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Potential, Cost, and Impact of DSM: Role of Load Research and Evaluation, Monitoring, and Verification (EM&V) Dr Amol Phadke, LBNL NPTI DSM Training Workshop Nov 2010. Outline . Estimating DSM Potential: Role Load Research DSM Costs – Simple ways to compare with supply side resources

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Potential, Cost, and Impact of DSM: Role of Load Research and Evaluation, Monitoring, and Verification (EM&V)

Dr Amol Phadke, LBNL

NPTI DSM Training Workshop Nov 2010

  • Estimating DSM Potential: Role Load Research
  • DSM Costs – Simple ways to compare with supply side resources
  • Estimating DSM Impact: Role of EM&V
  • Putting in all together – Super Efficient Equipment Program by BEE (presentation on behalf of Dr Garg, BEE)
dsm potential estimate and load research hands on exercise
DSM Potential Estimate and Load Research : Hands on exercise
  • What is the morning peak contribution of electric water heaters in
    • Your city
    • Your state
    • Overall in India
  • If all electric water heaters are replaced by either solar or gas water heaters, how much peak power will be saved
  • Any guess for India peak demand
    • 100 MW, 500 MW, 2000 MW, 5000 MW, 20,000 MW???
key information needed
Key information needed
  • Consumption
    • kW
    • kWh
  • Number of water heaters (penetration)
  • Usage pattern
  • Future trends
load research basics
Load Research Basics
  • Need to sample – surveying all consumers not possible and not needed
  • Are customers being surveyed similar to your customer base in general ?
  • Deciding the use of meters, survey questions, bill information, system data
load research hands on exercise
Load Research: Hands on Exercise
  • Estimate the penetration per household and usage (number of hours per year) of the following appliances
    • Lights (CLFs, tube lights, incandescent)
    • Fans
    • TV
    • AC
    • Water heater
    • Refrigerator
    • Computer
  • Estimate the average morning (9-10 am)and evening peak demand (8 pm) of households in the group
  • Max in the group and min in the group
demand side power purchase basics
Demand Side Power Purchase: Basics
  • Demand side Power Purchase is a bundled set of energy efficiency (EE) programs that are designed to deliver the energy and capacity equivalent of a power purchase on the supply side.
    • purchase “negawatts” and “negawatt-hours” that are functionally equivalent to the kilowatts and kilowatt-hours procured
    • Can resemble a conventional peaking power purchase by emphasizing efficiency measures (and demand response) that reduce electricity during periods of peak power consumption.
    • Can resemble a base-load power purchase emphasizing measures to reduce consumption during all hours of the day.
what is demand side power purchase
What is Demand Side Power Purchase?
  • Saving 400 MW during the evening peak hours at the load end > 500 MW generation at the bus bar
  • What does it take to saving 400 MW at the load end
    • Replacing ~ 88 lack incandescent with CFLs
    • 45 Watt saving/replacement ; 88 lack replacements ~ 400 MW saving
  • How much does it cost
    • If the utility decides to give the CFLs at the price of incandescent lamps, 100 Rs subsidy needed/bulb
    • Total expenditure 88 Cr: less that one third of the expenditure of the supply side !
comparing supply and demand side power purchase
Comparing Supply and Demand Side Power Purchase

Cost of demand side power purchase per unit =

(Annualized incremental capital cost)/(saving per year )

CFL example = (88 Cr)/(730 GWh) = 1.2 Rs/Unit

One important different: Demand side power purchase appears happens at the consumer end (avoids losses)

Power purchase cost of 5 Rs/Unit translates to more than 8 Rs/Unit when it lands at the consumers doorstep due to lossess

demand side power purchase merit order stack
Demand Side Power Purchase: Merit Order Stack

Utility Benefit

Average Tariff

Consumer Benefit

least cost power rationale derc example
Least Cost Power Rationale: DERC Example

“ The Commission is keen to see that distribution licensees undertake DSM initiatives, not only because DSM initiatives provides an opportunity for conservation of power use but also because these initiatives when integrated with supply, provides a least cost solution for distribution licensees to meet their power demand”

arr and impact on consumer
ARR and Impact on Consumer

One line summary

If the demand side power purchase is less half of the cost on the supply side, impacts on the consumer are going to be positive!

impact on arr
Impact on ARR

Goal: meet 1000 MW of demand increase during the four peak hours in the evening

  • Supply side power purchase
    • Sign a bilateral contract of 1000 MW for evening peak delivery (1460 GWh delivered during the evening peak hours over the years)
    • Addition to the ARR: 730 Cr
  • Demand side option
    • Facilitate the replacement of 1.7 Cr incandescent by providing Rs 100/bulb rebate to the consumer
    • Addition to ARR: 170 Cr
impact on tariff bills
Impact on Tariff & Bills
  • How is the increase in ARR typically is met
    • Tariff increase
    • Increase in government subsidy
    • Improvement in operations
    • Increase sales to high paying consumers
  • If the increase in ARR is lower for demand side power purchase
    • Tariff increase can be mitigated
    • Need for government subsidy can be reduced
  • If the Rs 730 Cr of power purchase cost on the supply side is used for demand side power purchase, more than three times the units can be purchased and could potentially eliminate shortages !
topics covered
Topics Covered
  • Role of Regulators
  • Role of Utilities and Implementation Models for Demand Side Power purchase
  • Next Steps and Potential Agenda
role of regulators
Role of Regulators
  • Establish clear goals for DSM power purchase based on potential estimates
  • Allocate resources from ARR for DSM power purchase
  • Provide guidance/regulation to facilitate implementation of DSM power purchase
  • Tariff options for promoting demand side power prucahse (can either viewed as pumped storage or peak power purchase)
formative em v
Formative EM&V
  • Used to improve existing and future programs
  • Energy Efficiency Potential Studies – What is the potential for additional energy savings by market segment
  • Market Assessment and Saturation studies
    • Residential Appliance
    • Commercial End Use
    • Industrial/Manufacturing end use

Change vs. Impact

In the Absence

Of the Program










When Do You Evaluate?(Impact Evaluations Only)







dsm programme in india concept of seep presentation by

DSM Programme in India - Concept of SEEPPresentation by

Dr Sandeep GargEnergy EconomistBureau of Energy Efficiency


the appliance ee challenge global appliance electricity consumption expected to double in 25 years
The Appliance EE Challenge:Global appliance electricity consumptionexpected to double in 25 years

Four appliance categories, each with major efficiency potential, constitute about two-fifths of residential consumption.


Source: LBNL, May 2010

savings potential in appliances
Savings Potential in Appliances

Saving potential in household and commercial appliance is about 57 B KWh per year in 2013.

Source: Prayas Energy Group



Possible Impact of SEAD

Electricity use of appliances constitutes about 22% of consumption

The average annual growth rate of these appliances is between 10-15%



Impact of SEEP on DSM Programme

Transaction costs reduces by:

(1) Enlarging geographical scope of the program, moving from utility to state, national and then global programs; and the

(2) Product chain stakeholders starting from the customer and moving upstream to retailer, wholesaler and finally the manufacturer.

SEEP could aggregate of SEE demand significantly



SEEP – Leveraging Energy Savings

Labeling of ‘super-efficient’ equipments (SEE)

Determination of incentives based on peak load reduction

Monitoring sale of SEE, verification and incentive payout



Mechanics of SEEP

Incentives for SEE -

The incremental cost of SEE is within reasonable limit as compared to normal equipment.

The Standards and Labeling programme of BEE has initiated market

Direct Procurement by Utility

The incremental cost of SEE is many times higher that a similar in-efficient equipment (like LEDs vis-à-vis the incandescent bulbs).

The technical standards are in an evolutionary stage and the testing facilities are not adequate.

Project Based SEE Deployment

Encourage project development by utilities to promote DSM under a regulatory oversight

Provide a suitable payment security mechanism by leveraging the regulatory charge to encourage ESCOs.



Mechanics of SEEP – Building Blocks

  • In-principle approval of FOR
  • Selection of Equipments
  • Technical specifications of Selected Equipments
  • Calculating the amount to be recovered from ARR of utilities
  • Monitoring of SEEP
  • Payment of Incentives/Procurement Costs
  • State Specific Regulatory Approval
  • Evaluation and Impact Analysis
  • Project Based Intervention



Interface with Climate REDI- SEAD

  • Concept of incentives to manufacturers for sales of SEE – exchange of information and best practices/ coordination
  • Harmonisation of technical standards in most equipments not feasible – except in some products for which common international specifications are possible- eg. TVs
  • Harmonisation of testing procedures
  • Exchange of technical information and expertise
  • Capacity building of Utilities/ regulators/ Manufactures, etc
  • Need of seed fund to kick start the process- BEE is in the process of seeking funds from Government – possibility of enhanced funding to this seed fund


the appliance ee challenge growing global demand
The Appliance EE Challenge:Growing global demand

Five global suppliersproduce ~60% of televisions

Fifteen global suppliers produce ~75% of major appliances

Five global suppliers produce ~45% of

room ACs

Source: LBNL, June 2010

The Opportunity: Untapped energy savings potential from highly-efficient commercially-available devices

Energy Star and California Performance Tiers

CA T20 Tier 1

(2011 MEPS)

Dots show commercially-available TVs that are more efficient than Energy Star 4.0.

BUT… about 60-70% of TVs sold in North America are less efficient than Energy Star 4.0.

Source: Noah Horowitz, NRDC, May 2010

sead is a global market transformation initiative for super efficient products
SEAD is a global market transformation initiative for super-efficient products

Number of Customers

Energy Intensity

“Push” with mandatory


“Pull” with incentives/labels

Market transformation

Business as usual

sead increases the benefits of appliance ee programs through global coordination
SEAD increases the benefits of appliance EE programs through global coordination

Number of Customers

Energy Intensity

1) “Raise the ceiling” by coordinating incentives for highly-efficient globally traded devices (e.g., employing similar definitions of tiers)

“Push” with mandatory


“Pull” with incentives/labels

2) “Raise the floor” by coordinating and accelerating MEPS schedules and engaging in relevant technical exchange

Market transformation

Business as usual

3) “Strengthen the foundations” by dialogue on test methods, certification data sharing, policymaker toolkit development, and technical support

one possible quick start area ceiling fans

Major Indian interest (20% of household energy use; Prayas estimates DSM program could avoid 6 TWh peak consumption by 2020)

Ceiling fans consume ~10 TWh/year in U.S. (~3 500 MW power plants)

Several US utilities provide incentives for Energy Star fans

DOE has authority to consider ceiling fan MEPS

One possible “quick start” area: Ceiling fans

“Tier 1”?

“Tier 2”?

“Tier 3”?

Source: Prayas Energy Group, March 2010

end use efficiency lowers electricity sales and can lower utility revenue
End-use Efficiency Lowers Electricity Sales and Can Lower Utility Revenue

Increasing efficiency of use amounts to asking utility companies to reduce sales of their product

How are utility companies to be compensated for existing capacity and slower growth in future assets?

Not a problem in India because electricity shortage means saved electricity can be sold to another customer, but first cost is an issue

Maharashtra Electricity Regulatory Commission has allowed utility companies to pass along all costs of demand-side management programs to customers


Contact information:

Sandeep Garg (

Bureau of Energy Efficiency

(Ministry of Power, Govt. of India)

4th Floor, Sewa Bhawan


New Delhi – 110066