Transcript Overview Environmental Energy Technologies Division

DSM and Resource Planning
Jayant Sathaye, Amol Phadke and Ranjit Bharvirkar
Energy Analysis Program
Lawrence Berkeley National Laboratory
Berkeley, CA
Bob Lieberman
Regulatory Assistance Project
Presented at the
Forum of Indian Regulators
11 June 2009
Work supported by the US Departments of State and Energy
Lawrence Berkeley National Laboratory
• Managed by the University of California for the US Dept
of Energy
• Founded in 1931, about 4000 staff
• 12 Nobel Prizes – IPCC (2008) – Jayant Sathaye
• Utility programs –
— Distribution loss reduction
— Demand-side management programs
— Load research and generation planning
— Transmission reliability
— Renewable energy
Regulatory Assistance Project (RAP)
• RAP is a non-profit organization providing technical and
educational assistance to government officials on energy
and environmental issues. RAP is funded by US
Department of Energy, several foundations, and
international agencies. We have worked in 40+ states and
16 nations.
• Bob Lieberman
— Illinois utility regulator for the last five years. Term ended June 1st,
2009
— Ran Chicago-based NGO that developed and ran energy efficiency
and demand response programs
— Implemented integrated resource planning in Illinois
Contents
I: Overview and Macro impacts
– Dr. Jayant Sathaye
II. Demand Side Power Purchase
-- Dr. Amol Phadke
III: ARR and Tariff Impact and Regulatory Treatment of
DSM
-- Dr. Amol Phadke
IV: Implementing DSM and Regulatory Perspective
-- Ranjit Bharvirkar
-- Bob Lieberman
V. Next Steps
Asia Pacific Partnership (APP)
1.
8 Participating Countries: Australia, Canada, China, India, Japan, Republic of
Korea and the United States
2.
Eight task forces including one on power generation, transmission, distribution
and demand management
3.
Goal: To develop, deploy and transfer cleaner, more efficient technologies and to
meet national pollution reduction, energy security and climate change concerns
consistent with the principles of the U.N. Framework Convention on Climate
Change (UNFCCC).

Assist partners to build human and institutional capacity to strengthen cooperative
efforts, and to seek opportunities to engage the private sector.
Electricity Demand Savings Potential
(Percentage, 2030)
Country
Residential Commercial
Total
Australia
12%
10%
11%
Canada
12%
19%
15%
China
25%
49%
33%
India
38%
36%
38%
Japan
18%
12%
15%
Korea
15%
8%
10%
United States
19%
13%
16%
Average
22%
20%
21%
Memoranda of Understanding (MOU)
• Maharashtra MOU signed in December 2007
— Maharashtra Electricity Regulatory Commission
• Former Chairman Dr. Pramod Deo
— California Energy Commission
• Commissioner Dr. Art Rosenfeld
— California Public Utilities Commission
• Commissioner Dian Grueneich
— Lawrence Berkeley National Laboratory
• Former Director Dr. Steve Chu (Current Energy Secretary)
• Similar MOUs signed with the Delhi Electricity
Regulatory Commission (Shri Berjinder Singh) and the
Forum of Regulators (Dr. Pramod Deo) in March 2009
Maharashtra and Delhi MOU
Scope of Cooperation
• The Parties will endeavor to promote information exchanges and
future joint research activities in the following areas:
— • Energy efficiency and Demand Side Management policies and
programs
— • Regulatory policies for renewable energy development
— • Integrated Resource Planning
— • Electricity regulation and governance
— • Transmission pricing framework
— • Balancing market framework in Maharashtra
— • Market development through open access and consumer choice
Demand-side Management of Efficiency
Project Motivation
 Reducing carbon emissions from electricity use –
DSM Programs (NAPCC, 11th Five Year Plan)
 Electricity shortage accompanied by blackouts
and load shedding is common across India
 In Maharashtra, electricity deficit was 4800 MW in
2008 or more than 25% of available capacity
Maharashtra:
Electricity shortage
Maharashtra State April 28th, 2008
MW
TPCL
MSEDCL
18000
Load
Catered
Shed.
Shedule
Net Exch.
16000
Demand
(MW)
(MW)
(MW)
14000(MW)
-55
10413
1076
12000 -31
-55
-27
9928
1055
10000
39
67
10032
1061
86 8000 118
9897
1420
110 6000 144
9634
1822
63 4000 94
9803
1759
-9 2000 16
9480
2564
-9
11
8887
3487
0
9
8
8769
3646
1 9 3
5
7 3649
9
-9
9205
-9
-9
-9
12
7/16/2015
9
8
13
Dr. Jayant Sathaye
9794
9745
9471
3719
4036
4535
TPCL+RE
State
L
Deman
Demand
d (MW)
(MW)
11456
1942
13431
11562
1811
12794
12044
1708
12801
1660
12977
S12374
12415
1635
13091
12854
1684
13246
Electricity
Shortage
13513
1761
13805
Demand
Met
13781
1769
14143
14006
1770
14185
11 13655
13 15 1768
17 19
1462221
12384
1772
15285
Hour
12783
1799
15580
13183
1790
15796
MSEDCL
Demand
(MW)
FREQ.
(HZs)
29% shortage
48.72
48.78
48.78
48.89
48.94
48.95
49.14
49.26
49.09
23
49.14
49.27
49.12
49.19
Maharashtra Project Motivation
 Electricity shortage
 Affects industrial production quantity and quality,
 Lower production and sales lead to reduced sales tax payment
 Government loses sales tax revenue
 LBNL estimates sales tax loss of 20 cents/kWh
 Shortage met partially by extensive use of inefficient diesel and
gasoline micro generators and hence high CO2 emissions
 Savings potential
 Energy savings potential of about 6,800 GWh/year
 CO2 savings potential of 3-5 Mt CO2/year
India Power Supply Capacity and Peak Demand
Reference Scenario with Shortage
250000
200000
150000
100000
Actual (2002-08) and Projected
Peak Demand (MW)
50000
Actual (2002-08) and Projected
Supply Capacity (MW)
0
2000
2002
2004
2006
2008
2010
2012
2014
• Assuming that from 2009 onwards deficit is 10% and12,500 MW of new capacity
is constructed each year for three years
• Total investment for the 11th Five Year Plan would be Rs. 250 thousand crores
India Power Supply Capacity and Peak Demand
Efficiency Scenario with No Shortage
200000
180000
160000
140000
MW
120000
100000
Actual (2002-08) and
Projected Peak Demand
(MW)
80000
60000
Actual (2002-08) and
Projected Supply Capacity
(MW)
40000
20000
0
2000
2002
2004
2006
2008
2010
2012
2014
• Assuming that from 2007 onwards efficiency improvements (4300 MW/year) reduce deficit.
Potential exists to eliminate deficit.
• Construction of new power plants is reduced to about 9400 MW/year
• Total investment for efficiency and supply power plants is still the same as that in the reference
scenario – Rs. 250 thousand crores
Efficiency Scenario with No Shortage:
Efficiency Options
Energy Efficiency
Measure
Investment
(Rs./kW)
Daily Use
(Hours/day)
Peak Demand
Savings (MW)
2008
Electricity
Savings (TWh)
2008
Variable speed drives in industry
4,700
11
948
3.8
Ag. Pump Rectification
9,400
8
655
1.9
Motor rewinding and downsizing
10,810
10
914
3.3
High efficiency agricultural pump
sets
8,460
8
715
2.1
Improved high efficiency
refrigerators
14,100
12
320
1.4
CFL and Electronic Ballasts
9,400
4
821
1.2
4,372
13.7
Total Energy Efficiency Savings
(MW)
Supply Capacity Additions (MW)
46,624
9,772
Macro-economic Results
• Assuming identical investment in each of the two
scenarios for the 11th Plan – Rs. 250 thousand crores
• Annual average electricity savings of efficiency
scenario
— 41 TWh/year
• Assuming business use of saved electricity is 50% -20 TWh/yr
— Total increase in business output
• Rs. 180 thousand crores/year
— Potential sales tax Rs. 12 thousand crores per year
• Assuming Rs. 6/kWh sales tax
Demand Side Power Purchase
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.
Will you Approve This Peak Load Power
Purchase?
One year contract
Rs/Unit
500 MW during the four hours of
evening peak over the year = 730
GWh
Mysterious
Regular
1.2
5
Total Cost Rs Cr/ Year 88 Cr.
365 Cr.
What is this Mysterious 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 lakh incandescent with CFLs
— 45 Watt saving/replacement ; 88 lackh
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
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
Many Demand Side Power Purchase
Options: Delhi Example
CFL
T5
LPG WH
NG
WH
Solar
WH
AC
Refrigerat
ors
Peak power
saving at bus
bar (W)
49
29
2,647
2,647
2,647
233
13
Total Energy
saving kWh/yr
79
46
529
529
529
565
133
2.74
1.26
5.00
1.16
0.70
Cost of
Demand Side
Power
Purchase
Rs/kWh
1.29 2.25
Demand Side Power Purchase: Merit
Order Stack
Preliminary Estimate of the Saving Potential (MU) in 3 years
(Residential)
8.0
AC(R)
7.0
Avoided PP Cost
Rs/kWh
6.0
Utility Benefit
T5(R)
5.0
SolarWH(N+R
Average Tariff
4.0
Consumer Benefit
3.0
`
LPG WH(N)
T5(N)
2.0
AC(N)
CFL(R)
CFL(N)
NG WH(N)
1.0 Refrigrtr(N)
CCE
0.0
0
200
400
600
800
1000
1200
Cumulative Saving Potential in 3 years MU FY2008 to FY2011
CCE Rs/kWh
Avoided PP Rs/kWh
1400
1600
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”
Advantages of Demand Side Power
Purchase
• Cost-effective resource
— Cheaper than a conventional power purchase
~ For e.g. Rs 350 Cr Savings/year for a 500 MW evening
peak power purchase for the CFL example
• Additional option to reduce power needs
— Large economic benefits of reducing load shortages
• Environmental benefits
— Reduced local pollution
— Reduced carbon emissions
— Reduced resource requirements – land, water,
Session III: ARR and Tariff Impact
of Demand Side Power purchase
ARR and Impact on Consumer
One line summary
If the demand side power purchase cheaper than
the supply side, impacts on the consumer are
going to be positive!
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
• 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 !
IV: Implementing Demand Side
Power purchase
Barriers to Reducing Electricity Consumption: A
Customer’s Perspective
• Lack of information about electricity savings
opportunities
• Lack of ability and/or technical assistance for
analyzing electricity consumption patterns
• Lack of financial resources to invest in electricity
savings options (e.g. technology, etc.)
• Lack of appropriate technological options to
reduce electricity consumption
What is a DSM Program?
Mechanism to influence customer’s
CAPABILITY and WILLINGNESS to
reduce electricity consumption
How to Influence Customer CAPABILITY to Reduce
Electricity Consumption?
• Availability of tools to understand electricity consumption
patterns (e.g. plug-in power meters to measure appliancelevel electricity consumption, software to analyze and
identify electricity savings opportunities, etc.)
• Availability of technology to reduce electricity consumption
(e.g. high efficiency T-5 tube-light to replace inefficient T-12)
— R&D for developing new technology
How to Influence Customer WILLINGNESS to
Reduce Electricity Consumption?
• Awareness
— Marketing, promotion, education, etc.
• Technical assistance
— Audits, analysis, equipment installation, facilitating
financing of projects, etc.
• Financial incentives
— Rebates, loans at low interest rates, shared savings,
electricity pricing schemes, etc.
DSM Program Design - Principles
• Systematic road-map for overcoming barriers
faced by customers in their goal of reducing
electricity consumption (and bills)
— BOTH in short-term and long-term
• Must be cost-effective – i.e. program costs must
be lower than benefits from program
• Ensure customer satisfaction
Types of DSM Programs
• All three reduce energy consumption (kWh) and peak demand
(kW), however, emphasis differs
— Energy Efficiency – emphasis is on reducing overall energy
consumption and also peak demand over several years
— Peak Load Management– emphasis is on reducing peak demand
consistently over a season
— Demand Response – emphasis is on reducing peak demand for
short periods of time for a few days during the year
Energy Efficiency
• Permanent energy (kWh) reduction
— Permanent peak demand (kW) reduction
• Size of impact is predictable
• No reduction or shift in customer value, comfort, or output
• Not dispatchable by distribution company
• Examples – rebates on efficient appliances, energy savings
performance contracting, etc.
Energy Efficiency Programs:
Level of Involvement of Distribution Company
Peak Load Management
• Overall energy consumption likely to stay same
— Focus is on changing customer load profile
• Size of impact fixed
• Fixed duration (4 - 6 hours daily) demand (kW) reduction
• Change/transfer in customer value, comfort, or output
• Not dispatchable by distribution company
• Examples – tariffs for agricultural pumps
Demand Response
• Overall energy consumption may vary based on customer load
curtailment strategy
— Focus is on changing customer load profile
• Size of impact may vary from event to event
• Small duration (15 min – 6 hours) demand (kW) reduction
• May involve a reduction in customer value, comfort, or output
• Dispatchable by distribution company
• Examples – “cycling” of air conditioners, critical peak pricing tariffs s
Characteristics of Successful DSM Initiatives
• Deeply committed senior management and program
staff – at both State Electricity Regulatory
Commission and distribution company (or
implementing agency)
• Clearly defined goals and objectives
• Data-driven, systematic, and comprehensive DSM
program planning processes
— “you can’t manage what you don’t measure”
• Stable program funding sources and levels
Best Practices – Planning
• Solicit stakeholder input
— Formal interview process or a collaborative planning process
involving key stakeholders
• Conduct market analyses around information gaps and
key issues in order to understand existing conditions
— Target resources toward the very largest markets, and those
that are least understood
• Establish baseline for tracking program expenditure
and impact
Best Practices – Program Design
• Seek to include programs with related and
complementary goals,
— for example, electricity conservation, water
conservation, and renewables (e.g. rooftop solar)
• Simplify participation in multiple programs
— Offer one “bundle” that may consist of energy
efficiency, measures from several different
organizations but is seamless to the customer
Best Practices – Program Design
(cont.)
• Efficiently deliver integrated programs to all endusers regardless of their size
— Upstream Vs downstream incentives
— Larger customers, should be assigned a single point of
contact that represents all related programs
— Smaller customers should be offered a whole building
strategy that incorporate measures from multiple
programs.
Best Practices – Adapting to Changes
•
Keep abreast of new developments in energy efficiency
technology
— Coordinate with BEE and FOR
•
Network with peers; stay connected to developments in this field
— E.g. FOR/FOIR meetings, interactions with international
experts
•
Foster close relationships with market actors; rely on them for
market intelligence
— E.g. attending conferences to exchange ideas
Best Practices - Staffing
•
Clearly define responsibilities and clarify roles to minimize
confusion
— Streamlining/facilitating stakeholder interaction
•
Reward high performing staff and contractors
— DSM is a new activity and in the initial phases staff will strong
motivation to explore this field
•
Encourage and facilitate development of energy efficiency
expertise of staff
— DSM training workshop at NPTI – June 15-18, 2009
What can be learned from the US
experience?
• Useful
— Identification of the DSM value proposition and the
understanding that “saved” energy was cheaper and
cleaner than energy consumed
— Evolving understanding that customer engagement and
behavior are key drivers in achieving and sustaining
cost-effective energy efficiency
— Broad experience (successes and failures) related to
delivering, measuring and valuing energy efficiency
What can be learned from the US
experience? Cont.
• Not so useful
— Pattern of utility by utility DSM implementation an
accident of institutional history and politics
— 30 year focus on technology as the sole DSM driver
• the “no-behavior change” strategy
— Corollary to above:
• 30 year refusal to engage with customers
– “revenue enhancement units”
Tales from the front:
The Illinois experience with DSM
• For nearly 30 years, Illinois regulators and
policymakers refused to implement DSM
— Swimming in electricity
• Reserve margins as high as 40%
— Concern about raising rates
— Utilities uninterested
— Customers uninterested
The Illinois experience, cont.
• By 2005
— Volatile energy prices
— Concern about emissions
— Shrinking reserve margins
— No State control over generation (restructured)
Commission concerns
• Concern of raising rates to pay for DSM
• Concern of political backlash
• Concerns about lack of capacity to manage DSM
initiatives
Relearning
• “Its not as if we are not going to spend the
money. The only question is:
What are we going to spend the money on?”
Four issues
• DSM increases rates in the short term
— Energy efficiency was less expensive than purchased
energy
• Public Education/key messages
— “helping customers”
• Commission staff and utility capacity
— Training and capacity building
• Cost recovery
Need for Co-ordination
• Efficient tube light program is applicable in
almost every state
• SERCs should explore coordinating programs
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)
Establish Clear Goals for Constructing
Demand Side Power purchase
•
In the initial period, the goal should be to get a
few small demand side power purchase/programs
started to gain experience
• In the long run, the achievable potential for cost
effective power purchase should determine the
goals set for utilities
— California Loading Order: Buy all cost effective demand
side power purchase before any supply side options are
considered
• Load research and technology assessment is
critical for potential estimates and target setting
— What kind appliances consumers are using and how,
what is the demand side power purchase potential and
what is the cost
Allocate Resources for Demand Side
Power purchase
• Public benefits charge: small surcharge on tariff
to create a fund for DSM Power purchase
— Stable funding mechanisms - allows utilities and ESCOs
to expand in the area of DSM Power purchase
— 5 paise/kWh charge 75 Cr of DSM funds in Delhi
•
Recovery through ARR/power procurement
accounts
— Treat as a an expense (same as the cost of power
purcahse)
— Amortize over the life the saving measure
Next Steps For Regulators
• Allocate staff/consultants
— Dedicated one or two staff or consultants to begin with at the
SERC
• Work with FOR to develop and issue a standard set of
guidelines on to facilitate demand side power purchase
• Allocate resources for demand side power purchase
— Firm approval of resources for utilities to create a DSM cell,
hire DSM consultants (if needed), conduct load research, and
prepare programs
— Conditional approval for funding for the first year (final
approval provided after programs are submitted)
• Develop a roadmap for demand side power purchase via a
stakeholder process
— Conduct/facilitate a potential study
— Goals and strategy by sector
— Role played various stakeholders
— Co-ordination with other programs
Questions for Discussion
Please check this website for
LBNL India and related publications
http://ies.lbl.gov
Thank you
Jayant Sathaye
Other Slides
Efficiency Programs
• Two types of efficiency programs
• Standards and labels –
— Bureau of Energy Efficiency
• DSM through financial and other incentives -— Regulatory and utility incentives
• MERC, DERC and FOR
Comparative Growth in the Power Sector
12%
10%
8%
6%
4%
2%
0%
Sixth Plan (1980-84)
Seventh Plan (1985-89)
GDP
Eighth Plan (1992-96)
Power Capacity
Ninth Plan (1997-2001)
Per Capita Electricity Consumption
Tenth Plan (2002-07)
Construction Cost Estimates
Plant Type
Planned Capacity Addition (11th Plan)
Cost Estimates
MW
Rs crore/MW
Coal and natural gas
58644
4.51
Large hydro
16553
4.86
Small hydro
1400
5.50
Wind power
12600
4.50
Nuclear power
3380
6.58
Overall
92577
4.66
Energy Supply with Deficit Reference
Scenario -- Annual Capacity and Deficit
Year
Actual and
Projected
Capacity
(MW)
10th Plan:
Actual
Capacity
Additions
(MW)
11th Plan:
Actual and
Estimated
Capacity
Additions
(MW)
Actual and
Projected
Capacity
Deficit (%)
Actual and
Projected
Capacity
Deficit
(MW)
Investment for
Projected
Capacity @ $ 992
/ kW
(Million US $)
(Col. 1)
(Col. 2)
(Col. 3)
(Col. 4)
(Col. 5)
(Col. 6)
(Col. 7)
2002
105,046
2,831
12.2
12,816
2003
107,877
4,807
11.2
12,082
2004
112,684
5,742
11.7
13,184
2005
118,426
5,861
12.3
14,566
2006
124,287
8,042
13.8
17,152
2007
132,329
10,732
16.6
21,967
10,648
2008
143,061
5,204
11.9
17,024
5,163
2009
148,265
12,506
10
14,827
12,408
2010
160,771
12,506
10
16,077
12,408
2011
173,276
12,506
10
17,328
12,408
2012
185,782
10
18,578
Total
27,283
53,453
Planned
Additional
Capacity
44,185
92,577
53,036
Supply with Efficiency Scenario - 2: Characteristics of Efficiency
measures, and Efficiency Savings and Supply Capacity
Energy Efficiency
Measure
Investment
(Rs./kW)
Daily Use
(Hours/day)
Peak Demand
Savings (MW)
2008
Annual
Electricity
Savings (TWh)
2008
Variable speed drives in industry
4,700
11
948
3.8
Ag. Pump Rectification
9,400
8
655
1.9
Motor rewinding and downsizing
10,810
10
914
3.3
High efficiency agricultural pump
sets
8,460
8
715
2.1
Improved high efficiency
refrigerators
14,100
12
320
1.4
CFL and Electronic Ballasts
9,400
4
821
1.2
Total Energy Efficiency Savings
(MW)
4,372
13.7
Supply Capacity Additions (MW)
9,772
India Multipliers and Direct Coefficients
Agriculture
Mining
Manufacturing
Electricity
Construction
Trade
Transport
service
Direct Employment
coefficient
17.52
13.97
2.22
0.59
2.98
4.52
2.16
4.00
Employment Multiplier
Output Multiplier
1.39
1.00
5.1
5.24
5.03
1.71
3.18
2.10
1.59
5.47
2.21
2.98
2.05
1.83
2.08
1.54