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TRANSCRIPT
MAHA
D
ARASHTRA
Summer
DEMAND S
Under
Dr
(Depu
MR. VIJ
(Member
A ELECTR
S
Roll N
MBA (P
A
AUG
r Internshi
On
SIDE MAN
r the Guida
r. N.V. Kum
uty Director
&
JAY L SON
– Technica
At
RICITY REG
Submitted b
ABHINAV
No: 112081
Power Mana
Affiliated t
GUST 2
ip Report
NAGEMEN
ance of
mar
,NPTI)
NAVANE
al, MERC )
GULATOR
by
V
12181
agement)
o
2012
NT
RY COMMIISSION
i
DECLARATION
I, Abhinav, Roll No. 61, MBA (Power Management), Batch 2011-13 of the National Power
Training Institute, Faridabad hereby declare that the summer training report on:
DEMAND SIDE MANAGEMENT
is an original work and the same has not been submitted to any institute for the award of any
other degree.
A seminar presentation of the Training report was made on date /08/2012 and the
suggestions as approved by the faculty are duly incorporated.
Dr. N.V Kumar Abhinav (Presentation In charge)
Countersigned Mr. S.K. Choudhary
Principal Director of the institute
ii
ACKNOWLEDGEMENT
I first thank my Project Convener Mr. Vijay L Sonavane, Hon. Member (Technical),
MERC. Without his help and interest it would have been difficult to finish this work.
I would also like to acknowledge Mr. Rajendra G Ambekar, Director (Tariff), MERC for
his valuable support and guidance throughout this project.
I would like to express my deepest gratitude Mr. Siddhartha Rokade, Deputy Director,
MERC. Without his insights and helpful thoughts, I would not have gained as much
information as I have. Their help enabled me to understand the subject.
Special thanks go to all the staff members of MAHARSHTRA ELECTRICITY
REGULATORY COMMISSION, especially Mr Abhishek Moza for their support.
I would also like to thank my Project In-charge Mr N.V Kumar, who always assisted me in
every possible manner; her valuable suggestions were only building blocks of this project.
Words would never be enough to express my gratitude towards our faculty at CAMPS their
unstinted support and guidance throughout this project.
Abhinav
iii
EXECUTIVE SUMMARY
DSM is believed to be a possible answer to the quest for quality power at cheap prices. The
Maharashtra Electricity Regulatory Commission issued two sets of Regulations in April 2010
to facilitate DSM Implementation in a cost-effective manner:
DSM Implementation Framework and
DSM Measures’ and Programmes’ Cost-Effectiveness Assessment
The DSM Implementation Framework provides the Demand Side Management
implementation framework to be followed by distribution licensees and for matters in
connection therewith and incidental and ancillary thereto.
The DSM Measures’ and Programmes’ Cost-Effectiveness Assessment provides the
methods and principles for assessing cost effectiveness of DSM programmes and charges
recoverable by the distribution licensee in connection therewith and for matters incidental and
ancillary thereto.
Part 1 of the project deals with the study of the existing regulatory framework for DSM
Implementation in the state of Maharashtra.
Under the existing regulatory framework the distribution licensees in the state of Maharashtra
have undertaken a number of pilot programmes at selected locations and concentrations of
their respective consumer bases.
Part 2 of the study target set by the utilities in their respective on-going pilot programmes and
their progress as on today.
The study reviews some international experiences in the field of DSM implementation and
their success.
Part 3 of the study is the analysis of thermal storage system their functioning and progress in
the state of Maharashtra. Some international experiences will also be analysed in this section.
iv
LIST OF FIGURES
Figure1.3.1 Peak demand met during May 2012
Figure1.5.1 Load shapes
Fig 2.3.2.1: EDF’s tempo and standard TOU rates
Fig 12.4.1 Process map for M&V
Fig 13.1 Detailed structure of DSM E,M&V guiding principles
Fig 3.6.1 Plant & Two layer Control Architecture
Fig 3.6.2 Logic regulation for a chiller with four capacity partialization steps.
Fig 3.6.3: The flowchart of A/C load management potential study
Fig 3.6.4 Scheme plot of the chilling system
Fig 3.6.5: Temperature Distribution of the water in the tank
Fig 3.8.1: Electric demand curves and the storage cycle of the stratified chilled water storage
system for an electronic manufacturing facility in Dallas, Texas
v
LIST OF TABLES
Table 1.3.1 Total generation capacity as on 30-06-2012(Sector Wise)
Table 1.3.2 Total generation capacity as on 30-06-2012(Fuel Wise)
Table 1.3.3Peak demand met and peak shortage in 2nd week of July (all regions)
Table 1.4.1 Total state generation & exchange on 18-07-2012
Table 1.4.2 Details on Maharashtra state peak load demand
Table1.5.1 Impact & cocst of Califofrnia’s DSM effort
Table 2.3.2.1: Steps for developing a TOU rate
Table 3.1.1 Details of T5 FTL projects by TPC-D & R-infra
Table 3.1.2.1 Details of program of 5-star fans by TPC-D & R-infra
Table 3.1.3.1 Details of program of 5-star fans by TPC-D & R-infra
Table 3.1.4.1 Details of program of gas geyser
Table 3.1.2.1 Details of program of 5-star rated ACs R-infra
Table 3.1.6.1 Details of Gas Water Heater Program
Table 3.1.7.1 Status of pilot projects
Table 3.2.2.1 Effects of DSM in California
Table 3.4.1 Overview of IPMVP options
Table 3.7.1 Tata power DSM pilot program design: thermal storage
vi
ABBREVIATIONS
DSM Demand Side Management
MERC Maharashtra Electricity Regulatory Commission
CERC Central Electricity Regulatory Commission
CEA Central Electricity Authority
PAT Perform Achieve & Trade
CDM Clean Development Mechanism
EM&V Evaluation Monitoring & Verification
EE R&M Energy Efficient Renovation and Modernization
DSM-cc Demand Side Management Consultation Committee
GoI Government of India
NDC National Development Council
DR Demand Response
HEMS Home Energy Management System
MW Mega Watt
TPC-D Tata Power Corporation-Distribution
TPC-G Tata Power Corporation-Generation
O&M Operation and Maintenance
OEM Original Equipment Manufacturer
TOU Time of Use
TOD Time of Day
R&M Renovation and Modernization
IPMVP International performance Monitoring & Verification Protocol
UNFCCC United Nations Framework Convention on Climate Change
vii
Table of Contents
Acknowledgement…………………………………………………………………………….ii
Executive Summary…………………………………………………………………………..iii
List of figures…………………………………………………………………………………iv
List of tables…………………………………………………………………………………...v
Abbreviations ………………………………………………………………………………...vi
Table of contents……………………………………………………………………………..vii
Chapter-1
Introduction
1.1. Organizational profile………………………………………………………………….1
1.1.1. Formulation of MERC…………………………………………………………….1
1.1.2. Functions of commission………………………………………………………….2
1.2. Objective of the study………………………………………………………………....4
1.3. Indian power scenario…………………………………………………………………5
1.4. Power Scenario in Maharashtra……………………………………………………….7
1.5. Introduction to DSM………………………….……………………………………….9
1.5.1. Evolution of DSM……………………………………………………………….12
1.5.2. US experience with DSM………………………………………………………..14
1.5.3. California success story …………………………………………………………15
Chapter-2
Literature survey, policy & research methodology
2.1. Literature review ………………………………………………….…………………….18
2.2.Research methodology……………………………………………………..…………….22
2.3. Price responsive DSM program…………………………………………………………23
2.3.1. Load curtailment program……………………………………………………….23
2.3.2. Dynamic pricing program……………………………………………………….25
2.4. DSM in India…………………………………………………………………………….30
viii
2.5.DSM regulations in Maharashtra…………………………………...……………………33
2.5.1. DSM implementation framework…………………………..……………………33
2.5.1.1.Basic principles……………………………………………………………….34
2.5.1.2.DSM guiding principles………………………………………………………35
2.5.1.3.DSM program eligibility criteria……………………………………………..36
2.5.1.4. Development and submission of DSM portfolio and plans………………….36
2.5.1.5. Role of DSM-CC…………………………………………………………….37
2.5.1.6.Responsibilities of distribution licensees related to DSM planning and
implementation……………………………………………………………….38
2.5.1.7.DSM funding………………………………………………………………....39
2.5.1.8.Evaluation measurement and vrification……………………………………..41
2.5.1.9.Monitoring and reporting……………………………………………………..42
2.6.DSM measures’ and program cost effectiveness assessment…………………………….43
2.6.1. Total resource cost test…………………………………………………………..43
2.6.2. Ratepayer impact measure test…………………………………………………..45
2.6.3. Life-cycle revenue impact-RIM test……………………………………………..46
2.6.4. Correction factors for power shortage situation…………………………………46
2.6.5. Values of key inputs used in test………………………………………………...46
CHAPTER-3
On-going pilot projects and draft regulation
3.1. On-going pilot projects for entire consumer base in Maharashtra..…...…………….48
3.1.1. T5 FTL program………………………………………………..…………….49
3.1.2. Programs on 5-star fans………………………………………………………50
3.1.3. 5-star split AC program………………………………………………………50
3.1.4. R-Infra pilot program on gas geyser…………………………………….……51
3.1.5. 5-star refrigerator program by R-Infra……………………………………….52
3.1.6. Gas water heater program………………………………….…………………52
3.1.7. Review of progress of approved DSM pilot programs……….………………55
3.2. International case studies………………………………………………….………….57
3.2.1. DSM case studies in China…………………………………………...………57
3.2.2. DSM case study in California, US...…………………………………………60
3.3. International standards……………………………………………………………….62
ix
3.4. IPMVP…………………………………………….………………………………….62
3.5. Draft Regulations:DSM Program’s Evaluation, Measurement & Verification…69
3.6. Thermal storage device…………………………………………………...………….71
3.6.1. System model………………………………………..……………………….71
3.6.2. Plant structure…………………………………………………………..…….73
3.6.3. Control structure……………………………………………………..……….73
3.6.4. Main subsystems of cooling systems………………………………………...77
3.7. TPC-D’s initiative on thermal storage in Mumbai……...……………………………78
3.8. International experience……………………………………..……………………….81
CHAPTER-4
Conclusion & recommendation
4.1. Conclusion……………………………………………………………………………….83
4.2. Recommendation………………………………………………………….…………….84
1
Chapter-1
INTRODUCTION
1.1. Organizational Profile
1.1.1. Formulation of MERC
The conceptualization of independent Regulatory Commission for the electricity sector dates
back to early 1990s, when the National Development Council (NDC) Committee on Power
headed by Shri Sharad Pawar, the then Chief Minister of Maharashtra recommended in 1994,
constitution of “independent professional Tariff Boards at the regional level for regulating the
tariff policies of the public and private utilities”. The Committee reiterated that “the Tariff
Boards will be able to bring along with them a high degree of professionalism in the matter of
evolving electricity tariffs appropriate to each region and each State”.
The need for constitution of the Regulatory Commission was further reiterated in the Chief
Minister’s Conference held in 1996. The Common Minimum State Action Plan for Power
evolved in the Conference inter-alia “agreed that reforms and restructuring of the State
Electricity Boards are urgent and must be carried out in definite time frame; and identified
creation of Regulatory Commissions as a step in this direction”. Thus was enacted the
Electricity Regulatory Commissions Act, 1998 paving way for creation of the Regulatory
Commissions at the Centre and in the States. The 1998 Act was enacted with the objective of
distancing Government from the tariff regulation. The Act provided for Electricity
Regulatory Commissions at the Centre and in the States for rationalization of electricity tariff,
transparent policies regarding subsidies etc. Under the provision of this act The MERC was
established on August 5, 1999 under the Electricity Regulatory Commission Act, 1998, a
Central Act which was superseded by Electricity Act (EA), 2003. The Commission is
continued as provided under Section 82 of the EA, 2003. The Act was mandated to promote
competition, efficiency and economy in the power sector and to regulate tariffs of power
2
generation, transmission and distribution and to protect the interests of the consumers and
other stakeholders.
1.1.2. Functions of the Commission
The functions of the Commission as stated under the Section 86 of the Electricity Act (EA),
2003 are as following:
To determine the tariff for generation, supply, transmission and wheeling of
electricity, wholesale, bulk or retail, as the case may be within the State.
To regulate electricity purchase and procurement process of distribution
licensees including the price at which electricity shall be procured from the
generating companies or licensees or from other sources through agreements
for purchase of power for distribution of supply within the State.
Facilitate intra-State transmission and wheeling of electricity.
Issue Licenses to persons seeking to act as transmission licensees, distribution
licensees, and electricity traders.
Promote cogeneration and generation of electricity from renewable sources of
energy.
Adjudicate upon the disputes between the licensees and generation companies
and to refer any dispute for arbitration.
Levy fee for the purposes of this Act.
Specify State Grid Code.
3
Specify or enforce standards with respect to quality, continuity and reliability
of service by Licensees
Fix the trading margin in the intra-State trading of electricity, if considered,
necessary.
Discharge such other functions as may be assigned to it under this Act
Advise the State Government as mandated under Section 86(2) of the EA,
2003.
4
1.2. Objective of the study
Indian power sector has been dominated by utilities which have been dominated by
government sector and Power planning in India has been supply oriented. The power sector
was thrown open to the private players in early nineties and government intervention was
reduced by bringing regulatory commissions. But the changes being planned were still supply
oriented which emphasizes on increasing the generating capacities to match the projected
demand.
In rapidly growing economy of India, the energy requirements have been increasing at a very
fast pace. In order to meet the increasing demands of residential, commercial as well as
industrial consumers for quality power energy conservation and efficient use of available
power should be emphasized. Other than capacity addition, which takes long time and huge
capital, Demand Side Management (DSM) provides an answer to the quest for more power.
Objective of this study is to analyse the various DSM opportunities in Maharashtra and pilot
projects started by the utilities. The study will mainly emphasize on the Thermal Storage
Project by Tata Power Corporation – Distribution.
5
1.3. Indian Power Scenario
In the recent past, the demand for power in India has increase significantly with the robust
economic growth.
At end–June 2012, the country’s generation capacity stood at 205 GW, recording a
compound annual growth rate of over 8.5% during the 11th five year plan.
Table 1.3.1 and 1.3.2 shows the breakup of generation capacity sector wise and fuel wise
respectively.
Sector MW %age
State Sector 86,275.40 42.01 Central Sector 62,073.63 30.22 Private Sector 56,991.23 27.75 Total 2,05,340.26
*source: MoP website
Table 1.3.1 Total generation as on 30-06-2012(Sector Wise)
Fuel MW %age
Total Thermal 136436.18 66.44
Coal 116,333.38 56.65
Gas 18,903.05 9.20
Oil 1,199.75 0.58
Hydro( Renewable) 39,291.40 19.13
Nuclear 4,780.00 2.32
RES**(MNRE) 24,832.68 12.09
Total 2,05,340.26 100.00
*source: MoP website
**Renewable Energy Sources (RES) include SHP, BG, BP, U&I and Wind Energy
Table 1.3.2 Total generation (fuel wise) as on 30-06-2012
Instead of capacity addition the problem of peak load management by the utilities still
persists.
Figure 1.3.1 shows the countrywide peak demand met during the month of May’2012 .
6
*source: NLDC
Fig 1.3.1 Peak demands met during may 2012
Figure 1.3.3 shows the peak shortage and peak demand met in the 2nd week of July ’2012 in
all five national grids in India.
*source: NLDC
Table 1.3.3 peak demand met and peak shortage in the week (region wise)
7
1.4. Power Scenario in Maharashtra
Fig 1.4.1 Total state generation & exchange on 18-07-2012
*Source: www.mahasldc.in
8
Fig 1.4.2 Details on Maharashtra state peak load demand
*Source: www.mahasldc.in
As we can see from the previous tables fulfilling peak demand and reducing peak shortage to
maximum extent is the need of day. To achieve this target of peak shortage reduction DSM
can be touted as 5th fuel. There are various ways in which DSM can help in peak shortage
reduction:
Shifting the consumption to off peak periods.
Energy efficient appliances are to be promoted.
Emphasize energy conservation by incentives and awareness programs.
Improving agricultural usage pattern.
9
1.5. Introduction To DSM
Demand-side management (DSM) refers to cooperative activities between the utility and its
customers (sometimes with the assistance of third parties such as energy services companies
and various trade allies) to implement options for increasing the efficiency of energy
utilization, with resulting benefits to the customer, utility, and society as a whole.
Such programs have multitude of objectives. Some important of them are:
“Peak lopping” to reduce energy consumption during daily system peak. This is done
by using technologically more advanced and efficient consumer end equipment on
services like heating cooling etc.
“Valley filling” to build up off peak loads to flatten load curves improve system load
factor and consequently more revenue.
“Load Shifting” which can be alone by Thermal Storage
Energy conservation at the consumer end by use of energy efficient equipment.
Energy efficiency programs are to be considered along with the cost of achieving the
energy conserved in comparison with the cost of procuring the quantum of energy
that may have to be purchased i.e. cost in Rs. per KWh of conserved/ saved with that
of energy procured/purchased.
There are 3 main categories of utility DSM programs viz (i) Energy Conservation (ii) Load
Management and (iii) Strategic Load Growth.
Energy Conservation Program: - This is intended to be achieved by using equipment
with improved efficiency, building and industrial processes.
Load management Programs:- This is achieved by redistributing energy demand to
spread it more evenly i.e. load shifting program offering time of use tariff and
interruptible power tariff rates etc.
Strategic Load growth program: - Programs that uncover cost effective electrical
technologies that operate primarily during periods of low electricity demand.
These concepts were summarized in a number of reports published by groups such as EPRI
and others in the 1980s and early 1990s.
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11
new markets and customers. Flexible load shape involves making the load shape responsive
to reliability conditions.
In the aftermath of the Enron debacle in the US, and California’s disastrous attempt at
deregulating the power industry, policy makers in developing countries have become wary of
restructuring.
Governments should begin their liberalization program by focusing on pricing reform. As a
general rule, prices should convey to consumers the cost of the resources that are used to
make a product, and convey to investors the returns they can expect to get by making the
product.
Supposing an acceptance of the underlying assumption that electricity should be viewed as a
“commodity” instead of a “public good,” the principle stated above is equally applicable to
electricity. When consumers do not see the real cost of electricity in their power bills, they
over consume energy, and that misdirects excessive capital and fuel resources to the power
sector.
This is especially true during peak periods, when the cost of producing electricity is much
higher than during the off-peak periods, largely because electricity cannot be stored in large
quantities economically due to technological reasons.
Example: U.S. utility DSM programs can be divided into seven categories:
(1) General information to increase customer awareness of energy use and of opportunities
to save energy.
(2) Technical information, including energy audits, which identify specific recommendations
or improvements in energy use;
(3) Financial assistance in the form of loans or direct payments to lower the first cost of
energy-efficient technologies
(4) Direct or free installation of energy-efficient technologies.
(5) Performance contracting, in which a third party contracts with both the utility and a
customer and guarantees energy performance.
(6) Load control and load shifting, in which the utility offers financial payments or bill
reductions in return for controlling a customer’s use of certain energy-using devices
(such as electric water heaters and air conditioners) or in return for customer adoption of
technologies that alter the timing of demands on the electric system (such as thermal
storage).
12
(7) Innovative tariffs, such as time-of-day and real-time prices, price signals that can
enhance the effectiveness of other DSM programs
1.5.1. Evolution of DSM
U.S. utility DSM programs began modestly in the 1970s in response to growing concerns
about dependence on foreign sources of oil and environmental consequences of electricity
generation, especially nuclear power. Utility DSM programs grew rapidly during the late
1980s as state regulators provided incentives for utilities to pursue least-cost or integrated
resource planning principles. Electric utility DSM programs reached their largest size in
1993. We expect DSM programs to continue on two parallel paths reflecting the changing
business interests of electric utilities in a restructured industry as well as continuing public
interest in the environmental consequences of electricity generation.
Over the past three decades, DSM activity in the U.S. (and to a large extent in Canada) has
been characterized by five waves of programs. In many ways, this evolution of activity in the
North America parallels developments around the globe. To provide a frame of reference on
how DSM needs to evolve to changing utility structures in the developing world, these five
waves that characterize the North American DSM experience are briefly described below.
First Wave: 1970s
The first wave took place from the mid to late 1970s and was triggered by the Arab Oil
Embargo of 1973 and the Iranian Revolution in 1979. Both events served to raise the cost of
energy and created a rationale for conserving energy. Thus, the focus of this wave of DSM
activity was on designing and implementing energy conservation and load management
(C&LM) programs.
It was generally recognized that electricity prices did not reflect the new marginal costs and
since prices were to be taken as a given for political reason, other ways had to be found to
give customers an incentive for reducing usage. Programs were initiated to reduce loads on
the presumption that it was less expensive to reduce loads through DSM than build new
power plants. Because of the crisis mind set, this crop of programs was designed to achieve
quick results. Not much time and budget went into monitoring and evaluating program
impacts. There was a heavy reliance on “soft” measures such as information and audits. On
the pricing front, time-varying rates were instituted for large commercial and industrial
13
customers. And 16 experiments were conducted in the U.S. by utilities, in concert with the
U.S. Federal Energy Administration (a precursor to the U.S. Department of Energy) with
time-of-use (TOU) pricing for residential customers.
Second Wave: 1980s
The second wave took place during the 1980s. During the first part of the decade, there was a
focus on achieving a comprehensive set of load shape objectives, including energy
conservation, load management and strategic electrification, where the latter means
expanding the uses of electricity to achieve other objectives such as economic development.
It was expected that DSM programs would be regarded as playing a key role in utility
resource planning. This led to the concepts of least-cost planning and integrated resource
planning. In the second half of the decade, concerns surfaced that large DSM expenditures on
energy efficiency and conservation programs were resulting in revenue losses to the utilities.
These concerns were justified, since DSM spending was lowering sales but the utilities had to
cover their fixed costs regardless of the amount of electricity that was sold. Several
“decoupling mechanisms” were devised to make the utilities whole by ensuring that they
would recover their revenue requirement regardless of the amount of power sold. In other
words, recognizing that utilities had large fixed costs, the mechanisms would ensure that
sufficient revenues would be collected to cover these fixed costs, even if sales went down.
This was achieved by raising electric rates by a small amount to cover the revenue deficiency
created by lowered sales volumes. A series of cost-effectiveness tests were developed to
ensure that programs would reflect the often-conflicting perspectives of the utility, its
customers and society. Some experiments were carried out with real-time pricing (RTP).
Third Wave: Early 1990s
The third wave came in the early 1990s. It was brought on by new regulatory mechanisms for
implementing DSM programs, comprised of the decoupling mechanism mentioned above,
provisions for cost recovery and incentives to shareholders for investing in energy efficiency
programs. The shareholder incentives involved raising the allowed rate of return to the utility
in response to its performance on its DSM programs. DSM activity expanded rapidly in some
states, but there was resistance in several others. There was a new focus on measuring the
environmental benefits of DSM programs. The year 1993 was the high water mark for DSM
spending in the US. Annual DSM spending reached $3.2 billion and represented 1.7 percent
of utility revenues. DSM programs were in place in 447 utilities. In the mid-1990s,
14
competition from independent power producers, using natural gas-fired, modular combustion
turbines, became a serious threat to the viability of vertically integrated utilities. They began
to institute a wide range of cost-cutting measures and any programs that were placing an
upward pressure on rates were eliminated or reduced in size. Many DSM programs,
especially the ones that emphasized energy efficiency measures, fell in this category. Thus,
DSM expenditures dropped dramatically as utilities geared up for competition.
Fourth Wave: Late 1990s
The fourth wave came in the late 1990s. Regulators were concerned that DSM expenditures
were on the decline. They instituted a “public goods charge” to cover DSM expenditures.
These were imposed as a charge on the sale of electricity by distribution utilities and had to
be paid regardless of who was the ultimate power provider. DSM programs were
administered by distribution utilities and often implemented by third-party energy service
companies (ESCOs). From 1989-99, utilities had spent a total of $14.7 billion on energy
efficiency programs.
Fifth Wave: 2000 Onwards
The fifth wave began in the year 2000, and was triggered by price spikes in wholesale power
markets. It got a boost in the year 2001, as California experienced a serious power crisis that
spread quickly to cover all Western states. In this phase, there was widespread interest in
implementing pricing reform rather than relying on traditional DSM programs. In particular,
there was interest in dynamic pricing. This is a form of time-varying pricing that goes beyond
static TOU pricing. Dynamic pricing is a form of pricing in which either the price for a period
is unknown ahead of time, or the time when a known price will be called is unknown. It has
been available to large customers for years, as real-time pricing (RTP). The digital revolution
has now brought it to mass-market customers.
1.5.2. U.S. Experience with DSM DSM energy efficiency programs evolved in the United States during the 1980s primarily as
utility demand-side resource investments. Regulators considered efficiency investments an
integral part of a utility’s overall resource portfolio, and required these investments when
they lowered costs as compared to utility supply-side resources, a process known as
integrated resource planning, or IRP. Utilities designed and implemented energy efficiency
15
programs for their customers, while regulators determined how to measure cost effectiveness,
approved budgets, verified results, and, in many jurisdictions, provided regulatory incentives
designed to align utility financial motives with ratepayer interest in achieving cost-effective
efficiency investment, thus avoiding more expensive supply-side alternatives (Harrington and
Murray 2003).
In the United States, more than 500 utilities implemented DSM programs from 1985- 1995,
saving more than 29 GW of peak load. The average upfront cost of implementing this energy
savings was only 2 to 3 cents per kilowatt-hour, far below the average tariff. The Rand
Corporation issued a report in 2000 that quantified the benefits of California’s utility energy
efficiency programs, finding that DSM programs operated since 1977 have provided benefits
to the state economy of U.S. $875 to 1,300 per capita (1998) and reduced air pollution
emissions from stationary sources by approximately 40% (Nadel 2000).
DSM programs in the United States, as in many countries, faltered in the wake of electric
utility restructuring and the belief that market forces would be sufficient to provide energy
efficiency. In the United States, investment in ratepayer-funded energy efficiency, not
including load management expenditures, declined dramatically from $1.6 billion in 1993 to
$900 million in 1997. Much of this decline can be attributed to the elimination of regulatory
requirements for utilities to conduct IRP and DSM programs (York and Kushler 2003). More
recently, however, many jurisdictions have come to realize that comprehensive DSM
programs are essential, even after power sector reform, to fill in the gaps left by the market in
providing energy efficiency. Total U.S. spending on utility DSM has risen steadily to $1.10
billion in 2000. Even more important, a wide variety of states and utilities have realized the
benefits of DSM in providing long-term solutions to electricity system reliability concerns
(Kushler and Witte 2003).
1.5.3. California Success Story
The most prominent example is California, whose leadership in energy efficiency and DSM
substantially reduced the economic and environmental damage associated with the state’s
severe energy crisis of 2001. In response to the crisis, Californians reduced their total
electricity consumption in 2001 by 6.7 percent (weather adjusted) compared to 2000, even as
the economy continued to grow. These demand reductions did not occur spontaneously, but
16
in response to a series of coordinated DSM measures and policies that were already in place
(NRDC/SVMG 2001).
By 1999, California’s energy efficiency investments and standards had already removed
about 10,000 megawatts from its peak demand, the equivalent of 20 large power plants. In
2001, the governor was able to use these programs, including public education programs,
rebates and other financial incentives, to coordinate the most successful state wide energy
conservation program in history. Consumers bought record numbers of energy-efficient
appliances in 2001, including nearly 100,000 high-efficiency refrigerators (more than five
times that in 2000) and 4 million compact fluorescent light bulbs (NRDC/SVMG 2001).
These concerted efforts on the part of millions of Californians in 2001 enabled the state to
avert a recurrence of its 2000 electricity crisis. A 2003 study examined the magnitudes,
sources, and costs of the savings contributing to California’s successful DSM deployment.
The following table summarizes the results of the study by Global Energy Partners of the
impacts and costs of California’s combined efforts:
na = Not Applicable [a] For a complete definition of the program categories, please see Table ES-1. [b] Los Angeles Department of Water and Power (LADWP) and Sacramento Municipal Utility District (SMUD). [c] City of San Francisco and City of Berkeley. [d] Includes 20/20 Rebate program (discounted for double counting), and residual effects, including the Flex Your Power public awareness campaign, free media coverage, and increasing rates. [e] Based on weighted average lifetimes of measures for each program category, and a discount rate of 8%.
Table1.5.1: Impact & Cost of California’s DSM effort
17
In all, the study found that 218 programs spent a total of U.S. $893 million in 2001 to save
3,389 MW of summer peak demand and 4,760,184 MWh of annual energy usage at a lifetime
cost of 3 cents/kWh (Global Energy Partners 2003).
Recognizing the value of DSM programs, especially in a restructured electricity market,
California substantially increased funding for utility DSM programs in 2001 to more than
U.S. $480 million, an increase of more than 50% over 2000 levels. The legislature also
extended until 2012 the use of the system benefit charge, a small surcharge on every
California utility bill. This surcharge will raise more than U.S. $5 billion of investment in
energy efficiency, renewable energy, and technology development, the largest sustainable
energy fund ever created by a single legislative action (NRDC/SVMG 2001). In addition, in
May 2003, the state’s three largest investor owned utilities announced plans to expend U.S.
$2 billion over the next five years on DSM. Of this total, U.S. $720 million is for
procurement of resources above and beyond the U.S.$1.1 billion funded by the current
system benefit charge (SBC), a small surcharge on customers’ utility bills. As part of this
renewed commitment, the utilities are seeking clarity on regulatory treatment, including cost
recovery rules (McCarty et al., 2003).
Substantial inexpensive efficiency resources are still available in California. New evidence
shows that over the next decade, California could realistically and cost effectively reduce its
electricity needs by an additional 900 MW—the equivalent of 12 giant power plants—while
avoiding the environmental damage associated with electricity generation. This added
investment in efficiency would save California an estimated U.S.$12 billion (NRDC/SVMG
2003).
18
CHAPTER-2
LITERATURE SURVEY, POLICY & RESEARCH
METHODOLOGY
2.1. Literature review
Who Should Administer Energy Efficiency Programs? - Carl Blumstein, Charles
Goldman, Galen Barbose, University of California Energy Institute, [USA, August 2003]
The restructuring of the US electricity industry, in order to create a competitive wholesale
electricity market, in turn created numerous problems for traditional, publicly-supported
energy efficiency programs, where through Integrated Resource Planning, and funding from
consumer charges, demand-side energy efficiency issues were addressed. Market
transformation activities were instead encouraged, for example, the promotion of business
model restructuring and capacity building and education programs. However, with changes to
the regulatory environment made in the wake of the Californian power system collapse of
Winter 2000-2001, a number of issues relating to the administration of energy efficiency
programs were raised, including the institutional structure of an administrative body, driving
factors for policy-makers in considering EE program administration, and many more.
The paper begins by assessing the various elements of energy efficiency program delivery,
include co-ordination of the program, development, budgeting, implementation, and
evaluation. The criteria to be considered in choosing an administrator for EE programs are
then discussed, including the necessary incentive structure, administrative compatibility with
policy goals, and other factors. Four case studies of U.S. Regions are then provided, with
varying models for the administration of EE programs, including California and New York
state. Finally, conclusions are drawn, assessing various candidates for energy efficiency
administrators.
Energy Efficiency Labels and Standards: A Guidebook for Appliances, Equipment and
Lighting – Stephen Wiel, James E. McMahon, Collaborative Labelling and Appliance
Standards Program (CLASP), USA, [2005]
One of the first steps taken in the creation of energy efficiency programs is often the
establishment of standards & labelling programs for consumer products. This guidebook
seeks to act as the primary reference for policy-makers, government officials, and other
interested parties in their efforts to implement such programs, and contains a complete
19
overview of the issues surrounding standards & labelling activities. The benefits and
problems with energy efficiency labels and standards are discussed, as well as the human and
institutional resources necessary for ensuring the development and maintenance of such
programs. A comprehensive breakdown on the design, development, implementation,
monitoring and evaluation of standards & labelling programs is also provided.
Policies for Increasing Energy Efficiency: Thirty Years of Experience in OECD
Countries –Howard Geller (Southwest Energy Efficiency Project, USA), Phillip Harrington
(Department of Infrastructure, Energy and Resources, Tasmania, Australia), Arthur H.
Rosenfield (California Energy Commission, USA), Satoshi Tanishima, Fridjof Unander
(International Energy Agency), [2006]
The importance of energy efficiency measures to developed economies is widely recognised,
and it is posited that without the energy efficiency measures that have been undertaken in
OECD countries over the last thirty years, energy consumption would have been 49% higher
than that observed in 1998. This paper seeks to examine the policies and instruments that
have been implemented in OECD nations over the previous three decades, firstly by
reviewing the energy intensity trends in all OECD countries from 1973 onwards, in order to
ascertain the true contribution of energy efficiency measures to energy intensity reduction,
and then by conducting an in-depth analysis of the energy policies and programs adopted in
Japan, the United States and Western Europe, as well as a comprehensive look at Californian
policy in particular. The examination of global energy policy begins with a sectoral look at
Japanese policy, encompassing residential, commercial, industrial and transportation issues.
The section for the United States examines the effect that federal governance can have on
energy efficiency, describing both local and national programs, as well as the effect these
programs have had on overall energy savings. Western European policy is similarly analysed,
on a national and multi-national level.
Policies for Promoting Industrial Energy Efficiency in Developing Countries and
Transition Economies – Aimee McKane, Lynn Price, Stephane de la Rue du Can, Lawrence
Berkeley National Laboratory, prepared for UNIDO, [2007]
As one of the most energy intensive sectors in the global economy, the industrial sector is
surprisingly often overlooked by policy-makers when assessing options for improving energy
efficiency. Particularly in developing countries, an energy-intensive industrial sector can
create tension between continued economic development and a constrained or ineffective
20
energy supply. Common perceptions hold that public policy is insufficient in dealing with
such a complex issue as industrial energy efficiency, and that market pressures alone are
sufficient to ensure improvements. This paper provides a portfolio of coherent, proven policy
options under the international Industrial Standards Framework, in an effort to introduce a
standardised methodology for the design of industrial energy efficiency programs. Under this
framework, it is proposed that cost-effective energy reductions in industry of 18-20% are
entirely feasible. The paper begins with an overview of industrial sector trends in energy
consumption, covering economic development and manufacturing productivity, as well as
energy consumption. A comparison of these trends in developing and developed countries is
made also. The opportunities for, and barriers to, improving industrial energy efficiency are
then discussed, followed by a comprehensive description of the model industrial standards
framework, encompassing energy management standards, capacity-building, financing and
fiscal policies, and more. The paper concludes with a set of recommendations for policy-
makers in implementing the standardised framework.
Realising the Potential of Energy Efficiency: Targets, Policies and Measures for G8
Countries – Expert Group on Energy Efficiency, United Nations Foundation, USA, [2007]
Energy efficiency improvements are widely seen as the cheapest and surest means of creating
energy savings, sustaining economic growth and curbing carbon emissions. This report
proposes that the G8+5 countries undertake ambitious, but achievable, programs to double
the historical rate of energy efficiency improvement, avoiding the need for up to US$3
trillion in new generation capacity in the period 2012-2030. In addition, to achieve this goal,
a set of proven policy options is provided, covering a variety of sectors, to help policy-
makers create effective national strategies. Finally, a framework for co-operation between
G8+5 nations is suggested, including proposals for annual summits, and internationally-
comparable data collection for energy efficiency. The report begins with a brief summary of
the technical and economic benefits of energy efficiency, before recommending international
and national strategies for realising energy efficiency potential, including cross-sectoral
measures, and incentives for public- and private-sector investment. The report then goes on to
highlight a number of individual policies for the building, transportation, industrial and
energy supply sectors, as well as assessing the overall potential for energy efficiency in each
sector. Finally, the report briefly explains how the proposed measures could be applied in
developing and transition economies
21
Fuelling Sustainable Development: The Energy Productivity Solution - Diana Farrell,
Jaana Remes, Dominic Charles, McKinsey Global Institute, [October 2008 ]
A number of developing countries with emerging economies are encountering the problem of
ageing or insufficient energy supply infrastructure, when faced with growing energy demands
to fuel economic growth. This paper proposes that the most cost-effective way of dealing
with energy supply concerns is through improving energy productivity, the economic output
that a country can achieve with the energy it uses. Through improving demand-side
efficiency, fuel imports can be reduced, and planned expansion of supply infrastructure can
be scaled back, alleviating unnecessary pressure on the economy. In addition, the MGI
estimates that global cost savings of up to US$600 billion per year could be achieved through
the utilisation of energy efficient technologies. The report begins with a complete
introduction into the concept of energy productivity, as well as the potential benefits that its
improvement could have globally. An in-depth analysis is then undertaken, quantifying the
current state of a number of factors that could be affected by energy productivity
improvements, including per-capita CO2 emissions, energy supply mix by fuel source, and
many more. Accompanying this analysis are a number of comparative explanations between
countries and regions. The report goes on to propose a selection of enabling policy
mechanisms for energy productivity improvements, and explain the wide range of potential
benefits for business in creating markets for energy efficiency in developing economies.
A Description of Current Regulatory Practices for the Promotion of Energy Efficiency –
The International Confederation of Energy Regulators, [June 2010]
The challenges facing the growth in energy efficiency globally are numerous, from an
unaddressed need for systematic information gathering and under-researching of the field, to
a lack of comparative analysis of different approaches to promote energy efficiency. This
report provides information on regulatory practices in the world's energy markets designed to
foster energy efficiency. A wide range of approaches are identified in this report, from legal
and regulatory obligations, to consumer information campaigns, instituted by a variety of
bodies, from government departments to national energy regulators. In addition, a number of
energy efficiency indicators, such as primary energy intensity and primary energy
consumption
22
2.2. Research methodology
This project of is based on the basic concept of research methodology. The following
concepts are directly or indirectly used while doing this project.
Research Design
This study is an exploratory research to understand the concept of DSM, the current
framework of DSM implementation in the state of Maharashtra and international experiences
in the area. The study attempts to look at the future of DSM in India.
Universe and Survey Population
The universe in this case consists of the DSM pilot projects in state of Maharashtra as well as
in the world.
Sample
The sample taken consists of few pilot projects in Maharashtra
Collection of Data
Various Regulations, codes and Commercial records are sources of data for this study.
Analysis Pattern
Data analysis is done by comparative study of handling similar issues in other state s and
nations across world
23
2.3. Price responsive DSM program
This emphasize price responsiveness, and are aimed at introducing a negative slope in the
demand curve in order to let demand and supply balance out at a reasonable price of
electricity during tight market conditions.
Programs involving demand response to price signals are not widely available in developing
and transition economies at this time.
This program basically consists of two categories:
Load curtailment programs that pay the customer for reducing peak load
during critical times.
Dynamic pricing programs that give customers an incentive to lower peak
loads in order to reduce their electricity bills.
Both types of programs are largely designed to relieve peak capacity constraints but they
could also be used to retain customers in a restructured market context.
2.3.1. Load curtailment program
Load curtailment programs include traditional programs that are based on an up-front
incentive payment and new market-based programs that involve a pay-for-performance
incentive payment. The former include direct load control of residential air conditioners and
water heaters, and curtail-able and interruptible rates for commercial and industrial
customers.
The latter include programs that pay a certain amount of money for each MWh of electric
load that is curtailed during critical time periods. These are sometimes also called demand
bidding or buyback programs as well.
These programs introduce price responsiveness in restructured power markets and were
developed in the aftermath of the California crisis. There are two types of market-based
programs, one that deals with emergency situations by improving system reliability, and
another one that deals with economic situations by mitigating the rise in wholesale prices.
Internationally these programs are implemented by the Independent System Operator (ISO,
which is sometimes called the Independent Market Operator). The utilities can help in
24
creating customer awareness. Energy service companies can act as aggregators that bid
demand reductions during critical times.
Large commercial and industrial customers are often the main participants in such programs.
Sometimes, program can include large multi-family dwellings. Program participants benefit if
they have the flexibility in their business or technological processes to curtail peak loads
during a few hours of the year.
Incentive payments are made to customers to induce them to reduce peak loads. In some
variants, there is also a penalty for non-compliance. A pre-requisite for these programs is an
agreed upon methodology for measuring customer base load (CBL), against which the
curtailed amounts can be measured.
In another variant of the program design, customers may bid “negawatts” of load reductions
at pre-specified prices. But its not very popular among consumers because of their inability to
think systematically think about the financially opportunity created by bidding, since
management focus is often diverted by higher priority issues dealing with running the
business.
The largest component of program cost is the incentive payment. Other elements of program
cost include administrative costs associated with program management, some program
evaluation cost and some marketing cost.
Experience with such programs indicates that it can be difficult to recruit customers into such
programs even when the economic benefits are clear. Utilities should explain in lay terms
what the customer has to do in order to save money and what the risks are of not seeing those
savings. If the savings look small in relation to day-to-day expenses and life priorities, it is
hard to get the customer involved in the “distraction.”
One cannot expect customers to get “smarter.” The ISOs and utilities have to position
themselves as being the customer’s partner in helping balance electricity demand with
electricity supply in order to manage electricity costs.
Benefits to utility:
It is non-polluting (when curtailment used).
It has the advantage of being fully distributed across the service area.
It’s available more quickly than the traditional thermal plant.
It incurs no T & D line losses.
25
It responds faster than a traditional plant; and can be used when bilateral
scheduling and exchange closes.
It helps utility to better manage the grid and available supply by utilizing
voluntary instead of involuntary load shedding.
It costs less to create and run than a traditional plant or short term power
purchase.
It creates additional revenue for large power cucstomers which greatly increases
the satisfaction with the utility.
It complies regulatory requirements, and helps meet indian government objectives
of climate change mitigation.
Benefits to Participating Consumers:
Focus on longer-term efficiency / become part of solution.
Contribute to an overall more stable supply from the Grid (which will eventually
improve their own situation)
Benefits to environment and everyone:
It incentivized the reduction in power wastage by consumers.
It helps to achieve better overall energy efficiency
It greatly reduces emissions.
2.3.3. Dynamic pricing programs
Dynamic pricing programs are designed to lower system costs for utilities and bring down
customer bills by raising prices during expensive hours and lowering them during
inexpensive hours, as discussed further below. Their load shape objective is to reduce peak
loads and/or shift load from peak to off-peak periods.
Such programs can be implemented at any stage of power sector reform. There are successful
examples of power sectors that have not been deregulated and are served by vertically
integrated electric utilities, and successful examples where the sector has been fully
deregulated.
The electric utility is most often the primary party responsible for program design,
implementation, and evaluation and monitoring. Since these programs involve the
implementation of new metering and billing systems, they are often conducted in close
26
coordination with providers of such systems. In some cases, the programs involve the
installation of end-use controlling equipment, such as smart, price-sensitive thermostats.
Thus, they may involve the installers and manufacturers of such equipment.
Such programs can be targeted at any class of customer, ranging from the residential class to
the commercial class to the industrial class. Most often, they begin with the industrial class of
customers, and within a particular class they begin by targeting the largest customers.
The market implementation mechanism is the rate design itself. This is often accompanied by
an educational campaign to inform customers about the benefits of dynamic pricing. In some
cases, technical assistance may be provided to assist customers in benefiting from the
incentives that are implicit in the rate design.
Time-of-Use Pricing (TOU)
This rate design features prices that vary by time period, being higher in peak periods and
lower in off-peak period.
The simplest rate involves just two pricing periods, a peak period and an off-peak period.
More complex rates also have one or more shoulder periods.
Developing a TOU rate
It is fairly straightforward to develop a TOU rate design. The following table shows the steps
involved in developing a revenue-neutral TOU rate.
Such a rate would leave the average customer’s bill unchanged if that customer chose to
make no adjustments in their pattern of usage.
Of course, a customer who uses less power in the peak period than the average customer
would be made better off by the rate even without responding to the rate and a customer who
uses proportionately more power in the peak period than the average customer would be
made worse off by the rate if he or she did not respond to the rate.
27
Existing Flat Rate
Per-Customer Class Revenue Requirement
Monthly Usage
Average Price
Revenue Neutral TOU Rate
Estimated Peak Usage
Estimated Off-Peak Usage
Set Peak Price = Peak Marginal Cost
Set Off-Peak Price = Off-Peak Marginal Cost
Given Class Revenue Requirement
Given Monthly Usage
TOU Rate with Load Shifting
Estimated Price Elasticity
Estimated New Peak Usage
Estimated New Off-Peak Usage
Estimated New Monthly Usage
Estimated New Monthly Bill
Estimate Bill Savings = Revenue Loss
Rs 100
1000 kWh
Rs 0.10 / kWh
200 kWh
800 kWh
Rs 0.2 /kWh
Rs 0.075 kWh
Rs 100
1000 kWh
-0.2
160 kWh*
840 kWh*
1000 kWh
Rs 95
Rs 100 – 95 = Rs 5
Table 2.3.3.1: Steps for developing a TOU rate
28
Critical Peak Pricing (CPP)
This rate design layers a much higher critical peak price on top of TOU rates. The CPP is
only used on a maximum number of days each year, the timing of which is unknown until a
day ahead or perhaps even the day of a critical pricing day.
Designing a CPP Rate
Under this rate design, customers are on TOU prices for most hours of the year but
additionally face a much higher price during a small number of critical hours when system
reliability is threatened or very high prices are encountered in wholesale markets because of
extreme weather conditions and similar factors.
In 1993, EDF introduced a new rate design, tempo, and now has over 120,000 residential
customers on it. The program features two daily pricing periods and three types of days. The
year is divided into three types of days, named after the colours of the French flag. The blue
days are the most numerous (300) and least expensive; the white days are the next most
numerous (43) and mid-range in price; and the red days are the least numerous (22) and the
most expensive. The ratio of prices between the most expensive time period (red peak hours)
and the least expensive time period (blue off-peak hours) is about fifteen to one, reflecting the
corresponding ratio in marginal costs.
Fig 7.2.1: EDF’s tempo and standard TOU rates
29
Extreme Day Pricing (EDP)
This rate design is similar to CPP, except that the higher price is in effect for all 24 hours for
a maximum number of critical days, the timing of which is unknown until a day ahead.
Extreme Day CPP (ED-CPP)
This rate design is a variation of CPP in which the critical peak price and correspondingly
lower off-peak price applies to the critical peak hours on extreme days but there is no TOU
pricing on other days.
Real Time Pricing (RTP)
This rate design features prices that vary hourly or sub-hourly all year long, for some or
customer’s entire load. Customers are notified of the rates on a day ahead or hour-ahead
basis.
Each of these rates exposes customers and utilities to varying amounts of risk. For example,
RTP rates are riskiest from the customer’s viewpoint since the utility simply passes through
the wholesale costs to the customer. These rates have minimal risk to the utility. CPP rates
carry less risk to the customer, since they know the prices ahead of time and the time for
which these prices will be in effect is limited.
30
2.4. DSM in India
Reddy et al (1991, 1993) proposed a development focussed end-use oriented (DEFENDUS)
electricity scenario for Karnataka in 1991. This evolved possibly the first least cost plan for
an Indian state. Considering renewable and energy conservation options, Nadel et al (1991)
examined the potential for improved end-use efficiency in India. A Demand Side
Management plan for the high tension industrial segment in Maharashtra was chalked up by
BaneIjee and Parikh (1994) in 1993 (Details of the plan are reported in Parikh, et al., 1994).
There have been a number of other studies to determine the potential for specific DSM
options or DSM potentials for a consumer class or a region (studies by consultants,
institutions like Tata Energy Research Institute, International Energy Initiative, non-
governmental organisations like Prayas (Sant and Dikshit, 1994).However even years after
the publications of these studies, very little has been done in terms of implemented DSM
programmes. It is often felt that this is caused by the supply bias of the utility.
Utility Response to the DSM
For the purpose of analysis, it will be assumed that the decision maker in the utility
(Discoms) is rational and is not biased towards supply. Given the existing policies and
pricing structure how should the utility react to DSM ?
In formulating the utility response, the following characteristics of the utility should be
considered:
(a) The utility is a monopoly.
(b) The utility has a peak shortage and an off-peak surplus.
(c) There are variations in the tariffs to different consumer classes with the industrial and
commercial consumers cross subsidising the and domestic consumers.
(d) There is a limit on the total revenues of the Discoms. A maximum rate of return of 3 % on
net fixed assets is permitted by government policy.
Most of the utilities resort to load shedding to control the peak demand. Utilities also find it
difficult to raise capital for new power plants. In this context they should be willing to
examine DSM as an option. In order to shortlist possible DSM programmes for
implementation the utility would adopt the following criteria:
31
(a)Low Transaction Cost For the DSM: Programmes to be viable the transaction cost
should be a small proportion of the total programme cost.
(b)High Potential Saving There should be a significant potential for saving for the
DSM measures selected.
(c) Revenue Considerations DSM programmes should not adversely affect the
revenue balance of the State Electricity Board (Discoms)
(d) Customer Viability The customer should be willing to adopt DSM measures, viz.
The payback periods for the customer should be low.
Recommendation of Integrated Energy Policy for DSM
The following recommendations have been made in the integrated Energy Policy Report of
the Planning Commission Government of India
The importance of energy efficiency and DSM has clearly emerged from the various
supply scenarios and is underlined by the rising oil, coal and other fuel prices.
Efficiency can be increased in energy extraction, energy conversion, energy
transportation, as well as in energy consumption. Further, the same level of service
can be provided by alternate means requiring less energy. Thus a “Negawatt” (a
negative Megawatt),produced by reducing energy need saves more than a
Megawatt generated
A study for the Asian Development Bank (ADB, 2003) estimated an immediate
market potential of energy savings of 54,500 Million Units and peak saving of 9240
MW. This has an investment potential of Rs.14,000 crores (3500 Million US
Dollars). Though there is some uncertainty in any aggregate estimates, it is clear that
the cost-effective saving potential is at least 10% of the total generation through
Demand Side Management.
In actual practice there are several barriers that constrain the adoption of EE/DSM.
These relate to high transaction cost, lack of incentives to utilities who perceive DSM
as loss of market, inadequate awareness, lack of access to capital, perceived
uncertainty concerning savings, high private discount rate and limited testing
32
infrastructure for ascertaining savings. Policy interventions are required to address
these barriers.
BEE (Bureau of Energy Efficiency) should be made autonomous and independent of
the Ministry of Power. It should be funded by contribution from all energy Ministries
or a cess on fuels and electricity adjusted for cess on fuels used for generating
electricity. BEE staffing should be substantially strengthened.
Implementing Time of Day (TOD) Tariffs: All utilities should introduce TOD tariffs
for large industrial and commercial consumers to flatten the load curve. Utilities
should support load research to understand the nature of different sectoral load
profiles and the price elasticity of these loads between different time periods to
correctly assess the impact of differential tariffs during the day.
Improving efficiency of Municipal Water pumping:- Institute measures that
encourage adoption of efficient pumping systems and shifting of pumping load to off-
peak hours. The public sector should be mandated to do so. Private sector could be
encouraged to do so through time of day pricing. This will help reduce peak demand
and energy demand.
Promoting Variable Speed Drives: All large industries should be required to assess
suitability of variable speed drives for their major pumping and fan loads.
Undertaking efficient Lighting Initiative: Utilities should launch pilot efficient
lighting initiatives in towns/cities (similar to the BESCOM programme in
Bangalore). Features should include warranties by manufacturers, deferred payment
through utility bill savings.
Regulatory commissions can allow utilities to factor EE/DSM expenditure into the
tariff.
Each energy supply company/utility should set-up a DSM/energy efficiency cell.
BEE can facilitate this process by providing guidelines and necessary training inputs.
A large number of pilot programmes that target the barriers involved and have low
transaction costs need to be designed need to be tried with different institutions,
incentives, and implementation strategies. Innovative programme designs can be
rewarded.
33
2.5. DSM regulations in Maharashtra
In exercise of the powers conferred by sub-section (1) of Section 181 and clause (zp) of sub-
section (2) of Section 181 of the Electricity Act, 2003 and all other powers enabling it in this
behalf, the Maharashtra Electricity Regulatory Commission hereby makes the following
Regulations:
1. Maharashtra Electricity Regulatory Commission (Demand Side Management
Implementation Framework) Regulations, 2010
2. Maharashtra Electricity Regulatory Commission (Demand Side Management
Measures and Programmes’ Cost Effectiveness Assessment) Regulations, 2010
2.5.1. DSM implementation framework
The DSM Implementation Framework is the primary regulatory document facilitating DSM
implementation in the state.
It is organised under the following heads:
Basic Principles on which the DSM Implementation in the state is planned
Guiding Principles that specifically outline the role of the Distribution Licensee
DSM Programme Eligibility Criteria
The detailed outline for the Development and Submission of DSM Portfolio and
Plans
Role of the DSM Consultation Committee (DSM – CC)
Responsibilities of the Distribution Licensees related to DSM Planning and
Implementation
DSM Funding
DSM Programme, Portfolio and Annual Work Plan and its Approval Process
Evaluation, Measurement and Verification
Monitoring and Reporting
End of DSM Programme Completion Report
Selection Criteria: Methodology for Selection of DSM Programmes to be include in
the DSM Plan
Selection Criteria for other Programmes to be included in the Plan
34
Power to Remove Difficulties
Issue of Order and Practice Directions
Power to Amend
2.5.1.1. Basic principles
This is covered under clause 3 of the regulation and it basically gives a broad description of
the principles for how every Distribution Licensee shall make DSM an integral part of their
day-to-day operations, and undertake planning, designing and implementation of appropriate
DSM programmes on a sustained basis.
It also speaks of the means to recover all justifiable costs incurred by the utilities in any DSM
related activity, including planning, designing, implementing, monitoring and evaluating
DSM programmes, by adding these costs to their Annual Revenue Requirement to enable
their funding through tariff or by implementing programmes at the Consumers’ premises that
would attract appropriate Return on Investment.
Distribution Licensees shall be guided by these regulations:
(i) While planning and submitting long-term power procurement plan to the
Commission as part of their application seeking determination of tariff;
(ii) While submitting to the Commission the measures proposed to be implemented by
them as regards load management, energy conservation and energy efficiency;
(iii) While submitting to the Commission the impact on energy and demand, together
with the cost-benefit analysis.
Distribution Licensees shall be guided by the MERC (Demand side Management Measures
and Programme’s Cost Effectiveness Assessment) Regulations, 2010 while carrying out cost-
effectiveness.
35
2.5.1.2. DSM guiding principles
Major highlights of this clause are:
Quick-gain; long-term savings
Stakeholder consultation
Align programs with BEE’s EE/EC efforts
Create a separate DSM Consultation Committee
Other than that it speaks about the duties of distribution licensees. Duties enlisted in the
clause are:
1. Distribution Licensees shall implement quick acting DSM programmes that provide
long-term savings.
2. Distribution Licensees shall propose and implement programmes bringing in energy-
efficiency in the premises used for the following purposes - commercial, public-
sector, residential, municipal, industrial and agricultural use.
3. Distribution Licensees shall implement programmes that help reduce peak demand
peak shifting and associated costly power purchase, specifically in the urban centres.
Such programmes shall also include Demand Response initiatives involving
consumers agreeing to modulate their load shapes through a contract with the
licensee.
Distribution Licensees formulate DSM programme designs that provide sustainable benefits
(market transformation), and which particularly:
1. Enhances consumer interest and inclination in adopting load management and
energy efficiency.
2. Enhances the interest and the willingness of the intermediaries such as the banks to
lend for energy efficiency measures.
3. Enhances emergence or development of sustainable energy delivery entities.
Distribution Licensees shall implement programmes that are:
1. Cost effective for total resources;
36
2. Do not put undue burden on non-participants (those who do not participate in the
DSM programmes) and participants (those who participate in the DSM programmes
3. Directly or indirectly benefit the consumers in all segments from the programmes.
Design, development and implementation of DSM programmes that supplement national
level efforts, specifically those promoted by the Bureau of Energy Efficiency (BEE)
“Market Driven” approach to DSM portfolio selection
Ensuring pragmatic implementation of programmes and also consumer awareness and
education
Setting up of a nodal agency – the DSM Consultation Committee to drive the programme
implementation under these regulations, and to recommend DSM Programme to the
Commission for approval
2.5.1.3. DSM programmes eligibility criteria A DSM programme shall be eligible if in the opinion of the Commission the said programme
meets with the DSM guiding principles specified in Regulation 4 of these Regulations.
2.5.1.4. Development and submission of DSM portfolio and plans
a) Distribution Licensees shall formulate DSM Plans based on Load Research activities
and submit the findings to the Commission in the form of “DSM Plans”.
b) Distribution Licensees shall specify DSM targets and submit DSM plan based on
multi-year planning horizon.
c) The term of the DSM plan shall correspond with the Multi-year Tariff term.
d) Distribution Licensees shall submit Multi-year DSM plans along-with the multi-year
tariff filing provided that till the time the multi-year tariff filings are made,
Distribution Licensees shall submit DSM plans as one-year targets and reconcile
those as Multi-year plans when the multi-year tariff filings are made.
e) DSM Plan shall contain prioritisation and implementation schedule for each DSM
programme in the Plan, which shall form the basis for deriving aggregated year wise
37
schedules for funds requirement, and DSM plan achievements in terms of savings or
shifting/reduction of peak load.
f) The aggregated year-wise funds requirement and proposed achievements shall be used
as annual DSM budgets and annual targets, respectively.
g) At the beginning of the multi-year planning cycle, the Commission shall accord
approval to the DSM Plan, based on the Cost-effectiveness of the individual
programmes and portfolio.
2.5.1.5. Role of DSM consultation committee (DSM-CC)
The DSM – CC is the nodal agency for the formulation and successful implementation of the
DSM initiatives and programmes undertaken by the various Distribution Utilities in the state.
This section of the DSM Implementation Framework deals with the formation of the DSM –
CC – primarily its composition and its role. The objectives and functions of the committee
are clearly articulated in this section.
The objects and functions of the DSM Consultation Committee shall be to:
Assist the Commission in DSM programme and DSM Plan evaluation;
Advise the Distribution Licensees on conducting perpetual Load Research to seek
information on end-use technologies, usage patterns, willingness to pay, perception
studies and impacts of already implemented DSM programmes;
Promote cross-learning among the Distribution Licensees and other stakeholders to
design appropriate DSM programmes and plans;
Undertake or direct research and analysis work related to:
1. Development of database and centralised information system
2. Development of guidelines/regulations resulting in facilitation of DSM
programme implementation
3. DSM and demand response potential studies;
4. Development of innovative Tariff offerings to promote DSM.
Review DSM programme, portfolio and DSM Plans submitted by the distribution
licensee;
Review common programmes across Distribution Licensees (common procurement,
common specifications for equipment/technology);
Oversee activities of the Distribution Licensees related to DSM Plan preparation and
DSM Programme Design;
38
Create avenues for training/capacity building within Distribution Licensees;
Assist in maintaining centralized information system and data base;
Drive market research and consumer surveys that would be useful for the Distribution
Licensees to design DSM Programmes and Plans;
Provide assistance to the Commission to institute DSM Plan/programme monitoring
and EM&V as and when required;
Act as a platform for:
Sharing of experience with respect to the entire DSM implementation cycle,
comprising creating knowledge-base among the employees of licensee, DSM Plan
preparation, Load Research, Integrated Resource Planning (IRP), DSM programme
design, implementation, monitoring, review and evaluation;
Interaction and coordination with the Commission and knowledge partners;
Sharing of experience with respect to DSM technology development;
Joint interaction with financiers and bankers;
Joint development/running of: Awareness campaigns, awareness activities,
establishment and running of EC/EE Centres, Joint Organisation of Consumer inter-
action sessions, Exhibitions, etc.
Development of Case studies, consultant/vendor directories and technology database.
2.5.1.6. Responsibilities of the distribution licensees related to DSM planning and implementation
Distribution licensees shall evolve feasible strategies to implement all DSM-related
activities.
Distribution licensees shall nominate a nodal officer with whom the DSM
Consultation Committee can interact with.
In addition to the overarching activities promoted by the DSM-CC, Distribution
Licensees shall carry out the following specific activities:
1. Load research and consumer surveys;
2. Integrated Resource Planning (IRP) exercise that includes DSM as a key
resource in power planning;
3. Load forecasting and energy consumption baseline development;
4. Capacity development of their employees through training;
39
5. DSM Plan preparation;
6. DSM Programme design;
7. Annual DSM Budget and work plan preparation and filing of the same with
the Commission for approval;
8. Implementation of DSM plans and programmes that are approved by the
Commission;
9. Fulfilling Annual reporting requirements as may be notified by the
Commission by order and quarterly reporting of programmes implemented;
10. Setting up DSM programme level dispute resolution mechanism and
resolution of disputes, if any;
11. Performing DSM plan and programme level EM&V (Evaluation,
Measurement & Verification) as may be notified by the Commission by
order;
Providing inputs to:
1. Centralised Information system / database development work;
2. Research and analysis work;
3. DSM and demand response Potential studies;
4. Load forecasting model development efforts
Any other activities suggested by the DSM-CC or as directed by the Commission.
2.5.1.7. DSM funding
Funding of all the DSM programmes and plans to be implemented by the Distribution
Licensees shall be included in the Annual Revenue Requirements (ARR).
Distribution Licensees shall be allowed to recover all costs incurred by them in any
DSM related activity, including planning, conducting load research, designing,
implementing, monitoring and evaluating DSM programmes, by adding these costs to
their ARR to enable their funding through tariff structure.
Since the DSM costs are being recovered through tariffs, only those DSM activities
that adhere to the Regulations related to Cost Effectiveness Assessment shall be
implemented by the Distribution Licensees.
40
The Commission may direct the Distribution Licensees to adopt other complementing
DSM funding approaches such as creating a pool of funds through collection of public
benefits charge at a later date; if such an approach is found beneficial.
Distribution Licensees shall obtain the prior approval of the Commission for
implementing DSM Programmes at the consumer premises through equity placements
provided that such programmes shall be eligible for Return on Investment and would
be evaluated during the ARR approval process.
DSM budget
The following provisions apply:
1. Distribution Licensees shall set up a Multi-year DSM plan and DSM programme
budgets and submit the same during the MYT approval and Annual Revenue
Requirements (ARR) approval process.
2. The budget shall be spent only after approval of aggregated DSM Plans and/or
individual DSM Programmes by the DSM Consultation Committee.
3. DSM implementation plan and associated budgets shall be substantiated with the
prioritization of the possible programmes within the license area.
4. The DSM budget to be spent every year shall be substantiated with the kW and kWh
savings targets where such targets shall be developed by carrying out detailed load
research activity and implementing DSM programmes that may be directed by the
DSM Consultation Commit-tee proactively for the benefit of consumers in the State.
Distribution Licensees shall submit year-wise schedule of DSM plan implementation
and corresponding budget allocations relevant to the savings or shifting/reduction of peak
load.
a) The aggregated year wise funds requirement and achievements shall be the annual
DSM budgets and annual DSM targets, respectively.
b) These annual DSM budgets and targets, determined and approved at the be-ginning
of the planning cycle shall be revisited during the Annual Performance Review.
c) The DSM Consultation Committee may take special account of measures taken by
Distribution Licensees to develop carbon finance programmes using the Clean
Development Mechanism of the United Nations Framework Convention on
Climate Change (UNFCCC) or any other voluntary carbon financing protocol.
41
d) Funding for DSM activities other than DSM plan implementation Distribution
licenses shall seek separate budget approval from Commission for additional
expenses (beyond the DSM programme and DSM plan implementation) to be
incurred for activities such as carrying out load research, consumer surveys, DSM
plan and programme development activities, research and analysis, funding of any
activities proposed by the DSM-CC, conduct of potential studies, training &
development, etc.
e) Allocation of funds for consumer awareness, audits and equity considerations
Distribution Licensees shall be allowed to spend a reasonable amount, pre-
approved by the Commission on recommendations by the DSM-CC to promote
programmes of the nature described below:
o DSM Programmes that:
a. Promote consumer awareness and education about why, how, when
and where of load management/energy efficiency and include
activities such as:
i. Energy audits,
ii. Awareness campaigns,
iii. Energy Efficiency and Load Management demonstration
projects.
iv. Training programmes, seminars, workshops, round tables,
conferences, business exchange meets (buyer-seller meets)
v. Establishment of permanent display/demonstration centres
cum model “green”/ ultra-energy efficient buildings (buildings
that go beyond ECBC – Energy conservation Building Codes).
b. DSM Programmes for consumers below poverty line/consumers
consuming less than 100 units per month (generally considered as
low income consumers)
2.5.1.8. Evaluation, measurement & verification (EM&V)
1. Distribution Licensees shall be guided by the MERC (Evaluation, Measurement &
Verification) Regulations
42
2. Notwithstanding the above, till such time that such MERC (Evaluation, Measurement
& Verification) Regulations come into force, the DSM programmes implemented by
the Distribution Licensees shall be evaluated based on measurement & verification
protocols submitted in the individual programmes or aggregated plans and validated
by the DSM-CC.
3. The Commission may empanel Independent Verification Contractors (IVC) to carry
out the Evaluation, Measurement & Verification plans.
4. The Distribution Licensees shall appoint the empanelled IVCs to carry out the EM&V
plans.
5. The Commission may decide to carry out EM&V activity for individual
programme(s) or entire plans by directly appointing empanelled IVCs.
2.5.1.9. Monitoring & Reporting
1. Distribution Licensees shall submit quarterly and annual DSM monitoring plans to the
Commission.
2. The evaluation methodology shall be governed by the MERC (Evaluation,
Measurement & Verification) Regulations.
3. Notwithstanding the above, till such time that such MERC (Evaluation, Measurement
& Verification) Regulations come into force, the distribution licensee shall submit
monthly and quarterly monitoring reports to the Commission for all pilot-phase and
large-scale DSM programmes based on the proposed monitoring plans embedded in
the programme/plan designs.
43
2.6. DSM Measures’ and Programmes Cost Effectiveness Assessment The DSM Measures’ and Programmes’ Cost Effectiveness Assessment hereby provides
Regulations, for methods and principles for assessing cost effectiveness of DSM programmes
and charges recoverable by the distribution licensee in connection therewith and for matters
incidental and ancillary thereto.
These Regulations will be used to assess the economic‐effectiveness of a programme or plan
and under simple assumptions regarding some of the decision variables such as, inter alia, DSM
measure/programme costs and impacts (both, energy – kWh and demand – kVA or KW),
discount rate, life, escalation rate and avoided cost.
Other than giving detailed Cost-Effectiveness criteria for DSM programmes, the document
outlines three mathematical tests for the purpose:
1. Total Resources Cost Test
2. Ratepayer Impact Measure Test
3. Life-Cycle Revenue Impact – RIM Test
2.6.1. Total resources cost test
TRC as the main hurdle test: All DSM programmes that show positive number for the Net
Present Value (NPV) of the Benefits over the NPV of Costs should be considered for evaluation
of RIM test. NPV for a DSM measure/programme shall be determined as the difference
between B and C,
Where:
B = NPV of measure/programme benefits discounted over a specified time period
C = NPV of measure/programme costs discounted over a specified time period
Let:
The measure/programme benefit in year “t” be “Bt”,
The discounting rate be “r”,
The time period for discounting is say “n” years,
then B can be expressed as:
44
Similarly if:
The measure/programme cost in year “t” is say “Ct”,
The discounting rate is say “r”,
The time period for discounting is say “n” years,
then C can be expressed as:
n
C = Σ [(Ct)/ (1+r) ^(t-1)]............................... (Equation 2)
t=1
4. Cost elements for the TRC test shall be determined considering the following.
a) The cost of efficient device/equipment/appliance/ technology or
practice, including the applicable taxes, duties and levies;
b) Installation, trial and commissioning costs associated with efficient
device/equipment / appliance/practice/technology;
c) Yearly operation and maintenance costs over the life of the
measure/programme;
d) Old inefficient equipment removal and safe disposal costs (if the DSM
measure/programme involves replacement or retrofitting)
e) Programme administration, monitoring and evaluation costs
f) Programme marketing costs.
Benefits of a DSM programme or a DSM measure are the savings in the energy (kWh)
consumed and/or savings in the demand (kW). The kWh savings shall be calculated based on
the number of hours the energy efficient appliance/equipment is used and number of days in a
year the appliance/equipment is used. These savings usually occur at the point of use and are
experienced by the consumer installing a DSM measure or consumer participating in a DSM
programme. To arrive at the avoided purchase of power by the licensee, the participant
savings at the point of use have to be suitably adjusted to account for system transmission and
distribution losses. The benefits have to be valued over the period over which the assessment
is to be carried out.
45
2.6.2. Ratepayer impact measure test
Cost elements mentioned below shall be used in “equation 1”
a) The cost of efficient device/equipment/appliance/ technology or practice,
including the applicable taxes, duties, levies, etc. paid for by the licensee or to
the extent paid for by the licensee;Installation, trial and commissioning costs
associated with efficient device/equipment/appliance/practice/technology paid
by the licensee or to the extent paid by the licensee;
b) Yearly operation and maintenance costs over the life of the
measure/programme paid for by the licensee or to the extent paid for by the
licensee;
c) Old inefficient equipment removal and safe disposal costs (if the DSM
measure/programme involves replacement or retrofitting) paid for by the
licensee or to the extent paid for by the licensee;
d) Programme administration, monitoring and evaluation costs paid for by the
licensee or to the extent paid for by the licensee;
e) Programme marketing costs, including incentives, if any, paid by the licensee
or to the extent paid for by the licensee;
f) Decrease in licensee revenues due to the DSM programme.
Benefits of the DSM programme shall be calculated as “Avoided Cost of Power Purchase”. If
savings due to a DSM programme/measure at point of use in year “t” are ΔSt, and if
transmission and distribution losses in the same year are TLt and DLt, expressed as a
percentage, respectively, the Avoided purchase of power in year “t” (APPt) by the licensee
would be = ΔSt/[(1-TLt) x (1-DLt)]. If, rate of power purchase in year “t”, is Rt, then avoided
power purchase cost (APPCt) in year “t” would be: = APPt x Rt
Any reduction in “intra-state transmission charges”, as a result of reduction in the
average co-incident peak demand of the licensee shall be considered as a “benefit” under this
test.
While calculating energy and demand savings as benefits, year-on-year escalation rate
of 5% should be considered (Discount rate = 10.5%)
Benefits and costs; shall be calculated over the “Life” of the technology being
deployed.
46
Distribution Licensee shall use the “warranted” life of the retrofit by the technology
provider as it is important to ensure that the savings considered are realized over the life-span
of the equipment/appliances. Alternately, “life” as may be defined by the DSM Consultation
Committee shall be used.
2.6.3. Life-cycle revenue impact – RIM test
LRIM test shall be conducted using same data used for calculating the RIM test
Difference between NPV of Cost and NPV of Benefits shall be divided with total
utility kWh sales to determine the rate impact on the non-participants.
Distribution Licensees shall also submit results of two more tests – Participants Cost
Test (PCT) and Societal Cost Test (SCT); though these are not considered in the
decision-making.
2.6.4. Correction factors for power shortage situations The Cost Effectiveness tests when applied in the power shortage situations will have
to be substantiated by sound information on the hours of usage of pre and post-DSM
programme implementation for the end-uses that are retrofitted or changed or
installed newly.
Measurement and verification process to be followed for the power shortage
situations shall be designed in order to review the actual number of hours post
implementation
2.6.5. Values of key inputs used in the tests
The default input values to be considered by all Distribution Licensees in the State,
shall be as follows:-
a. Avoided cost of power purchase for TRC, RIM and PCT – Weighted Average
of Highest Marginal Cost of Power Purchase related to top 10% of energy use
stack for the past one year as computed by Maharashtra State Load Despatch
Centre
b. Avoided cost of power purchase for SCT - Rs. 10.6/kWh (prevalent for diesel
generator sets)
47
c. Escalation rates for power sales, avoided cost of purchase – 5% year-on-year\
d. Discount rate for TRC and RIM tests – 10.5%
e. Discount rate for PCT – 13%
f. Discount rate for SCT – 10%
The values are subject to change upon review by the commission.
48
CHAPTER-3 ONGOING PILOT PROJECTS AND DRAFT
REGULATION
3.1. On-going Pilot Projects For Entire Consumer Base In Maharashtra
Distribution Licensees in the state of Maharashtra are:
• 2 Private Owned DL: TPC-D & R-Infra-D
• 1 State Govt. owned DL: MSEDCL (Biggest DL in country)
• 1 DL owned by Local Authority i.e. Municipal Corporation BEST
Reliance Infrastructure Limited (R-Infra) and Tata Power are the two major distribution
licensees who have been spearheading the DSM activities in the state of Maharashtra through
pilot programmes and other initiatives.
Common programmes undertaken by both the distribution Licensees:
T5 FTL Programme
Programme on 5-Star Fans
Programme on 5-Star Split AC
Programmes undertaken by R-Infra:
Gas – Geyser Programme
5 – Star Refrigerator Programme
LT Capacitor Installation Programme for Consumers
Competence Building
Programmes undertaken by Tata power:
Gas Water Heater Programme
49
3.1.1. T5 FTL programme
T5 FTL is more energy efficient which helps in reducing energy consumption and also
system peak demand. Therefore, the T5 – FTL programme was undertaken, which envisages
the replacement of existing lighting fixtures with T5 – FTL.
The product was offered in two designs:
T5 Putty and
T5 Connect with higher power factor (>0.95) and low THD (<10%)
R-INFRA TPC-D
TARGET MARKET All Consumer Categories in
Supply Area
Residential, Industrial and
Commercial Consumers
Programme Features Replacement of
1,00,000 FTLs
Warranty Period
offered – 2 Years
Rebate:
– Residential: Rs 200 –
Commercial: Rs150
Number of T5s allowed:
– Residential: 2
– Commercial: 5
– Industrial: 10
Free installation by
skilled electrician
Disposal in Eco friendly
way
860 Consumers
Registered; nearly
1,40,000 fittings replaced
Warranty Period offered –
2 Years
Rebate:
– Residential: Rs 250
– Commercial: Rs150
Number of T5s allowed:
– Residential: 3
– Commercial: 5
– Industrial: 10
Free installation by
skilled electrician
Disposal in Eco friendly
way
Table 3.1.1 Details of T5 FTL projects by TPC-D & R-infra
R-Infra launched the programme in its entire supply area.
50
Extensive promotions through the “Change for Mumbai” campaign on Radio, Electricity
Bills, the company websites, SMS, e-Mailer etc. helped make the programme a success.
3.1.2. Programme on 5-star fans
This programme was designed to create awareness on the benefits of using energy efficient
appliances and also to remove barriers on its purchase. It envisaged the replacement of
inefficient ceiling fans by energy efficient 5-star rated fans.
Product Offered: BEE labelled 5 star rated 1200 mm ceiling fan
R – Infra TATA Power
Target Market Residential Consumers with
monthly consumption less
than 500 kWh
LT – I Residential
Programme
Features
Replacement of 5000
nos. Of fans under the
pilot program
Warranty period – 2
years
Rebate of Rs535 per fan
will be given by the
utility after the purchase
of 5-star rated fan
Replacement of 5000 nos.
Of fans under the pilot
program
Warranty period – 2 years
Rebate of Rs535 per fan will
be given by the utility after
the purchase of 5-starrated
fan
Table 3.1.2.1 Details of program of 5-star fans by TPC-D & R-infra
3.1.3. 5 – star split ac programme The pilot program was designed for switching over to 5-star rated split ACs from existing
window units. It helped to reduce energy consumption with decrease in peak demand.
Product Offered: BEE-labelled 5-star split ACs of 1 Ton and 1.5 Tons (labelled after
October 2009 and any further revisions)
51
R – Infra TATA Power
Target Market Non-Government, Commercial
Consumers having load < 20 kW
with 300 – 500 kWh per month
Consumption
LT – Industrial
Programme Features Replacement of 200 window
Acs
Warranty period – 1 year for
machine & 4 years for
compressor
Rebates: Post-paid through
electricity bill which will be
Rs5000 for 1 Ton and
Rs7000 for 1.5 Ton 5- star
rated split Acs
Replacement of 250
window Acs
Warranty period – 1
year for machine & 4
years for compressor
Rebates will be post-
paid through
electricity bill which
will be Rs5000 for 1
Ton and Rs7000 for
1.5 Ton 5-star rated
split AC
Table 3.1.3.1 Details of program of 5-star fans by TPC-D & R-infra
3.1.4. R-Infra pilot programme on gas geyser
Preface A pilot program for replacing Electric geyser by Gas
geyser.
Designed to create awareness on the benefits of using
Gas geyser and also to remove barriers on its purchase.
Target Market Residential Consumers of Reliance Energy and
Mahanagar Gas ltd.
Product Offered Gas Geyser (technically specified by MGL)
Project Features Replacement of 1000 nos. Of Gas geyser under the pilot
program
52
Rebate of Rs. 3000 per Gas geyser will be given by the
utility after the purchase under the program.
Table 3.1.4.1 Details of program of gas geyser
3.1.5. 5 star refrigerator program by R-Infra:
Preface A pilot program for replacing Old inefficient refrigerator by 5
star EE refrigerators.
Reduction in peak load as refrigerator being base load
Target Market Residential Consumers of Reliance Energy.
Product Offered 5 star EE Refrigerator – Single door and Double door
In high capacities 4 star Models if 5 star is not available.
Project Features Warranty period – 1 year for machine & 5 years for
compressor.
Program duration is 6 months.
Table 3.1.2.1 Details of program of 5-star rated ACs R-infra
3.1.6. Gas water heater programme Rationale behind GWH For Consumer
1 kWh
860kCal Rs 5/- per kWh
1 SCM 8600kCal Rs 17.74/- per kWh
3KW heater for 1 hr per day
(1095 kWh per year)
Heat Generated per year
9.41 L kCal
Rs 5475/- per year
Gas Heater for Equivalent Heat Generated per year Rs 5475/- per year
53
heat (110 SCM per year)
9.41 L kCal
For Environment Heat Generated per Year Gas
Requirement for Direct
Heating
Gas Requirement to Generate
Electricity to provide Heating
9.41 L kcal 110 SCM 306 SCM
GWH Pilot Programme
Sl No Title Details 1 Objective Strategic Conservation in Morning
Peak
2
Basis derived from LR Electric Water Heater typically
consumes around 3 KW power as
against GWH with no power
consumption Target consumer bases
typically uses electric water heater
for at least 1 hr/day during morning
peak hours
3 Target Consumer Base TATA Power Residential Consumers
4 Target Installations 1000 GWH
5 Program Impact Annual saving of 0.72 Mus and 0.9
MW demand savings are expected
6 Rebate from Utility Rs 3000/- per GWH
7 Heater Replacement Cost Approximate with Rs 9000/- GWH
with piping etc
8 Cost to Customer Rs 6000/GWH after availing rebate
9 M & V Methodology Pre and Post Energy Consumption for
1 % sample
10 Program Costs Utility Rebate, promotion, Advertising
and M&V cost: Rs 33.9 lakh
Table 3.1.6.1 Details of Gas Water Heater Program
54
Challenges in Implementation of the GWH Pilot Programme:
At present there is no authorised manufacturer or model by MGL
At present there is no ISI mark for PNG Gas Geysers
MGL does not permit installations in bathrooms, hence customers not willing to
remove electric heaters in bathrooms
Logistics Capacity limitation with MGL to serve large number of installations
Safety Requirements for Gas Geysers are not defined
55
3.1.7. Review of progress of approved DSM pilot programmes
Sr.
No.
Approved
programmes
Quantity
in Nos.
Progress of
TPC-D(as on oct-
11)
Progress of
R-Infra-D(as on june2012)
1 T-5 FTL
programme
1,75,000 Out of 50,00, more
than 4000 Nos. of
T-5 FTL were
replaced
Out of 1 lakh, 8,000 Nos. of T-5
FTL has been replaced. For
remaining T-5 FTL replacement,
manufacturer is not able to complete
the installation.
2 5 star Ceiling
Fan programme
20,000 Programme started
with approval of
MERC
Out of 5000 registrations by
consumers, 4300 Nos. of
installations are completed
3 Window A/C
programme
600 Out of 200 A/C, 40
numbers of A/Cs
has been replaced.
Out of 200 A/C, installations of 60
Nos. of A/C have been completed
4 Thermal
Energy
storage
programme
3,500TR Programme has
been modified with
the approval of
MERC.
As per programme,
the metering at 2
customer premises
has been
commenced.
Discussions held with customers and
Technology providers. But some
issues have to be sorted out.
5 star
Refrigerator
programme
15,000
(5000)
Programme has
been commenced
No response from manufacturers So,
New proposal submitted to MERC
and approval is awaited.
Demand
Response
(Manual)
1000 Customer’s
enrolment process
are in progress.
Not applicable
56
Energy Audit - 34 Audits
completed of which
4 energy audit
reports are awaited.
3 Energy audits are
in progress
Indira Gandhi Research Institute
audited in this quarter.
Gas Water
Heater
2,000 Program to be jointly executed with Mahanager Gas
Limited (MGL). MGL has floated tender for gas geyser
models with enhanced safety features. Vendor finalisation
is in final stage
Table 3.1.7.1 Status of pilot projects
57
3.2. International case studies
3.2.1. Case-1: DSM case studies in China 1. Hainan Integrated Resource Planning Prefeasibility Study
In 1992, the International Advisory Council on the Economic Development of Hainan in
Harmony with the Natural Environment worked with the U.S. Oak Ridge National
Laboratory to conduct a prefeasibility study of resource options to be included in an
Integrated Resource Planning (IRP) process. The study recommended that Hainan conduct an
IRP process, with a focus on using electricity pricing as a DSM strategy; developing efficient
building codes for new construction; implementing DSM programs in all sectors and
exploring the possibility of large scale wind resources. The study found that the DSM
programs alone could reduce electricity use in Hainan by 21 percent in 2000, with savings of
US$ 200 million to $400 million. The Hainan IRP prefeasibility study was the first such
analysis conducted in China, soon after DSM and IRP were first introduced. Relevant
decision makers and institutions most likely lacked adequate capacity, understanding and
interest in the IRP process to carry it out.
2. Shanghai DSM Cost/Benefit Analysis
In 1994, with the assistance of the Asian Development Bank, Shanghai conducted a
cost/benefit analysis of a range of potential DSM measures in certain secondary and tertiary
industries, including commercial facilities, catering services, office buildings and public
institutions. The analysis was based on a consideration of Shanghai’s power consumption
mix and load curves, as well as conventional DSM energy efficient technologies. The
analysis focused on DSM opportunities in lighting, air conditioning and cooling, district and
industrial heating, fans, pumps and electric traction. Typical energy efficient technologies
assessed include efficient pumps, fans and electric heating equipment; waste heat recovery
generators; ice storage cooling; gas fuelled air conditioners and electric-heat-cooling triple
generation.
58
As shown in Table 1, the analysis concluded that the DSM technologies mentioned above
would save Shanghai 2 terawatt hours (TWh) of electricity and 663 MW of peak levelling
capacity in 2000, avoiding the need for 80 MW of additional installed capacity. These
savings would grow to 6.1 TWh of electricity and 2030 MW of peak levelling capacity in
2010, avoiding 245 MW of new capacity.
The DSM program would also eliminate 880,000 tons of carbon dioxide and 5,900 tons of
sulphur dioxide emissions each year. By the year 2010, these DSM measures would eliminate
1.5 million tons of carbon dioxide emissions and 10,000 tons of sulphur dioxide emissions
per year.
Year (Base Year 1994)
Annual Electricity Savings ( TWh)
Peak Shifting Capacity ( MW)
Deferred Generating
Capacity (MW)
2000 2 663 80
2010 6.1 2030 245
Year Capacity Installed (BAU)
GW
Ratio of DSM Peak Load Avoided %
Additional Peak/Valley
Difference(BAU) GW
DSM Peak/Valley Difference Avoided %
2000 7.80 10.25 2.41 27.5 2010 21.5 11.40 8.12 25.0
Despite the clear benefits revealed by the cost-benefit analysis, Shanghai never conducted the
DSM project. As with the other pilot projects, lack of financing and utility incentives was
likely culprits.
3. Peak Load Management in Beijing
Beijing began engaging in DSM activities primarily for load management purposes in
response to rapidly escalating peak demand. The peak load grew from 3 GW in 1992 to
nearly 4.5 GW in 1996, a yearly average load growth of 10.4 percent. The minimum load had
increased slowly, while the daily max-min had grown quickly, decreasing the annual system
load factor by around 86 percent in 1992 to 82 percent in 1996. This made it difficult for
59
Beijing to ensure the safe, stable and economic operation of the power system. In order to
promote the load factor increase, Beijing’s main goal was to open up the power market in off-
peak hours.
The first step was to investigate the consumer power market. Before developing effective
measures for peak load management, Beijing carried out a survey to determine the condition
of customers’ electric equipment and consumption patterns. Models and software programs
were developed, based on the load survey, to analyze the efficiency opportunities available
from major customers in key industries.
The survey revealed that in 1996, industrial consumption accounted for over 55 percent of the
typical winter daily electricity consumption in Beijing, including 51 percent of the system’s
morning peak and around 50 percent of the evening peak. Even though the industrial load is
the base-load of the Beijing system, there is still a large potential for load shifting through the
rational arrangement of discretionary load.
Based on the above analysis, Beijing decided upon the following measures to improve its
system load factor:
Further expand the price differential between the peak and valley hour tariffs in order
to encourage load shifting;
Sign interruptible load agreements with large customers, first on a pilot basis, then on
a more widespread basis;
Encourage enterprises to rearrange their production schedules so that scheduled
maintenance took place during peak hours;
Encourage enterprises to establish schedules to upgrade and retrofit high loss
electrical equipment, such as motors and transformers; install reactive power
compensators for high and low voltage equipment; and arrange equipment with higher
diversity factors to operate at peak hours with a minimum operating scheme and at
off-peak hours with a maximum operating scheme;
Encourage customers to use highly efficient electric devices, retrofit existing
production processes in order to improve productivity, and invest in technologies that
shift usage from peak to valley periods, such as ice storage air conditioning and
storage electric heaters;
Provide financial assistance based on actual upgrading and retrofitting needs;
60
The net effect of these measures was a reduction in the peak demand of 50 MW in 1997, an
additional 50 MW in 1998, and an improvement in the load factor because of the 150 GWh
increase in consumption during the valley load period. The investment to produce the peak
load shift was 12.05 million RMB in 1997 and 5.67 million RMB in 1998. The annual benefit
based on the avoided cost of new generation capacity was estimated at 24.8 million RMB.
The Beijing DSM project was successful primarily because it focused on peak load
management, which is generally easier to implement than other DSM programs. In many
cases, load management can be accomplished with properly designed and progressive tariffs,
such as time of use and interruptible tariffs. After successfully completing the load
management program, Beijing has now gained practical experience that should prove useful
for the development of DSM programs that result in long-term reductions in demand through
efficient end use technologies. Beijing is now conducting a detailed study of DSM policy
options and incentive mechanisms with the support of the Energy Foundation.
3.2.2. Case 2: California US
California is the most prominent success story in the area of DSM implementation.
California’s leadership in energy efficiency and DSM substantially reduced the economic and
environmental damage associated with the state’s severe energy crisis of 2001. In response to
the crisis, Californians reduced their total electricity consumption in 2001 by 6.7 percent
(weather adjusted) compared to 2000, even as the economy continued to grow. These demand
reductions did not occur spontaneously, but in response to a serious of coordinated DSM
measures and policies that were already in place.
By 1999, California’s energy efficiency investments and standards had already removed
About 10,000 megawatts from its peak demand, the equivalent of twenty large power plants.
In 2001, the Governor was able to use these programs, including public education programs,
rebates and other financial incentives, to coordinate the most successful state-wide energy
conservation program in history. Consumers bought record numbers of energy efficient
appliances in 2001, including nearly 100,000 high-efficiency refrigerators (over five times
more than in 2000) and four million compact fluorescent light bulbs.
These concerted efforts on the part of millions of Californians in 2001 enabled the state to
avert a recurrence of its 2000 electricity crisis. A 2003 study examined the magnitudes,
sources and costs of the savings contributing to California’s successful DSM deployment.
61
The following table summarizes the results of the study by Global Energy Partners of the
impacts and costs of California’s combined efforts:
Table 3.2.2.1 Effects of DSM in California
Recognizing the value of DSM programs, especially in a restructured electricity market,
California substantially increased funding for utility DSM programs in 2001 to more than US
$480 million, an increase of more than 50 percent over 2000 levels. The legislature also
extended until 2012 the use of the system benefit charge, a small surcharge on every
California utility bill. This surcharge will raise more than US$ 5 billion of investment in
energy efficiency, renewable energy and technology development, the largest sustainable
energy fund ever created by a single legislative action.
62
3.3. International standards Protocols
IPMVP - International Performance Measurement and Verification Protocol
IEEFP - International Energy Efficiency Finance Protocol
IPEP - International Program Evaluation Protocol
3.4. IPMVP
As the world is coming to recognize that energy efficiency is foundational to good
environmental management, the importance of proper savings documentation has never been
greater. It is certainly in everyone’s interest that predicted savings are achieved and properly
reported.
Energy users need to have robust methods of verifying achievement of their energy
policy objectives, to get or maintain ISO 50001 certification for their management
practices;
Potential purchasers of energy efficiency products or services want to know that
their potential purchases have already proven themselves using widely recognized
methods;
Actual purchasers of energy efficiency products or services need feedback on the
effectiveness of their purchases, to help them fine tune performance and to inform
further purchases;
Governments and utilities need to know that savings reported from energy
efficiency programs are grounded in actual field-measured results following a widely
accepted protocol
Purpose and Scope of IPMVP
Efficiency Valuation Organization (EVO) publishes the International Performance
Measurement and Verification Protocol (IPMVP) to increase investment in energy and water
efficiency, demand management and renewable energy projects around the world.
The IPMVP promotes efficiency investments by the following activities.
63
IPMVP documents common terms and methods to evaluate performance of efficiency
projects for buyers, sellers and financiers. Some of these terms and methods may be
used in project agreements, though IPMVP does not offer contractual language.
IPMVP provides methods, with different levels of cost and accuracy, for determining
savings1 either for the whole facility or for individual energy conservation measures
(ECM)2;
IPMVP specifies the contents of a Measurement and Verification Plan (M&V Plan).
This M&V Plan adheres to widely accepted fundamental principles of M&V and
should produce verifiable savings reports. An M&V Plan must be developed for each
project by a qualified professional.
IPMVP applies to a wide variety of facilities including existing and new buildings and
industrial processes.
“Measurement and Verification” (M&V) is the process of using measurement to reliably
determine actual savings4 created within an individual facility by an energy management
program. Savings cannot be directly measured, since they represent the absence of energy
use. Instead, savings are determined by comparing measured use before and after
implementation of a project, making appropriate adjustments for changes in conditions.
M&V activities consist of some or all of the following:
Meter installation calibration and maintenance.
Data gathering and screening.
Development of a computation method and acceptable estimates.
Computations with measured data.
Reporting, quality assurance, and third party verification of reports.
IPMVP-adherent M&V includes both operational verification and an accounting of savings
based on site energy measurements before and after implementation of a project, and
adjustments
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64
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65
Improve engineering design and facility operations and maintenance
The preparation of a good M&V Plan encourages comprehensive project design by
including all M&V costs in the project’s economics. Good M&V also helps managers
discover and reduce maintenance and operating problems, so they can run facilities
more effectively. Good M&V also provides feedback for future project designs.
Manage energy budgets
Even where savings are not planned, M&V techniques help managers evaluate and
manage energy usage to account for variances from budgets. M&V techniques are
used to adjust for changing facility-operating conditions in order to set proper budgets
and account for budget variances.
Enhance the value of emission-reduction credits
Accounting for emission reductions provides additional value to efficiency projects.
Use of an M&V Plan for determining energy savings improves emissions-reduction
reports compared to reports with no M&V Plan.
Support evaluation of regional efficiency programs
Utility or government programs for managing the usage of an energy supply system
can use M&V techniques to evaluate the savings at selected energy user facilities.
Using statistical techniques and other assumptions, the savings determined by M&V
activities at selected individual facilities can help predict savings at unmeasured sites
in order to report the performance of the entire program.
Increase public understanding of energy management as a public policy tool
By improving the credibility of energy management projects, M&V increases public
acceptance of the related emission reduction. Such public acceptance encourages
investment in energy efficiency projects or the emission credits they may create. By
enhancing savings, good M&V practice highlights the public benefits provided by
good energy management, such as improved community health, reduced
environmental degradation, and increased employment
66
IPMVP Option How Savings Are
Calculated
Typical Applications
A. Retrofit Isolation: Key
Parameter Measurement
Savings are determined by
field measurement of the key
performance parameter(s)
which define the energy use
of the ECM’s affected
system(s) and/or the success
of the project.
Measurement frequency
ranges from short-term to
continuous, depending on the
expected variations in the
measured parameter, and the
length of the reporting
period.
Parameters not selected for
field measurement are
estimated. Estimates can
based on historical data,
manufacturer’s
specifications, or engineering
judgment.
Documentation of the source
or justification of the
estimated parameter is
required. The plausible
savings error arising from
estimation rather than
measurement is evaluated.
Engineering calculation of
baseline and reporting period
energy from:
short-term or
continuous
measurements of key
operating
parameter(s)
Estimated values.
Routine and
nonroutine
adjustments as
required.
A lighting retrofit where
power draw is the key
performance parameter that
is measured periodically.
Estimate operating hours of
the lights based on facility
schedules and occupant
behaviour.
B. Retrofit Isolation: All Short-term or continuous Application of a variable
67
Parameter Measurement
Savings are determined by
field measurement of the
energy use of the ECM-
affected system.
Measurement frequency
ranges from short-term to
continuous, depending on the
expected variations in the
savings and the length of the
reporting period.
measurements of baseline
and reporting period energy,
and/or engineering
computations using
measurements of proxies of
energy use.
Routine and nonroutine
adjustments as required.
speed drive and controls to a
motor to adjust pump flow.
Measure electric power with
a kW meter installed on the
electrical supply to the
motor, which reads the power
every minute. In the baseline
period this meter is in place
for a week to verify constant
loading. The meter
is in place throughout the
reporting period to track
C. Whole Facility
Savings are determined by
measuring energy use at the
whole facility or sub-facility
level.
Continuous measurements of
the entire facility’s energy
use are taken throughout the
reporting period.
Analysis of whole facility
baseline and reporting period
(utility) meter data.
Routine adjustments as
required, using techniques
such as simple comparison or
regression analysis.
Non-routine adjustments as
required
Multifaceted energy
management program
affecting many systems in a
facility. Measure energy use
with the gas and electric
utility meters for a twelve
month baseline period and
throughout the reporting
period.
68
D. Calibrated Simulation
Savings are determined
through simulation of the
energy use of the whole
facility, or of a sub-facility.
Simulation routines are
demonstrated to adequately
model actual energy
performance measured in the
facility. This Option usually
requires considerable skill in
calibrated simulation.
Energy use simulation,
calibrated with hourly or
monthly utility billing data.
(Energy end use metering
may be used to help refine
input data.)
Multifaceted energy
management program
affecting many systems in a
facility but where no meter
existed in the baseline period.
Energy use measurements,
after installation of gas and
electric meters, are used to
calibrate a simulation.
Baseline energy use,
determined using the
calibrated simulation, is
compared to a simulation of
reporting period energy use.
Table 3.4.1 Overview of IPMVP options
69
3.5. Draft Regulations DSM Programme’s Evaluation, Measurement & Verification
Based on International Performance Monitoring and Verification Protocol MERC has drafted
a regulation for DSM programme’s evaluation, measurement and verification .
The basic purpose behind this regulation is:
• Finding Baseline Information
Baseline data upon which to base energy savings measurement
Perform study if none available
• Energy Efficiency Measure Information
Description of EE measures in program
Includes assumptions about important variables and unknowns
• M&V Approach
Reference appropriate IPMVP option
Describe deviation from IPMVP
Schedule for acquiring project-specific data
• Evaluation Approach
Questions to be answered through evaluation
Evaluation tasks / activities
Describe how evaluation will meet all policy objectives
Following figure 13.1 gives the detailed structure of the DSM E’M&V guiding principles.
70
Fig 13.1 Detailed structure of DSM E,M&V guiding principles
Figure 3.5.1 shows the detailed structure of the draft regulation for DSM Evaluation, Monitoring and Evaluation
71
3.6. Thermal storage device
For the past 10 to 15 years, the restructuring of the electricity industry has been under way in
the country. In many countries, the electricity market has been deregulated to open up the
supply of electricity to competition. Existing power utilities and new market participants now
have to trade electric power in a deregulated electricity market.
The utilities can reduce the purchase cost of electricity from the electricity market through
load managements by customers as part of demand-response programs. There are significant
benefits to the utilities if customers shift their load from on-peak to off-peak hours. The
Thermal Storage System is a well-known example of this load shifting. It stores off-peak
power as cold water (ice) or hot water for air-conditioning demand in daytime and is very
efficient in shifting peak air-conditioning demand to off-peak hours.
The campus cooling system consists of a chiller plant (three chillers redundantly configured
as two in series, one backup in parallel), an array of cooling towers, a 7000 m thermal energy
storage tank, a primary distribution system and secondary distribution loops serving each
building of the campus. The two series chillers are operated each night to recharge the storage
tank which meets campus cooling demand the following day. Although the storage tank
enables load shifting to off-peak hours to reduce peak demand, the lack of an optimized
operation results in conservatively overcharging the tank, where heat losses erode efficiency,
and in suboptimal operation of chillers and cooling towers.
3.6.1. System model
In HVAC plants of medium-high cooling capacity, multiple chiller systems are often adopted
to achieve a satisfactory trade-off between reliability and cost. Multiple chillers are normally
used in parallel configuration, where every chiller is independent of each other to provide
standby capacity and operational flexibility, while requiring less disruption maintenance.
Compared with single-chiller systems, multiplechiller systems have reduced starting in-rush
current and a reduced power cost under part load conditions [2]. However, the overall energy
performance of a multiple chiller systems is difficult to characterize since it depends on many
factors. The capacity regulation and part load efficiency of each chiller (and therefore of the
entire system) strongly depend the choice of refrigerating unit, refrigerant circuit design, type
and number of compressors, and so on. For instance, multiscroll chillers equipped with twin
compressors on the same circuit present high part load Energy Efficiency Ratio values (EER,
defined as the ratio of cooling capacity and total power absorption, fans included), whereas
72
screw compressors units are strongly penalized, mainly because of the reduction of screw
compressor isentropic efficiency at low cooling loads. Therefore, the problem of optimizing
the energy performance of multiple-chiller systems is a complex one.
To meet such requirement a Two-Layer Control (TLC) structure for control and optimization
of a multiple chiller system is uses that consist of a local control loop and a supervisory
control loop. Proper tuning of the local-loop controller can enhance comfort, reduce energy
use, and increase component life. Set points and operating modes for cooling plant equipment
can be adjusted by the supervisor to maximize overall operating efficiency. At any given time
cooling needs can be met with various combinations of modes of operation and set points for
the chilled water temperature. In the proposed TLC structure, a cooling load estimation
algorithm is adopted to obtain information on the cooling needs. Once the cooling needs
have been estimated, the selection of the optimal set of operation modes and set point values
is then performed by means of a Particle Swarm Optimization (PSO) algorithm.
The system consists of a condenser loop, a primary loop, a secondary (campus) loop, and
several tertiary (building) loops. The chilled water is generated via chillers and cooling
towers within the primary and condenser loops. The chilled water is stored in a stratified
thermal energy storage tank, and distributed to the buildings throughout the campus via the
secondary loop. Internal building loops use pumps and valves to distribute the chilled water
to the fan coils and air handling units (AHUs) that deliver cold air to the thermal zones. The
chilled water is warmed by the air-side load of the buildings and returned to the secondary
loop.
Fig 3.6.1 Plant & Two layer Control Architecture
73
3.6.2. Plant structure In Fig. 3.6.1 the block structure of the system considered in the paper is reported. Three basic
blocks can be pointed out:
1) The energy production section (e.g., a packaged aircooled water chiller);
2) The hydraulic section where a common primary secondary pumping arrangement is
adopted with constant water flow rate on the secondary, thus decoupling the chiller section
from the distribution one;
3) The load section: the building thermal load and capacity are represented in the scheme by
cooling coils and a water tank of suitable capacity.
Fig 3.6.2 Logic regulation for a chiller with four capacity partialization steps.
DM is the temperature differential when controlling the chiller evaporator water outlet, DR
is the temperature differential when controlling the chiller evaporator water inlet.
3.6.3. Control Structure
With reference to Fig.12.1 a Two Layer Control structure for multiple chiller system
operation is proposed. In the lowlevel layer, each chiller set-point is maintained using a local
controller. In the high-level layer, a supervisor specifies the modes of operation and the set-
points for each chiller.
74
A. Low Level Controller Typically, a chiller without capacity control can be regulated in two different ways, namely
by controlling the chiller evaporator water outlet temperature or the chiller evaporator water
inlet temperature. In both cases, a relay control law is used, where the compressor is switched
on and off when the controlled temperature reaches given threshold values. The difference
between the upper and lower threshold values is called water temperature differential, and its
value clearly affects the width of the oscillations of the supply water temperature as well as
the number of start-ups of the compressor. While both control strategies maintain constant
water supply temperature in full load conditions, outlet water temperature control grants
better performance during chiller part load operations since it maintains the mean water
supply temperature fairly constant during on/off operations.
B. High Level Controller: Supervisory The supervisor structure consists of two main components:
1) a load estimation algorithm;
2) a PSO algorithm for solving the OCL and OCS problems.
At each supervision period (i.e. 10 minutes) the system cooling demand is estimated, and the
estimate is used by the PSO optimization algorithm that solves, simultaneously, the OCL and
OCS problems thus determining, for each chiller, the cooling load, in the form of local set-
points, and the status (on/off). The computations required by the optimization process can be
performed within a time length of five minutes on a personal computer, thus granting an on-
line implementation.
75
Fig 3.6.3: The flowchart of A/C load management potential study
Above flow chart shows the detailed steps involved in the selection of any DSM project.
.
Fig 3.6.5: Te
Fig 3.6.4 S
emperature D
76
Scheme plot o
Distribution
f the chilling
n of the wat
system
ter in the tan
nk
77
3.6.4. Main subsystems of the cooling system
1) Chillers and Cooling Towers Model
2) Thermal Energy Storage Tank
3) Campus Load Model: The campus load model has two subcomponents: “the Solar and
Internal Load Predictor” and the “Building Thermal Load Predictor”. The Solar and
Internal Load Predictor uses time, date, and cloud coverage as inputs, and calculates
inside and outside solar loads and internal load. The outside solar load reflects the
solar energy on the outer surface of the building, while the inside solar load is the
solar radiation into the building (e.g., sunshine through the windows into rooms). The
internal load includes the heat from people, lights, and equipment.
4) Fan Coil Model: The fan coil models the heat exchange between the chilled water
supplied to the campus and air in the buildings. Several fan coil models are available
The performance of the system is evaluated in terms of user comfort, energy use, and
financial costs.
78
3.7. TPC-D’s initiative on thermal storage device in Mumbai
Project Title Pilot program to install thermal storage
equipment among commercial central air-
conditioning system users
Summary Pilot program is designed to demonstrate the
results of demand shifting programs and
gaining confidence in the thermal storage
programs so that all new large sites can be
considered at the design stage itself
Target consumer base Commercial & Industrial users having central
air-conditioning system of ratings > 100TR
using during day-time peak
Rationale Shifting of day peaok to to off peak
1night hours can be achieved through
thermal storage.
Mumbai peak demand and the time-
of-use of central air-conditioner
systems are coincident.
Reduced costly power purchase will
reduce tariffs for all consumers
Program impacts With a target of 1000 TR capacity Central
AC systems to be replaced, an annual energy
shifting of 2.40 MUs and 1 MW2 demand
shifting to night
Program design
Market creation
Program partners
Service delivery
Market creation:
Promotion of Thermal Storage
technology
Program partners:
Manufacturers & Suppliers of the
system.
Customers from categories identified.
79
Service delivery:
Random selection of consumers upto
total 1000TR capacity
Rebates to be paid to
supplier/consumer after successful
commissioning.
Rebates (if any) Rs. 5000 per TR (assuming 25% of Rs.
20000/TR capital cost) amounting to rs 50
lakhs for total program of 1000TR.
Key barrier Awareness of Thermal storage
system.
Support to prefeasibility/HVAC audit
Perceived higher first cost
Program implementation process Send communication along with the
electricity bills to all target
consumers.
Recieipt of expression to participate
in the program within 15 days of final
electricity bill dispatch.
Random selection of consumers to be
included in the program
Intimation to consumers
Purchase of thermal storage from pre-
determined OEM
Financing approach Part rebate by utility; rest paid by consumers
Program cost Utility rebate: Rs. 50,00,000 (Rs 5000 per installed TR) Admin cost (including cost of prefeasibility audits): Rs 4,00,000 M&V: Rs. 5,00,000 (Rs. 5000 per installed TR) Total: Rs 59,00,000
Implementation responsibilities Utility to drive the entire project
80
Funds Program will be funded from available load
management charges with TATA Power or
through ARR
Fig 3.7.1 Tata power dsm pilot program design: thermal storage
Budget Allocated= 60.92 lakhs
Till date 1.92 lakhs
Left 59 lakhs
81
3.8. International Experience Case Study: A Stratified Chilled Water Storage System A full-storage stratified chilled water storage system was completed in August 1990 to serve
a 1.142 million ft2 (106,134 m2) electronics manufacturing facility in Dallas, Texas. The
following are the details of this project as described by Fiorino (1991).
Storage cooling capacity
Maximum refrigeration load
Charge process duration
Discharge process duration
Inlet temperature during charging Ti
Limiting outlet temperature during
discharging To
Inlet temperature during discharging Tre,i
Maximum volume flow rate
Tank diameter
Tank height
Tank volume
Usable tank volume
24,500 ton_ h (861,420 kWh)
3200 tons (11,251 kW)
16 h
8 h
40°F (4.4°C)
42°F (5.6°C)
56°F (13.3°C)
5120 gpm (323 L / s)
105.5 ft (32.2 m)
41 ft (12.5 m)
2.68 million gal (10,144 m3)
90%
Results of the Thermal Storage System are shown in the following curve:
82
Fig 3.8.1: Electric demand curves and the storage cycle of the stratified chilled water storage
system for an electronic manufacturing facility in Dallas, Texas.
Other Cases i. Asia World Expo, Hong Kong (China) – installed in 2004, STL - AC.00 - 1 404
(77,250 kWh / 22 000 T.H)
ii. AIRPORT “Nice” France - 1983-2001, STL - AC.00 - 205 (11 300 kWh / 3 200 T.H)
83
CHAPTER-4
CONCLUSION & RECOMMENDATION
3.1. Conclusion
With increasing focus on energy prices, Demand Side Management (DSM) is touted as the 5th
fuel. In the past, the primary objective of most DSM programmes was to provide cost-
effective energy and capacity resources to help defer the need for new sources of power.
However, many changes occurring in the industry, such as increased government and
regulatory focus towards energy efficiency, carbon emission constraints and greater public
awareness has resulted in utilities relying on DSM. On the other hand with ever increasing
scope and scale of DSM programmes utilities face a stiff challenge in administering these
programmes effectively.
As presented in this paper, demand side management relies basically on two aspects:
technology and behaviour. Continuous information and education programmes are necessary
for the development of efficient systems. Both of these aspects need to be maintained,
stimulated and improved. Finally, DSM is not only good practice for reducing energy
consumption; it has also side-benefits such as improved wellbeing and comfort of end users.
The state of Maharashtra in particular has spearheaded the DSM initiatives in Indian power
sector. With sound regulatory framework distribution utilities have huge scope of realizing
full economic and societal value of DSM programmes and their seamless delivery to larger
consumer base. Bringing all categories of consumers i.e. residential, industrial and
commercial consumers into the ambit of the regulations and incentivizing the adoption of
DSM and Energy Efficiency measures is a step in the right direction.
Earning consumer confidence is critical for the success of such programs. Therefore modes of encouragement other than incentivizing should also be explored. At the same time, it must also be ensured that the utilities do not suffer losses.
84
3.2. Recommendation
DSM is still in its nascent stage in Indian electricity sector. There is a need to look way
forward in this area of energy efficiency. There are very few people who know about this
demand side management. As it needs a voluntary participation from consumer side for
successful implementation of DSM, the utilities and regulatory commissions should promote
consumer awareness. Consumers should be made aware of the benefits associated with this.
So I would like to suggest some measures for success of DSM in Indian context:
There is a need to develop suitable incentive mechanism which will enable to share
benefits between end users and utilities, to attract both of them for active
participation.
SERCs should make regulations and give due benefits to the participants.
Residential consumers should also be included in the DSM initiatives along with
commercial consumers.
Pilot programs should be applicable to larger consumer base and there is a need of
stringent follow-up of these programs.
Interaction schemes specifically addressing interaction between intermediaries, end
users and other stakeholders should be promoted
Develop guidelines / methodologies to be adopted for integrating DSM options with
supply side options
There is a need of better coordination among various agencies of Central and State
Governments for implementation of DSM measures
State government should financially support the pilot programmes in various sectors
to enable the market transformation
85
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