Demand Side

management.
 Objectives
• To introduce the concept of demand-side management for
residential, commercial and industrial energy users.
• To give an overview of the different types of demand-side
measures.
• To show how housekeeping and preventative maintenance
in commerce and industry can be used to reduce energy
demand.
• To describe energy auditing and routine data collection and
monitoring, and to indicate their benefits.
• To outline information dissemination on demand-side
management.
• To provide an overview of the major implementation
challenges for DSM programmes.
 DSM facts in the United States
• In 1999 in the United States, 459 large
electricity utilities had DSM programmes.
These programmes saved the large utilities
50.6 billion kilowatt hours (kWh) of energy
generation. This represented 1.5 per cent of
the annual electricity sales of that year.

Source: www.cogeneration.net/Demand_Side_Management.htm(accessed
06July06)
 Basic Concept Of DSM
• The term DSM was coined after the energy crisis in 1973 USA.
• DSM is also known as Energy Side Management or Energy
Demand Management whose ultimate aim is to reduce the
peak demand of power plant.
• DSM has different means for different categories of peoples.
• For utility company, DSM means avoiding or delaying the
need to construct new generating capacity by reduction or
shift of consumer’s energy use period.
• For domestic consumer, DSM means an opportunity to save
money by reducing their electricity bill taking the advantage
of financial incentive provided by utility.

•
 WHY PROMOTE DSM?
• Cost reduction: many DSM and energy efficiency efforts have
been introduced in the context of integrated resource planning
and aimed at reducing total costs of meeting energy demand.
• Environmental and social improvement: energy efficiency and
DSM may be pursued to achieve environmental and/or social
goals by reducing energy use leading to reduced greenhouse gas
emissions.
• Reliability and network issues: ameliorating and/or averting
problems in the electricity network through reducing demand in
ways which maintain system reliability in the immediate term
and over the longer term defer the need for network
augmentation.
• Improved markets: short-term responses to electricity market
conditions (“demand response”), particularly by reducing load
during periods of high market prices caused by reduced
generation or network capacity.
 WHY PROMOTE DSM? Cont…

• Where it is argued that the benefits of DSM to

consumers, enterprises, utilities and society can be
realized through:
– Reductions in customer energy bills;
– Reductions in the need for new power plant, transmission
and distribution networks;
– Stimulation of economic development;
– Creation of long-term jobs due to new innovations and
technologies;
– Increases in the competitiveness of local enterprises;
– Reduction in air pollution;
– Reduced dependency on foreign energy sources;
– Reductions in peak power prices for electricity
The main types of DSM activities may
be classified in three categories:
• Energy reduction programmes—reducing
demand through more efficient processes,
buildings or equipment;
• Load management programmes—changing
the load pattern and encouraging less demand
at peak times and peak rates;
• Load growth and conservation programmes.
 Demand-Side Management
• First introduced in 1981 as “Demand-Side
Load Management” by Clark W. Gellings.
• Changed to “Demand-Side Planning”.
• And then changed to “Demand-Side
Management”
 What is Demand-Side Management?
• To ensure stability on the electricity grid, electricity supply
and demand must remain in balance in real time.
• Traditionally utilities have called upon peaking power plants
to increase power generation to meet rising demand.
• Demand-side management (DSM), which includes energy
efficiency and demand response (DR), works from the other
side of the equation – instead of adding more generation to
the system, it pays energy users to reduce consumption.
• Utilities pay for demand-side management capacity
because it is typically cheaper and easier to procure than
traditional generation.
 OBJECTIVE OF DSM
• The objective of DSM is to reduce the peak electricity
demand and promoting the energy efficient devices. In fact
to reduce the overall load on electrical network, total
consumption and peak demand can be reduced by:
 Improving the load curve
 Energy Conservation

• The DSM strategies have the objective of maximizing the

end use efficiency to avoid/ postpone the requirement of
new generating capacity. In DSM three concepts are clearly
identified: Demand Response, Energy Efficiency and Energy
Conservation
 ADVANTAGES OF DSM
• DSM results in low peak demand on power plant and saving of electrical
energy, ultimate advantage to consumer, utility and societies are:
 Postpone the construction of new power plant.
 Deferring high investment to setup transmission and distribution
networks.
 Mitigating electrical system emergencies.
 Reduces the number of blackouts.
 Less stress on power plant that reduces local air pollution.
 Less stress on plant results in reduction of harmful green gas
emissions.
 Low cost of generation per unit.
 Network reliability is improved.
 Power plant demand less maintenance.
 Reduction in consumer’s electricity bill.
 Enhances the national energy security by reducing the dependency on
expensive import of fuel.
 Creation of long term jobs due to new innovation and technology.
 Demand-Side Management Software - Benefits
• Reduce energy costs
• Reduce peak MWh costs
• Reduce Mvar & power factor penalties
• Improve system operation & stability
• Increase equipment life
• Increase system capacity
• Shared decision making process
 DSM can be achieved through
• Improving the efficiency of various end users
through better housekeeping correcting
energy leakages, system conversion losses etc.
• Developing and promoting energy efficient
technologies and
• Demand management through adopting soft
options like higher prices during peak hours,
concessional rates during off- peak hours
seasonal tariffs, interruptible tariffs, etc.
 Cont…
• DSM in a wider definitions, also includes
options such as renewable energy systems,
combined heat and power systems,
independent power purchase etc., that utility
to meet the customers demand at the lowest
possible cost.
 Need and objectives of Demand Side
Management
• DSM is the modification of consumer demand for energy
through various methods such as financial incentives and
education.
• Usually, the goal of DSM is to encourage the consumer to
use less energy during peak hours, or to move the time of
energy use to off-peak times such as nighttime and
weekends.
• Peak demand management does not necessarily decrease
total energy consumption, but could be excepted to reduce
the need for investments in networks and/or power plants.
• The term DSM was coined during the time of the 1973
energy crisis and 1979 energy crisis.
 DSM benefits
Customer Benefits Social Benefits Utility Benefits
Satisfy electricity demands Reduce environmental Lower cost of service
degradation

Reduce Stabilize cost Conserve resources Improve operating

efficiency, flexibility

Improve value of service Protect global environment Reduce capital needs

Maintain / improve lifestyle Maximize customer welfare Improve customer service
and productivity
 The implementation of DSM
programmes
• Improve the efficiency of energy systems.
• Reduce financial needs to build new energy
facilities (generation).
• Minimize adverse environmental impacts.
• Lower the cost of delivered energy to consumers.
• Reduce power shortages and power cuts.
• Improve the reliability and quality of power
supply.
Steps to implement DSM
 Step 1: Load Research
• This stage in the DSM implementation will
typically assess the customer base, tariff, load
profile on an hourly basis and will identify the
sectors contributing to the load shape. This
step will also identify peak load contributors.
 Step 2: Define load-shape objectives
• Based on the results of the load research in
the utility, DSM teams define the load shape
objectives for the current situation.
• Various load-shape objectives - Peak Clipping
(reduction in the peak demand), Valley Filling
(increased demand at off-peak), Load Shifting
(demand shifting to non-peak period), and
Load Building (increased demand) are
possible.
Specific descriptions of load-shape
objectives
 Meaning of load-shape objective
• Peak Clipping - the reduction of utility load primarily during periods
of peak demand
• Valley-Filling - the improvement of system load factor by building
load in off-peak periods
• Load Shifting - the reduction of utility loads during periods of peak
demand, while at the same time building load in off-peak periods.
Load shifting typically does not substantially alter total electricity
sales.
• Conservation - the reduction of utility loads, more or less equally,
during all or most hours of the day.
• Load Building - the increase of utility loads, more or less equally,
during all or most hours of the day.
• provision of a more Flexible Utility Load Shape - refers to programs
that set up utility options to alter customer energy consumption on
an as-needed basis.
 Step 3: Assess programmed
implementation strategies
• This step will identify the end-use applications
that can be potentially targeted to reduce
peak demand, specifically in sectors
contributing to system peak.
• This step will also carry out a detailed benefit-
cost analysis for the end-users and the
utilities, including analysis of societal as well
as environmental benefits.
 Step 4: Implementation
• Implementation stage includes program
design for specific end-use applications,
promotes the program to the target audience
through marketing approaches such as
advertising, bills and inserts, and focused
group meetings (specifically in case of
commercial and industrial sector).
Step 5: Monitoring and Evaluation
• This step tracks the program design and
implementation and compares the same with
proposed DSM goal set by the utility. A
detailed benefit-cost analysis in this case
includes identifying the avoided supply cost
for the utility vis-à-vis the total program cost
for the utilities and benefits to the
participants including the reduced bills or
incentives to the end-users.
What Are Demand Forecasting, Planning, and
Management?
Industry Trends – Movement From Push to Pull
Manufacturing
Aligning supply and demand plans to helps ensure optimized
profitability
Single number forecasts/plans need to be translated
into terms stakeholders can understand
Aggregated product demand is less
variable than individual demands,
 Demand Planning

• The 4P’s of marketing:

– Product decisions -packaging and sizes

– Pricing decisions -list and discounts
– Promotional decisions -consumer and trade
– Place –distribution and sales channels
 Focus is on DSM and Utilities
• How DSM programs affect utilities both
technically and financially
• Why utilities do DSM programs
• Creating DSM programs to provide benefits to
utilities
• Case studies of DSM activities by utilities
• Practical work in energy audits, financial
analysis and with tools for DSM
 Utility Management Issues and DSM
• Determining the financial effects of DSM
activities on the utility
– How lowering kWh sales through DSM changes
cash flow for a utility
– Impact of meeting external requirements for
implementing DSM
– Planning, forecasting and DSM
 Technical Aspects of DSM
• Energy auditing
– Commercial
– Industrial
– Government
– Residential
• Energy management technology
• Utility technical operations and DSM
• Renewable energy and DSM
 Analyzing Cost/Benefits of DSM
• Life cycle costing for DSM investment
• Concept of “payback period” for DSM
investments
• DSM in situations where tariffs are below
service delivery cost
• DSM in rising fuel price conditions
 DSM Programming
• Energy Surveys and Audits
• Designing programs for each class of customers
• Public Information programs
• Appliance efficiency rating programs
• ESCO (Energy Service Companies) type activities
• DSM programs and government
• Energy codes for buildings
 POTENTIAL OF DSM IN NEPAL
• The distribution network of Nepal is very ill managed which is
responsible for huge loss of power supplied by the utility.
• In context of Nepal, there is enormous potential of Demand Side
Management.
• Looking towards current trend, we are only focused on generation
issues but not on distribution system, although certain initiatives
have been taken recently in perspective of Demand Side
Management.
• It has been calculated has total of 150MW loss could be reduced
upon implication of DSM by utility, which is a huge amount of
power in case of Nepal since till now it only has total generation of
750MW roughly with maximum output in Rainy season.
• Most of the industry has inductive loads causing degradation of
power factor eventually leading to increase in losses. Thus, industry
could be motivated to use synchronous condenser at their plants
which would aid in reduction of losses, otherwise utility may charge
for reactive power as well.
 There are several projects being carried out in
Nepal regarding demand side management.
• Energy Access and Efficiency Improvement Program.
• Project for Energy Efficiency through Loss Reduction.
• Distribution System Rehabilitation Project.
• Energy Efficiency in Lightning (CFL) Project.
• Energy and Customer Accountability Enhancement
Program.
 MECHANISM FOR DSM
• Identification of appropriate DSM options for
Nepal.
• Identification of different factors those affects
the DSM options.
• Identification of different stakeholders for
decision making to achieve overall goals.
• Addressing DSM options on the basis of
priority.
 Implementing DSM, In context of Nepal

• Reactive power pricing for industry.

• Installation of Capacitor banks.
• Promoting Energy Efficient Lamp.
• Seasonal Tariff.
• Tariff Management
 Why DSM?
• DSM is an intervention by a utility on the
“customer side of the meter” to change the
way customers use electricity. It is a
partnership between the utility (or
government) and customer with benefits to
both.