why demand side management

7/30/2019 Why Demand Side Management

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What is DSM

Making an Electricity available to consumers at

optimal and efficient price

Why DSM?

Traditionally, electric utilities planned their supply to meet all the needs of their customers with

little regard to how or when customers use energy. But in the economic realities of the electricutility industry today, DSM really can be the least cost planning option. There are three majorreasons that energy services program sponsors (usually utilities) are starting to reevaluate theneed to implement DSM programs:

DSM programs benefit customers, the program sponsor and society. As a customer strategy,DSM programs encourage the installation and use of end-use technologies that will use lessenergy, thereby reducing and/or shifting the customers overall electric bill. Energy efficienttechnologies also have higher efficiency operating characteristics; they tend to last longer, thusreducing the operation and maintenance costs. This is especially true for programs thatencourage the use of high efficiency heating, cooling, and ventilation equipment (HVAC),energy efficient lighting, and process technologies, such as fans and motors. So DSM programsmake sense for a customer perspective because the energy savings more than offsets thehigher first costs of these technologies.

Utilities, however, can benefit from these reductions or shifts in customer energy use. For someutilities, DSM programs can help them reduce their peak power purchases on the wholesalemarket, thereby lowering their overall cost of operations. In the near term, DSM programs canreduce energy costs for utilities, and in the longer term, DSM programs can help limit the needfor utilities to build new power plants, distribution, and transmission lines. In short, a DSMprogram can be much cheaper to implement than building a new generation plant. Societybenefits when DSM is green. Reduced or shifted energy usage can directly translate into lessair pollution, less carbon emissions, and a way to lower the potential environmental threatsassociated with global warming. DSM programs are a promising alternative strategy to theincreased concerns customers, utilities, and government agencies have now regarding globalwarming and carbon emissions. Moreover, a properly designed DSM program can actually trackthe program impacts and measure the amount of carbon reduced or saved based on programactivities.

DSM StrategiesThere are four basic DSM strategies that utilities use depending on their overall objectives andneeds.


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1. Energy Efficiency: Reduce energy use overall2. Peak Load Reduction: Reduce peak load consumption3. Load Shifting: Move load to cheaper times4. Load Building: Increase consumption to off-peak hours or increase overall consumption

What is Demand Side Management?

DSM measures are designed to influence and, if necessary, change customer behavior to

achieve benefits for both the customer and the electricity industry

Demand side management (DSM) refers to actions which change the demand on the electricitysystem, including:

actions taken on the customer side of the electricity meter(the demand side), eg energyefficiency and load shifting

arrangements for reducing loads on request, such as interruptibility contracts, direct loadcontrol and demand response

fuel switching, such as changing from electricity to gas for water heating

power factor correction

distributed generation, such as stand by generators in office buildings or photovoltaic

modules on rooftops; and pricing initiatives, including time of day and demand-based tariffs based on some form of

smart metering

Types of DSMThere are three types of DSM based on the overall purpose of the DSM program:

Environmentally-drivenachieves environmental and/or social goals by reducing energyuse, leading to increased energy efficiency and/or reduced greenhouse gas emissions

Network-drivendeals with problems in the electricity network (grid) by reducing demandin ways which maintain system reliability in the immediate term and over the longer termdefer the need for network (grid) augmentation

Market-drivenprovides short-term responses to electricity market conditions (demandresponse), eg by reducing load during periods of high market pricescaused by reducedgeneration or network capacity


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Using DSM to Support Electricity Grids

What is Network-driven DSM

Network-driven DSM comprises demand-side measures used to relieve network (grid)constraints and/or to provide services for network system operators

Network-driven demand-side management is concerned with reducing demand on the electricitynetwork in specific ways which maintain system reliability in the immediate term and over thelonger term defer the need for network augmentation

two prime objectives for network-driven DSM:

to relieve constraintson distribution and/or transmission networks (grids) at lower coststhan building poles and wires solutions; and/or

to provide servicesfor network system operators, achieving peak load reductions withvarious response times for network operational support

Characteristics of Network Constraints

Network-driven DSM measures must address the particular characteristics of networkconstraints

In relation to timing, network constraints may be: narrow peak relatedoccurring strongly at the time of the system peak and lasting

seconds, minutes or a couple of hours; or

broad peak relatedless strongly related to the absolute system peak, occurringgenerally across the electrical load curve and lasting several hours, days, months, yearsor indefinitely

In relation to the spatial dimension, network constraints can:occur generally across the network; or


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be associated with one or more specific network elements such as certain lines orsubstations

Projects were classified by the major DSM measure:

demand response

direct load control

distributed generation, including standby generation and cogeneration

energy efficiency

fuel substitution

interruptible loads

integrated DSM projects

load shifting

power factor correction

pricing initiatives, eg time of use and demand-based tariffs

smart metering

DEMAND SIDE MANAGEMENT ENERGY EFFICIENCY & ENERGY

CONSERVATION - Working Group on Power for 12th Plan

The schemes of the Ministry of Power (MoP) include Energy Conservation Awareness, Energy

Conservation Awards & Painting Competition on Energy Conservation for school students and National

Mission for Enhanced Energy Efficiency (NMEEE). In the 11th Five Year Plan (200712), it was proposed to

achieve the energy saving of 5% of the anticipated energy consumption level in the beginning of the 11th

Five Year Plan.

The outcomes of these schemes are quite encouraging; various activities under different schemes of BEE

and MoP have resulted in savings in avoided power capacity of 7,415 MW (verified; till Dec 2010) and250 MW (unverified for 4th Quarter of year 2010 11) and 3409 MW avoided power capacity savings is

projected during the last year of the 11th Five Year Plan (2011-12).

BEE would provide the technical assistance for establishment of DSM cells in the DISCOMs and capacity

building of personnel of DSM cells for enabling them to undertake the following strategies and schemes

of DSM in 12th Five Year plan:

Load Survey

Load Strategies

o Demand Response

o Load Management Programmes

Dynamic/Real Time Pricing: Based on real time system of supply & demand

Time-of-Use Rates: Customers are offered different rates for electricity usage at

different times of the day.

Automated/Smart Metering: Implementing Dynamic/ Real Time Pricing or Time-

of-use rate bstructure and billing accordingly

Web-based/Communication System: This is a tool used along with the above to

convey to the customer about the prevailing demand, supply, prices on real


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time basis and the incentives and options for him, which are used by the

customer to manage the demand

Demonstration Studies

Advanced Metering

DSM Financing

DSM and Demand Response (DR) Activity are utilized to curtail the peak electricity demand. Inother words, it helps to negate spending on generation, transmission and distribution

infrastructure by curtailing the peak. Thus, it can be said that funds are freed up which would

otherwise be utilized to meet the peak demand. At the National level, the load growth should be

reviewed with and without DSM and the fund freed up because of lower peak growth should be

used for DSM/DR activity. In other words, the DSM/DR should have a target (say 0.5% to 1%) of

peak demand reduction and the net saving in infrastructure due to that should be used for

DSM/DR activity. The total funds required for providing technical assistance for capacity building

of DSM cells established by DISCOMs under 12th Five Year Plan is Rs. 300 crore.

ENERGY CONSERVATION STRATEGY IN THE 12TH PLAN

The strategies adopted during the 11th Five Year Plan have started showing encouraging outcomes. It is

necessary to carry forward the existing schemes as well as further strengthen the activities to accelerate

the process of implementation of energy efficiency measures to achieve the desired energy savings.

Further, large scale energy savings can be realized through strengthening of the schemes in industrial,

commercial, residential and agriculture sectors as well as expanding and reaching out to new areas.

Projected electrical energy saving potential at the end of 12th Five Year Plan i.e during the year 2016-17

is 44.85 BU on the demand side (equivalent to 60.17 BU at Bus bar) and an additional energy saving

equivalent of 21.3 mtoe in the industrial sector (including Thermal Power Stations (TPS) and Small and

Medium Enterprises), Transport Sector and Energy Conservation (EC) award scheme. The share of target

energy saving (Electrical & Thermal) for various proposed schemes under 12th Plan is given below:

The proposed activities for the 12th Plan include sector specific interventions in areas like municipality

(drinking water and sewage treatment), agriculture sector (pumping), street lighting, commercial

buildings, government buildings and waste heat recovery in SMEs including demonstration projects.

Following initiatives of SDA are proposed to be supported that would help in strengthening the


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capacities of SDAs and undertaking of various projects and programmes to promote energy efficiency in

their respective states:

Support for implementing state-wise sector specific energy saving plan by the SDAs

Continued engagement of SDAs with energy efficiency professionals like energyauditors, energy managers and ESCOs

Implement various EE demonstration projects in the states to showcase theeffectiveness of the most advanced energy efficient technology and pursue stategovernments to replicate the project in other parts of the state.

LED village campaign in the villages and pursue state governments to replicate theproject in other parts of the state.

Publicity /awareness on EE in the states

Workshops/ training programmes for all the stakeholders

Capacity building programmes for the SDAsThe total funds requirement for the above proposed activities is Rs. 140 crore

Industrial Sector

(a) Large Industries (Designated Consumers)

The projected energy saving potential in the 12th Plan is 11.43 mtoe which consists of a saving of 6.2mtoe from the seven energy intensive industries (DCs) and 5.23 mtoe from thermal power stations

sector. The total energy saving per year during 2011-12 to2016-17 for 7 DC sectors is calculated on the

basis of 1.2% p.a. of the total energy consumed and at 1% p.a. of the total energy consumed for the

Thermal Power Plant sector during the 12th Plan period.

With the above assumptions, the extrapolation is also made further to see the expected energy saving in

2019-20 in 7 Industrial Sectors. The projected energy savings stand at 10.03 mtoe and 11.53 BU in

thermal and electrical energy respectively in 2019-20.

The tabular and graphical representation of projected energy consumption trend (electrical and

thermal) and saving targets in 7 industrial sectors (Designated Consumers) is given in below.

The details of projected energy consumption trend (electrical and thermal) and saving targets in 7

industrial sectors (Designated Consumers) are given in below.

Continuation of on-going Schemes/Programs by Bureau of Energy Efficiency and Ministry of

Power

National Energy Conservation Award

Notification of Energy Intensive Sectors as Designated Consumers (DC)-

Enhanced Capacity Building of Energy Management Professionals (National Certification

Examination for EA/EM)

Implementation of Perform, Achieve & Trade (PAT) Scheme


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The total projected saving in the year 2016-17 i.e end of 12th Five Year Plan is of the tune of 11.43 mtoe

in which 10.41 mtoe is contributed by thermal energy. The rest, which is equivalent to 11.96 BU of

electricity saving is estimated at bus-bar in 2016-17. The fund requirement is Rs. 190 crore to support

the proposed PAT schemes.

The total funds requirement for Industrial Sector (excluding SMEs) under the 12 th Five year plan is Rs.

3767 Crore.

(b) Small & Medium Enterprises

The targeted goal is proposed to be achieved by introducing innovative business models and financial

instruments (like Venture Capital Fund/Revolving Fund, Partial Risk Guarantee Fund). The proposed

schemes/activities to be undertaken in 12th Plan are as mentioned below:

Sector specific approach for energy efficiency and technology upgradation through facilitation of

implementation of DPRs

Energy mapping of the targeted SME Sector on all India basis

Undertaking of Innovative Financial Schemes for adoption of EE Technologies in the SMEs

Technical assistance and capacity building

SMEs Product Labelling Promotion Scheme

The details of projected energy consumption trend (electrical and thermal) and saving targets in energy

intensive SMEs are given in below.

The projected saving in the year 2016-7 of 12th Five Year Plan is 1.75 mtoe in which 1.59 mtoe is thermal

energy and rest is equivalent to the 1.83 BU of electricity with the financial budget requirement of Rs. 55

crore. In addition to this, Rs. 400 crore is also proposed for setting-up of Revolving fund and partial risk

guarantee fund.

The total funds requirement for SMEs under the 12thplan is Rs. 455 Crore.

Equipment and Appliances

(a) Standard & Labeling (S&L) Programme

The proposed activities in 12th Five Year Plan under S&L for equipments and appliances include:

Inclusion of at least 5 selected new equipment and appliances (selection is to be made from thelist provided in the table given below). Standby power loss reduction in few of the electrical

appliances will also be focussed in the 12th Plan.

Awareness creation among all the stakeholders,

Undertaking of check testing, label verification, market impact assessment for appliances/

equipments covered under S&L scheme and

Up-gradation of energy performance standards for equipment/ appliances covered during 11th

Plan


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(b) Super Efficient Equipment Program (SEEP)

SEEP is a part of Market Transformation for Energy Efficiency (MTEE) initiative, one of the four initiatives

of the National Mission on Enhanced Energy Efficiency (NMEEE). The primary objective of MTEE is to

accelerate the shift to energy efficient appliances through innovative measures to make the products

more affordable. NMEEE seeks to achieve annual savings of 19,598 MW of power and 23 million tonnes

of fuel and greenhouse gas emissions reduction of 98.55 million tonnes. The mission is one of the eight

mission under the Prime Minister's National Action Plan on Climate Change (NAPCC). BEE is the mission

implementing agency for NMEEE.

This programme proposes to deal directly with the manufacturers of select key appliances. Usually, only

a handful of manufacturers account for 70 to 90% of the market share of these appliances. SEEP would

compensate the manufacturers for a major part of the incremental cost of producing Super Efficient

Appliances (SEAs), and encourage them to not just produce but also sell SEAs at an affordable price to

common consumers. The need for incentive is expected to reduce very fast as volumes pick up.

Super efficient appliances (SEA) may consume 30 to 50 percentages less energy than the five star rated

equipments of BEE. SEAs will have their high first cost which can be decreased by large scale production

facilities, but due to uncertainty of market demand, manufacturers feel reluctant to make the initial

investment to change production lines for super efficient appliances. This barrier needs to be removed

by innovative policy interventions.

BEE has already announced the SEEP for ceiling fans, and has initiated a dialogue with manufacturers on

setting the technical specification, monitoring process etc. SEEP would also be extended to LED Tube

lights & LED bulbs. Financial incentives of Rs 244 crore per year would be required (depending on the

market situation and technical preparation).The ceiling fan market will undergo a significant transformation because of the SEEP intervention. It is

expected that 26.86 million SEA ceiling fans will be sold in 12th Plan which will provide savings of 2.2

billion units in the year 2016-17 of 12th five year Plan.

The details of sales (total sales of appliances and sales of SEAs) and energy saving is given in the table

that follows (base year 2012-13):


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The energy saved from appliances under SEEP is about 6.6 BU in the year 2016-17. The financial support

required for the proposed activities is Rs. 1470 crores which includes Rs. 250 crore for capacity building

and creating awareness regarding S&L and SEEP.Commercial Sector

Energy Conservation Building Code & Energy Efficiency in Existing Buildings

To set the minimum energy performance standards for new commercial buildings, having connected

load of 100 kW and above, as well as to promote energy efficiency in the existing buildings through

retrofitting, Energy Conservation Building Code (ECBC) was launched during the 11th Plan. Rajasthan and

Orissa have notified ECBC and three other states (, Kerala and Uttrakhand) are in the process of

notification. Star labelling programme (Voluntary) for day use office buildings, BPOs and Shopping

complexes have been developed and 123 buildings have been awarded energy star ratings label.

The draft report on Low Carbon Strategies for Inclusive Growth indicates that by mandating ECBC for

new commercial complexes and energy audits in existing buildings, 75 % of new commercial buildings

constructed during the 12th Plan would be compliant to the ECBC. Similarly, 20% of existing buildingswould reduce their present energy consumption by 20% through energy audits & retrofits.

Consequently, the estimated savings in energy use in new and existing buildings over the Business As

Usual (BAU) scenario is likely to be 5.07 BU.

The projected energy saving at the end of the 12 th Five Year Plan i.e. 2016-17 is 5.07 BU with the

financial budget requirements of Rs. 65 crore.

Residential Sector

Bachat Lamp YojanaThe residential sector accounts for 25.87 percent of the electricity demand in the country. The lighting

load comprises of 28% of this electricity demand in the residential sector and contributes almost fully to

the peak load as well. To promote the penetration of energy saving CFLs in the residential sector, BEE

has developed the Bachat Lamp Yojana (BLY) Scheme. Under the BLY scheme, a maximum of 4 nos.

long-life, quality CFL would be distributed by the CFL supplier to the grid-connected residential

households in exchange of equivalent no. of incandescent lamp (ICL) and Rs. 15 per CFL. The savings in


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electricity that would mitigate GHG emissions will be leveraged in the international market by the CFL

supplier under the Clean Development Mechanism (CDM) of the Kyoto Protocol.

To bridge the cost differential between the market price of the CFLs and the price at which they are

distributed to households, the Clean Development Mechanism (CDM) is harnessed. The CFL supplier

(Investor) would cover the project cost through the sale of greenhouse gas (GHG) emission reductions

achieved in their respective, project areas.

In 12th Five Year Plan, activities proposed to be undertaken are: strengthen the on-going BLY scheme by

continued engagement with the state electricity distribution companies and streamlining and sustaining

operations-mainly database management, data security, BLY system audit, PoA updation & re-

validation, and CDM Project Activities (CPA).

The projected electricity saving at the end of 12th Plan is i.e. 2016-17 about 4.4 BU with the financial

budget requirement of Rs. 6 crore.

Agriculture Sector

Agriculture DSM (Ag DSM)

Electricity consumption in agriculture sector has been increasing mainly due to the subsidized electricity

rates and meeting the growing irrigation need of agricultural land. To tap the energy saving potential in

the agriculture sector, which is estimated to be 20.75% (2007-08) of the total energy consumption, theactivities planned to be undertaken in the 12th Plan would focus on development of innovative financial

mechanisms like Venture Capital Fund (VCF) and Partial Risk Guarantee Fund (PRGF) for the large-scale

implementation of AgDSM projects on Public Private Partnership (PPP) mode, in the states for which

DPRs have been prepared in the 11th Five Year Plan.

The major impacts of the Ag DSM scheme during the 11th Five Year Plan includes 97 MU of annual

energy saving potential assessed across eight different states covering about 20,885 pump sets.

Based on the results achieved during the 11th Plan, the targeted reduction in electricity consumption at

the end of 12th Plan is 0.7 billion units (BU) which would be about 0.57% of the electricity consumption

in the agriculture pumping system. The following instruments are proposed to meet the proposed

target:Financing mechanism for promoting investments in Ag DSM projects (Target 0.25 million pump sets,

0.7 BU of energy savings, Total Budgetary Provision: Rs. 352 crore).

Placement of partial risk guarantee fund for risk mitigation of

Manufacturer/Implementer/ESCOs/FIs.

Placement of capital subsidy fund/venture capital fund for providing incentive to

Manufacturer/Implementer/ESCOs.

Monitoring and verification protocol under the AgDSM scheme (Total Budgetary Provision: 25

crore)

Monitoring and verification protocol under the AgDSM scheme (Total Budgetary Provision: 25

crore)

Integrated water and energy conservation scheme 100 Joint Demo projectsimplementation(Total Budgetary Provision: Rs. 10 crore)

Technical assistance & capacity development of all stakeholders (Total Budgetary provision Rs.

6 crores)

The projected electricity saving at the end of 12th Plan i.e. 2016-17 is about 0.7 BU with the financial



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Municipal and Public Utility Sector

Municipal DSM (Mu DSM)

The basic objective of the Municipal Demand Side Management (MuDSM) programme is to improve the

overall energy efficiency of the Urban Local Bodies (ULBs) which could lead to substantial savings in theelectricity consumption, thereby resulting in cost reduction/savings for the ULBs.

The situation analysis was carried out in the Municipal sector in 2007 covering 23 States/UTs. The

finding across all the 171 cities spread in 23 states points out that only 9 cities have exclusive energy

cell. Other Municipals region neither had energy cells nor having any medium for collection of data for

improvement of energy efficiency.

Energy Efficiency in ULBs

As low as only 38 cities out of 171 have separate allocation in their budget for any energy efficiency

initiative. Notably out of total budget allocation of Rs. 12,123 crore across these 171 cities, only Rs 128.5

crore (1.06%) was allocated exclusively for energy efficiency initiatives in the year 2006-07. This

subsequently went down to 0.88% in 2007-08 with the allocation of Rs 161.8 crores out of total budget

provision of Rs 18,430 crore. Based on the data collected in the situation analysis survey, the energy

saving potential for 12th Plan has been estimated as 257 million units (MU) in the urban local bodies.

Energy Efficiency in Water pumping

During the course of initial Investment Grade Audits (IGAs) of ULBs, it was found that over a period of

time, many of the water pumping bodies (Jal Nigam/ Jal Sansthan/ Water Department) have separated

out from the scope of ULBs and therefore, a separate situation analysis of these bodies was carried out.

The representative water bodies, encompassing total of 3520.65 lakh of population in 1896 Sq.km

spread across 105 cities, were covered during this sample based survey for situation analysis covering 19

states. In this study, the overall estimated electricity consumption in the pumping was 1040 MU with an

estimated electricity saving potential of 208 MU.

Based on the above survey, funding requirement of Rs. 45 crores is assessed for the MuDSM Scheme as

this scheme would create an institutional mechanism for implementation of the MuDSM in the country.

The above budget is meant for undertaking investment grade energy audits in both ULBs and Jal-

Nigams. It is envisaged that implementation of the proposed IGAs can be achieved through funding

under JNNURM and linking the same through development fund of MoUD to realize the savings. Any

implementation programme under BEE scheme is to be considered for separately funded.

The projected electricity saving at the end of 12th Plan i.e. 2016-17 is about 0.47 BU with the financial


Energy conservation awareness, awards and painting competitionIt is proposed to strengthen all ongoing activities during the 12th Plan and introduce the following

specific activities:

Creation of data base and its analysis EC Award participating units

Compilation and dissemination of best-practices in industry and building sector

Continuation of EC Awards and paintings competition on energy conservation

Awareness creation on energy conservation through print, electronic and other media for


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general public

The projected saving in the year 2016-17 of 12th Plan is about 3.42 BU of electrical energy and 5 mtoe

of thermal fuel saving with the financial budget requirement of Rs. 100 crore.

HUMAN RESOURCE DEVELOPMENT PROGRAMMESthe HRD activities undertaken in each of the scheme of BEE and MoP, the following initiatives are also

proposed to be undertaken in the 12th Five Year Plan:

Student awareness programs

Training, skill up gradation and refresher training of energy managers and energy auditors

Training, skill upgradation and refresher training of operators handling fuel fired furnaces and

boilers.

Inter-institutional networking in energy efficiency training

Training of Power plant personals

It meets the need of most of the sectors such as the power sector, SME, North East, agricultural,

buildings, etc.

The total budget proposed is Rs. 288 crores in the 12th Plan.

OTHER TECHNOLOGIES/AREAS FOR ENERGY CONSERVATION

Award for manufacturer offering the most energy efficient appliance models

Energy Efficiency Research Centers

Other strategies and Initiatives

Railways

The Indian Railways in past has undertaken many initiatives to conserve energy. However, still many

opportunities may exist for improving the energy efficiency in the railway sector as a whole. Given the

energy saving potential that may exist in this sector, it is proposed to initiate studies and various

schemes in coordination with the Ministry of Railways.

Additional sectors

A few additional sectors are proposed under the 12th Plan, where possibilities to reduce energy

consumption exist, which are not presently/ adequately covered under the existing BEE schemes. These

include the defence establishments like ordinance factories (purely on a voluntary basis), Public Sector

Units (PSUs) township and large engineering/ manufacturing industries.

Lighting Center of Excellence

Following recommendations/new initiatives are suggested for 12th Plan.

Continuation of on-going Schemes/Programs by Bureau of Energy Efficiency and Ministry of

Power

State designated agencies (SDAs) in different states need to play a very important role in terms

of carrying forward various energy efficiency initiatives at the state level. The thrust of the SDA

program during the 12th Plan will be on strengthening the 32 SDAs which would enable them to

implement various programs and activities initiated by BEE or SDAs themselves.

In the 12th Plan, it is proposed to set up State Energy Conservation Fund (SECF) in all the States

and pursue with SDAs for constitution of SECF in the states to implement various energy


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conservation activities and utilization of fund under SECF. Matching contribution may be made

by the state governments to the SECF.

The proposed activities in 12th Five Year Plan under Standard & Labelling Programme (S&L) for

equipments and appliances include:

Inclusion of at least 5 selected new equipment and appliances. Standby power loss reduction in

few of the electrical appliances will also be focussed in the 12th Plan.

Awareness creation among all the stakeholders,

Undertaking of check testing, label verification, market impact assessment for appliances/

equipments covered under S&L scheme and

Up-gradation of energy performance standards for equipment/ appliances covered during 11th

Plan.

Under the labelling scheme, the following activities are proposed

Introduction of fuel economy norms effective from 1st year of 12th Plan,

Technical study for 2 & 3 wheelers and commercial vehicles (Truck & Buses) to finalise S&L

programme


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WHAT DRIVES DSM?

Cost reduction and environmental motives

Reduce utility costs / customer costs

Rising fuel prices

Opposition/financial limitation to building new plants

emission/environmental concerns


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Reliability and network motives

Delay or avoid expansion Competition Demand shifting

Energy Reduction Programmes

Energy management

Energy purchasing

Metering and billing

Performance measurement

Energy policy development

Energy surveying and auditing

Awareness-raising, training and education

Capital investment management

Load Management Measures

Load levelling: Peak clipping Valley filling Load shifting

Load control: Loads (e.g. heating, cooling, ventilation, and lighting) switched on or off, often remotely, by the

utility

Tariff incentives or penalties: Time-of-use & real time pricing

Power factor penalties

DSM Programme Challenges

Developing countries Awareness Technical capabilities

Production and safety constraints Cost to customer Financing constraints

The relatively low utilisation of generation and networks means that there is significantscope for DSM to contribute to increasing the efficiency of the system investment. Theimportance of the diversity of electricity load is discussed and the negative effects of DSMon load diversity illustrated.DSM and Energy efficiency can be


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Key features and the opportunities for demand side management (DSM) Generation capacity, plant utilisation and efficiency Utilisation of transmission and distribution networks

Key features of demandLoad diversity and DSM

Power Ministry

PAINTING COMPETITION ON ENERGY CONSERVATION, 2010

Ministry of Power has undertaken National Campaign on Energy Conservation 2010. Under thiscampaign, a painting competition on energy conservation at School, State and National level are

conducted. The painting competition is first conducted at the School level and two best paintings

from the participating school are included in the concerned State/UT level Competition. First twowinners from each State and UTs are invited to participate at the national level competition. This

year, 47155 Schools and 15.63 lakhs students of 4th, 5th and 6th standards of the 35 States and

Union Territories participated in the School Level Painting Competition, which was quite

encouraging. This competition is aimed at motivating the children towards energy conservationand offers them a chance to explore their creativity. The expressive paintings of the children

reflected their interest in the energy conservation activities and their concern about climate

change.

NATIONAL MISSION FOR ENHANCED ENERGY EFFICIENCY (NMEEE)

The National Mission for Enhanced Energy Efficiency is one of the eight missions under the

National Action Plan on Climate Change. The scheme has been approved by the cabinet and its

implementation will commence in 2010-2011. The objective of the Mission is to achieve growthwith ecological sustainability by devising cost effective strategies for end- use demand side

management. The Ministry of Power (MoP) and Bureau of Energy Efficiency (BEE) have been

entrusted with the task of preparing the implementation plan for the National Mission forEnhanced Energy Efficiency (NMEEE) and to upscale the efforts to create and sustain market for

energy efficiency to unlock investment of around Rs. 74,000 Crores. The Mission, by 2014-15, is

likely to achieve about 23 million tons oil-equivalent of fuel savings- in coal, gas, and petroleum

products, along with an expected avoided capacity addition of over 19,000 MW. The carbondioxide emission reduction is estimated to be 98.55 million tons annually.

The Cabinet approved the financial outlay of Rs.235.35 crores and a budgetary provision for Rs108.30 crores has been made for the current financial year. NMEEE will usher in the following

four initiatives, in addition to the policies and programmes for energy efficiency being

implemented by BEE. These initiatives are as follows:


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Perform, Achieve and Trade (PAT), which is a market, based mechanism to enhance

cost effectiveness of improvements in energy efficiency in energy-intensive largeindustries and facilities, through certification of energy savings that could be traded.

Targets for improvements in energy efficiency will be set under Section 14 of the Energy

Conservation Act, 2001 in a manner that reflects fuel usage and the economic effortinvolved. The Government, in March 2007, notified units in nine sectors, namely

aluminium, cement, chlor-alkali, fertilizers, iron and steel, pulp and paper, railways,textiles and thermal power plants, as Designated Consumers (DCs).

Designated Consumers (DCs) in 8 industrial sectors will have mandatory participation inthe 1st cycle of PAT scheme which will be implemented during 2011-12 to 2013-14. It is

estimated that the total energy consumption by about 462 DCs in 8 energy intensive

sector is about 165 million tons of oil equivalent (MTOE) with Power Plant sector having

the lion's share (i.e. 64%). Moreover, only 5 sectors like Power plant, Iron & Steel,Cement, Fertilizer and Aluminium do consume 97% of total energy consumed by 8

sectors. About 5.4% reduction which is estimated as 8.97 MTOE are targeted in 3 yearsfrom energy intensive industries. Among the 23 MTOE set as target from NMEEE,implementation of PAT scheme do focus on achieving 8.97 MTOE by the end of first

PAT cycle.

In an effort to provide an online platform to operationalize the PAT scheme, development

of an internet based system (PATNET) is under process and work-order on PATNET has

been awarded to NIIT to develop the e-platform of entire PAT scheme.

Market Transformation for Energy Efficiency (MTEE) to accelerate the shift to

energy efficient appliances in designated sectors through innovative measures to make

the products more affordable with focus on leveraging international financial instruments,including Clean Development Mechanism (CDM) to make energy efficient appliances

affordable and increase their levels of penetration.

Since the public sector holds the key to aggregation of CDM projects so as to reduce

transaction costs, barriers to widespread adoption of CDM need to be removed throughthe following measures.

o Make it mandatory for all public investment and over time, all public operationsto be assessed for their potential to attract carbon finance

o Promote programmatic CDM to reduce transaction costs and aggregation of small

energy-efficiency projects

o Develop and implement a national CDM strategy for energy efficiency

o Promote market access of small industries in energy-efficiency projects

o Promote transparency in pricing

o Ensure that the legal status of CERs is clear to avoid disputes related to taxation

o Enhance capacity-building and training


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Under this initiative of NMEEE, BEE has developed the umbrella framework BLY-

Programme of Activities (PoA) which has been registered under UNFCCC-EB on 29thApril 2010. The PoA would define key CDM requirements, including the project

baseline, additionality, methodology, monitoring protocols through which CO2 emission

reductions would be assessed. The PoA approach reduces time and transaction costs for

registering the projects since the key CDM requirements will not need to be addressed byarea-specific projects within the PoA. BEE plays a role of a coordinating and managing

entity (CME) in the BLY - PoA. Kerala State has distributed the CFLs in the entire state.

Karnataka State has also launched the scheme and CFL distribution has started. BLY is atdifferent stages of implementation in many other states like Punjab, Haryana, Andhra

Pradesh, Orissa, Andhra Pradesh, Chhattisgarh , Madhya Pradesh, Uttar Pradesh,

Uttarakhand , Rajasthan, Goa, West Bengal, Tamilnadu and Delhi. These projects can beadded to the registered umbrella framework as and when they are developed during the

lifetime of the PoA.

Another program under this initiative is the development of Super Efficient Equipment

Programme (SEEP). This program is proposed to develop superefficient appliances withan aim to reduce consumption and enable demand side management. The goal is not only

to reduce cost of energy efficient equipments to stimulate accelerated markettransformation but also to encourage domestic manufacturing to sustain the market.

Energy Efficiency Financing Platform (EEFP), to help stimulate necessary funding for

Energy Service Company (ESCO) based delivery mechanisms for energy efficiency. The

costs will be recovered from the energy savings, which will also reduce the subsidy bill

of the state government. The scheme has the potential to be replicated across the country.

BEE has undertaken the following measures, in addition to those related to implementing

demonstration projects in government buildings, in order to stimulate the market.

o Putting in place a government-supported standard methodology that covers the

entire project chain from audit to performance measurement and verification

o Designing a standard performance contract

o Designing appropriate financial mechanisms to fund projects

o Implementing projects and evaluating their impact

o Building capacity in ESCOs and project owners

In an effort to provide EEFP, MoUs with M/s. PTC India Ltd, M/s. SIDBI and HSBC

Bank have been signed by BEE. PTC India Ltd. has commenced financing of several

building energy efficiency projects in Rashtrapati Bhavan Estate, ESIC Hospitals at

Rohini and East Delhi, AIIMS, Safdarjung Hospital. SIDBI has taken up projectpreparation of energy efficiency projects in 25 SME clusters which will then be offered

financing.

Further, investment grade energy audits have been completed for large public buildings

in the country. Based on the recommendations of these audits iconic buildings in the

states will be taken up for implementation through ESCO route.


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Framework for Energy Efficient Economic Development (FEEED), seeks to develop

fiscal instruments to promote energy efficiency including innovative fiscal instrumentsand policy measures like the Partial Risk Guarantee Fund (PRGF) and Venture Capital

Fund for Energy Efficiency (VCFEE), Public Procurement of energy efficient goods and

services, Utility based Demand Side Management (DSM), etc.

Efforts of the government to create a market for energy efficiency need to be

supplemented with appropriate fiscal instruments, which must be designed to address thefollowing objectives:

o Reassuring lenders by providing a guarantee for performance contracts

o Providing a venture capital fund from the Government to provide equity for

energy-efficiency projects

o Promoting leadership in the public sector on energy efficiency

o Promoting energy efficiency in public procurement based on life cycle costanalysis

o

Promoting regulatory incentives to state utilities through electricity regulatorycommissions for DSM projects

o Offering concessions on taxes and duties to attract investment

Partial Risk Guarantee Fund (PRGF)

A PRGF is a risk sharing mechanism lowering the risk to the lender by substituting part

of the risk of the borrower by granting guarantees ensuring repayment of part of the loanupon a default event. The guarantee can seek to directly support financing of energy-

efficiency projects by:

o

Addressing credit risk and barriers to structuring the transactions involved infinancing energy-efficiency projects and

o Engaging commercial financial institutions and building their capacity to financeenergy-efficiency projects on a commercially sustainable basis.

Venture Capital Fund for Energy Efficiency (VCFEE)

VCFEE as envisaged by the Government of India under the National Mission forEnhanced Energy Efficiency can go long way in addressing these barriers and kick

starting some of the long awaited energy efficiency projects in the country.

This fund will work with following criteria:

o It is a Fund providing risk capital support to energy efficiency investments innew technology, goods and services, etc

o It is a leveraging fund with a view to leverage private venture investments in

energy efficiency sector by identifying the possible co-investment opportunities(not in competition with other private funds) with other venture capitalists into

Energy Efficiency projects & companies.


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o It allows private venture fund players to capitalize the transaction costs

associated with specific EE investments

o It helps to create the volume in energy efficiency deal flow by the fund manager

of VCFEE through advertising & soliciting opportunities in energy efficiency

area.

o

In investments, where it co-invests with other venture capitalist on same returnexpectation as private venture capitalist, this Fund could be last to be paid in case

of liquidation of investment in projects

o In investment, where it co-invests with other venture capitalist on lesser returnexpectation than private venture capitalist, this Fund then should be the first paidin case of liquidation of investment.

Under this initiative, framework development for financial institutions to promote

energy efficiency is in process. Document on institutional framework and RfP for

hiring fund manager for Partial Risk Guarantee Fund (PRGF) and Venture CapitalFund (VCF) are being finalised.

Study on fiscal and monetary policy of energy efficiency projects have beenawarded to National Institute of Public Finance and Policy (NIPFP).

The above documents are available in PDF format. Please use Acrobat Reader to viewthem.

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