15%), lighting (30-35%), commercial buildings (50%) and agriculture (40-45%) but there is a need to develop a favorable environment in which all stakeholders can interact on a common platform with state regulators and authorities.
There are barriers such as new technologies to produce, investments due to higher cost, and to convince the policymakers for Energy Efficiency.
- In the present scenario, DSM programs in India mainly are focused on the use of efficient lighting initiated by EESL.
- There are many successful DSM models, but it is not being replicated in other states due to lack of awareness, skills and technology transfer sharing of best practices.
- The end result of any DSM program is hardly applied due to non-availability of protocols and lack of clarity regarding the role of regulators.
- The Electricity Act 2003 has put significant emphasis on efficiency and optimal utilization of Still, issues related to the regulatory treatment of costs and benefits need clarity.
DSM Projects in India
The Success of UJALA has reinforced stakeholders’ confidence in the promise of DSM and re-established the Utility DSM market potential by considering the end use energy efficiency opportunities alone.
- The Government of India has launched Ujwal DISCOM Assurance Yojana (UDAY) for DISCOMs. The scheme aims to reduce interest burden, lessen the cost of power, reduce power losses in Distribution sector and improve the operational efficiency of DISCOMs. UDAY involves several measures such as DSM, energy efficient LED, pumps to support reform initiatives of States and DISCOMs.
- The State Electricity Regulatory Commissions (SERC) have issued directives and regulations to DISCOMs to implement DSM programs. SERCs have even advised DISCOMs to include DSM programs in their power purchase planning and Annual Revenue Requirement (ARR) reporting.
- Eight states in India have undertaken DSM programs such as distribution of solar water heaters, energy efficient bulbs and so on, the DSM programs in Maharashtra have been the most successful.
- IIT Mumbai3 with support from Shakti Sustainable Energy Foundation (SSEF) has documented and analyzed of DSM projects in India, technical information on DSM, manuals, and tutorials for capacity building on DSM.
- SSEF and Alliance for an Energy Efficient Economy (AEEE) proposed a capacity building programs in 2011-12 for state electricity regulatory commissions, distribution companies and sector experts in the area of DSM to develop the skills of evaluation of programmatic DSM activities in the states.
- Price Waterhouse Coopers (PWC) has created a ‘Utility CEO Forum’ platform for Regulators and CEOs of Utilities to share experience and develop strategies for DSM program in India to learn from experience and scale up.
Way Forward
Tapping energy savings through DSM program is a way of ushering in energy efficiency and reducing power demand. The potential for DSM programs in India is high. Unfortunately, it has remained at a pilot scale due to lack of awareness, resources, and skills at the DISCOM level. The Regulators and DISCOMs can learn from each other; share their experience and develop strategies for scaling up DSM program in India to large scale. Tracking improvements in the DSM sectors would help Indian utilities find out about innovations, fruitful DSM plans in India.
Customer awareness program can be conducted to increasing stress on the grid with technology characterization study for utilities and policymakers to undertake load research studies and pursue DSM options in different sectors. This will help in Identification of different end use technology segments throughout the country by making guidelines to promote DSM.
Towards this effort SSEF, AEEE, and IIT Mumbai 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 programs and contribute to energy saving and accrue cost saving.
References:
- Load Generation Balance Report 2016, Central Electricity Authority
- UJALA Dashboard
- Demand Side Management
- Aditya Chunekar, Mrudula Kelkar, Shantanu Dixit. 2014. “Demand Side Management in India: An Overview of State-Level Initiatives.” Prayas Energy Group
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