Training Program on DSM AT IIT, Bombay

“DSMRegulations &

Role of Regulatory

body"

Vijay L Sonavane Former Member MERC Mumbai

Former Director (Projects) MSEDCL Date: 8th Dec 2016 Mumbai

Thought for the day “Let us all work together forthe progress of our countrywith the focus on 4 Es:– Electricity for all– Efficiency to ensure

affordable tariffs– Environment for a

sustainable future– Ease of doing business to

attract investments &ensure financial viability”

(finalization of New Tariff Policy: 20th Jan 2016)

Vibrant Indian Power Sector • 1st power station at Darjeeling on 10th Nov 1897

• Installed Capacity (15th Aug 1947):1362 MW

• 30th Nov 2016: Capacity:308 GW (+) (227 times)

• By 2020: Installed capacity : 375 GW

• Present RE: 45.9 GW (+): (Energy: 6.5%). Rising % of RES (INFIRM)/ Need: Storage

• AI RE TARGET: By 2022: 175 GW RPO: 15%

• As of Jan 2016 World IC: 11,056 GW RE IC: 785 GW

• 4th highest electricity using country (USA, China, EU)

• Per capita: 1010 U/year: 25% of World AV

• 25% Indians (300 Million population, 60 Million H/H) do not have access to Electricity

• AI Dist Losses (about 23.4%) HI AT&C losses: Rising tariff

• Off Peak Load: 70% of Peak : DSM/EE

WHAT IS DEMAND SIDE MANAGEMENT?• Observing & implementing EE

program from utility side by motivating consumers for Modification of Electricity usage pattern

• Cooperative activity between utility & its customers. resulting benefits to customers, utility & society

• DSM: for Improving End Use efficiency

• DSM: addresses:

– Load reduction via EE & EC(Use Less Energy)

– Load shifting (use at Off-peak hours)

Distribution Utilities

SERC

Nodal Agencies – BEE, SDAs

etc..Consumers

State Govt.

Reasons for non-deployment of DSM

• Lack of clarity about obligation on DistUtilities & Absence of clear guidelinesfor DSM implementation

• With DSM: DL’s Revenue will comedown ???

• Dist Staff has many other IMP jobs:Supply Interruptions/ MBC (Revenuefunctions)

• Lack of Public awareness/participation:Need for public education (Schools/Colleges)

• No clarity on financial incentives toConsumers (Monthly Bill going down)

DSM: Legal & Policy Framework

• EC 2001: First major policyinitiative to coordinate variousactivities associated with efficientuse of Energy & its Conservation

– Institutional Framework :Formation of BEE / StateDesignated Agencies

• Preamble of EA-2003 clearlyspecifies ‘efficiency’ & ‘promotionof environmentally benign policies’as one of the key objectives of EA-2003.

Difference between an ACT & a REGULATION

ACT: legislation passed by the Parliament.• Acts, can only be amended by another Act

of Parliament.• Acts set out the broad legal/policy

principles.REGULATIONS: commonly known as

"subsidiary legislation" & requirepublishing in the Govt. Gazette to becomelegal.

• Regulations: guidelines that dictate howthe provisions of the Act are applied.

• Regulations can only be amended by anotice published in the Govt. Gazette.

• Legal/statement of Law: Act• Implementation of Act : Regulation

Basic functions of DSM-CC• Maharashtra: First State to notify Two DSM

Regulations in 2010• Mandate DL to make DSM as a part of day to day

operations• DSM Consultative Committee formed under

Principal Secretary, representatives from DL, CR,IIT/VJTI, Dr.MP for recommending DSM Projectsto MERC

Functions of DSM-CC:• Review DSM Plans & Programs submitted by DL• Provide assistance to SERC for approving DL’s

DSM Plan & individual DSM Schemes• Promote cross-learning among DLs• Plan common programs across DL: Common

Specs for equipments & Joint Procurement• Create avenues for capacity building within DL

Proactive initiative : MERC (DSM implementation framework) Regulations,2010

Basic principles:• DL to make DSM: part of day‐to‐day

operations (DSM Cells formed & pilotprojects initiated)

• DL allowed to “recover” DSM costs in ARR• Program investments to be cost-effective

(avoided PP cost) & (reduced bill)• MYT Tariff Regulations: DL to submit DSM

plans & also to factor the target savings inPP due to DSM Programs

• DL shall project power purchaserequirement after considering effect oftarget set for EE & DSM schemes

• MERC introduced TOD tariff from May2000.

TOD: A DSM Measure: Dynamic Pricing MSEDCL TOD: (Ps/Unit) for consumers with > 20 KW CL

(Effective Dynamic Pricing Mechanism: basic tariff: 713Ps/U )

In paise

Time Slot 2000-01 2001-02 2003-05 2006 to 2010 2011-12 2012-132015-16& 2016-17

0600 to 0900 hrs

0 0 0 0 0 0 0

0900 to 1200 hrs

30 50 60 80 80 80 80

1200 to 1800 hrs

0 0 0 0 0 0 0

1800 to 2200 hrs

60 90 100 110 110 110 110

2200 to 0600 hrs -50 -75 -85 -85 -100 -250 -150

Revision in TOD Tariff to encourage load shiftingMP: + 11% EP: + 15% NOP: (-) 21%

UP TOD : 0600-1700: 0%, 1700-2200 (+) 15%, 2200-0600: (-) 7.5%

A common practice across several Indian States has been to encourage consumers to shift their consumption from peak to off-peak times through adoption of TOD tariffs

MAHA: Pilot DSM Schemes

Pilot DSM Schemes: – LED bulbs replacing IB / LED Street

Lighting – 5 Star Ceiling fans / 5 star Split

window AC/ 5 Star Refrigerators – Demand Response Schemes – Load curve flattening by segregation

AG load (AG feeder Separation scheme)

– EE AG Pumps Program/ Solar AG Pumps

– Thermal Storage systems: run Chillers in night & store energy in ice cubes. Shifting AC Load to night : NSCI BKC

MERC (Multi Year Tariff) Regulations, 2011Sample: RInfra –D MYT tariff Order dated 22 August 2013 in Case No. 9 of 2013

Particulars Unit FY 2013-14 FY 2014-15 FY 2015-16

R-Infra D Own sales

MU 6600.37 6797.87 7027.62

Energy Savings through DSM measures

MU 6.69 7.53 7.53

RInfra D Own Sales after DSM Measures

MU 6593.68 6790.34 7020.09

DSM Expenses (Rs. CR) approved by MERC for R-Infra & TPC in MYT Order dated 21st oct 2016

DL Particulars FY 16-17 FY 17-18 Fy 18-19 FY-19-20 Total

R-INFRA Large Scale Ceiling Fans & Refrigerator Programs

5.19 5.19 2.20 ---- 12.58

TPC For Approved DSM Schemes (Fan/Refri/ AC/DR)

2.60 1.44 2.10 2.48 8.62

Any further DSM Scheme undertaken by DL, with MERC’s prior approval shall be considered at the time of MTRDL may consider targeting construction industry for installation of Energy Efficient appliances in “under construction” R/C/I premises to give impetus to DSM measures (ARR: TPC: Rs 3000 CR & R-IN: Rs. 5200 CR)

Responsibilities of SERC/Utility: Flow chart

SERC Utility

1. Guidelines & Regulations

2. Technical Potential assessment

3. Goals & Target setting 4. Load Research & Market Research 5. Economic Potential Assessment 6. Preparation & Design of DSM Plan

7. Approval of DSM Plan (DSM CC)

8. Preparation & Design of approved DSM Plan for funding

9. Approval DSM Plan funding (SERC)

10. Project Implementation 11. Monitoring & Reporting

12. Evaluation, Measurement & Verification (EM&V)

Mumbai Load curve: Typical day

100200300400500600700800900

100011001200130014001500160017001800190020002100220023002400250026002700280029003000

DEM

AN

D in

MW

TIME BLOCK

(For Mumbai Distribution Utility & Consolidated Mumbai)(Peak Mumbai Load: 3469 MW)

REL-D

TPC-D

BEST

Mumbai

15About 35-40% Peak Load in Mumbai is due to Air Conditioning Load

DR: Case study: Mumbai system• Mumbai Peak: 3400MW (Base Load: 2000

MW): 5 Hrs/day, 22 days/month: 1320Hours/year. Major Laod: AC.

• Short term PP has great impact on Mumbai’sretail tariff. Need for Peak Load reduction.

• Mumbai (09-10) : Price: > Rs.8/KWH for 100Hour With 10% Dist loss Cost at consumer end:Rs 8.90/KWH

• Comm. tariff: Rs 5.50 – 6.00/ KWH• India’s first pilot DR program for Com & IND

sectors by TPC

• Instead of increasing supply; Aggregatorcalls for a reduction in demand byconsumer to balance the system Demand& consumer gets compensation for L/R

• BKC Area: about 50 Consumers with DRcapabiity of 2 MW each

DR Actions: (Negawatt: unit of power that is no longer needed)

Impact of DSM-Regulations

• All Discoms to formulate DSM Cells,with interested Officers, (MembersDSM-CC)

• Pilot Projects to be started in allDiscoms

• MYT Tariff Regulations to mandateDiscom to factor the savings inPower Purchase due to DSM

• All Discoms to submit their DSMplans & estimated savings in PP dueto the DSM Programs in their ARR

DSM Consultative Committee : To meet once in two months

DSM: Cost-effectiveness assessment testsTest Brief Explanation

Total Resource

Cost (TRC) Test

Main hurdle test: takes a holistic approach & compares all costs

incurred on a DSM program (by utility & consumers) & all

benefits received therein, both over the technology lifecycle.

Need: Positive NPV of benefits over the cost

Ratepayer

Impact

Measure

(RIM) Test

Need: costs incurred would not impact tariffs adversely.

This test analyses the impact on the consumer by considering

costs incurred by utility on implementing the DSM program.

Benefits are evaluated the same way as in the TRC test.

Positive NPV benefits over the cost for ratepayers: Program can

be implemented directly without LCRIM test

Lifecycle

Revenue

Impact-RIM

(LRIRIM) Test

This test uses the computations of RIM test & evaluates tariff

impact due to implementation of the DSM program. Tariff

impact of programme less than 1PS /kWh or less than 1% of

existing tariff, which ever is higher (Program to be impemented)

The assumptions for the programs are given below:

Example: Cost-effectiveness assessment : Replacement of Inefficient fans

Parameter Fan Replacement

Costs

Cost of new Technology (Rs.) 1400

Administration, Marketing and EM&V Costs (%) 2%

O&M Costs (%) 1%

Benefits

Average Power Purchase Cost (Rs./kWh) 4.00

Highest marginal cost of power purchase (Rs./kWh) 8.00

Parameter Fan Replacement

Consumption of Old equipment (kW) 0.080

Consumption of new equipment (kW) 0.055

Life of equipment (years) 5

Days of use in a year (days) 300

Example: Cost-effectiveness assessment:Replacement of Inefficient fans – Contd..

Parameter Fan Replacement

Number of Equipments being replaced (no.) 10,000

Total utility sales (kWh) 100,000

Demand Charges (Rs / kVA) 190

Societal Cost of Power (Rs./kWh) 11.58

Escalation Rate (%) 5%

Discount Rates (%) 10.5%

TEST RESULTS: REPLACEMENT OF INEFFICIENT FANS WITH EFFICIENT FANS

Total Resources Cost (TRC) Test 1,43,68,621

Ratepayer Impact Measure (RIM) test 75,54,048

Life-cycle Revenue Impact – RIM (LRIRIM) test -0.0000755

Participants Cost Test (PCT) 51,03,126

Societal Cost Test (SCT) 2,89,67,860

Cost of Conserved Energy (CCE) (Rs/KWH) 4.48

National Mission for Enhanced Energy Efficiency (NMEEE)

Four pillars of the NMEEE are:

• Creation of mechanisms that wouldhelp finance DSM programmes;

• Accelerating the shift to EEappliances in designated sectors &to make the products moreaffordable;

Market based mechanism to enhancecost effectiveness of improvementsin EE in Energy-Intensive industriesthrough certification of energysaving that could be traded (Ecerts)

• Development fiscal instrument topromote EE (PAT)

UDAY: GOI OM dated 20/11/2015

4.0 Improving Operational Efficiency:• 4.1: Participating States & Utilities

would follow the timeline of thefollowing targeted activities forimproving operational Efficiencies:

• Activity: 5: DSM which includes EE LEDbulbs, AG Pumps, fans, air-conditioners & efficient industrialequipment through PAT (Perform,Achieve & Trade)

• Targeted Benefits: Reduce Peak Load &Energy Consumption: Annualestimated savings of Rs. 40,000 CR forconsumers from LED Lighting Programalone.

• Expected Date of Completion: 31st

March 2019

DELP : Domestic Efficient Lighting Program National Energy Efficient Fan Program (NEEFP)

• EESL: AI: As on 7th Dec 2016: 18.17 CRinefficient bulbs replaced by LEDs under theUnnat Jyoti by Affordable LEDs for All(UJALA) program.

• MAHA: 2.00 CR Target: 6 CR. Highest: GUJ:2.76 CR

• Transparent Procurement of LED bulbs byEESL: Price dropped Rs.310 (Feb 2014) Rs.73 (June 2015)

• NEEFP: EESL in collaboration with DL: 50WBEE5 star rated ceiling fans beingdistributed to consumers (Replacing 7 yearVintage ceiling fans consuming 80-105 Wwith 50W 5-Star fans)

• Pay back < 2 years

Golden Moment with Dr Arthur Rosenfeld Grand father of Energy Efficiency (11th June 2011)

• Born in 1927. Ph.D. in PHY in1954 University CA Berkeley

• Until 1974 in LBNL (PHY Dept.)Changed research focus to EE

• 1994-99: Senior Advisor to USDOE’s Asst. Sec for EE/RE

• In 2000, appointed as aCommissioner at CEC. In 2005,reappointed as Commissioner

• CA stable energy demandrequirement : (DSM + RE )

• Retired from CEC in Jan 10www.artrosenfeld.org

CA per capita consumption reduced Per Capita Electricity Consumption

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

year

kWh

per

pers

on

United States

California

California has

avoided

building Forty

500 MW power

plants

Dr. AR’s efforts: Average Energy consumption per Household Fridge was 1900 Units/year in 1973.

Average Energy use for EE Fridge in 2009 is 380 Units/year

27

White roofs to cool your buildings, your cities

& to cool the earth.

flat, white

pitched, white

pitched, cool & colored

OLD NEW

AC savings ≈ 15%

AC savings ≈ 10%

AC savings ≈ 5%

White roofs around the world…(1) In Hyderabad, India (2) Wal-Mart store in Northern California

29

Nagpur MSEDCL Building Data Example (2013)(White Roof outdoor & indoor temperature difference is 15 degrees

compared to 7 degrees difference in Grey Roof.)

-20

-15

-10

-5

0

5

10

15

20

25

30

4-Jun 5-Jun 6-Jun 7-Jun 8-Jun 9-Jun

Ind

oo

r a

ir &

ou

tdo

or

air

tem

pe

ratu

re (°C

)

ia1-oa1

ia2-oa2

ia1-oa1 is white roofia2-oa2 is gray roof

Suggested Regulatory Interventions for successful implementation of DSM

• To develop suitable incentive mechanism forDL: to earn additional ROE (1%) forinvestment in DSM/EE programs forsubsidised categories like Dom, Municipal,AG, etc. & 2% for investments in DSMprograms for subsidizing categories like Com& IND Sector (Normative ROE: 17.5%)

• DL may be encouraged to develop peak loadsaving programs so that overall PP costdecreases. DL may be allowed to retaincertain % of such saving

• DL may be encouraged to design large scaleDSM/EE schemes, where benefits are largeenough to allow sharing of benefits withconsumers

• Need for proper M&V Regulations

Way Forward… • Regulators need to facilitate framework for

implementation of DSM: DSM-CC to playleading Role

• DL: Dedicated DSM Cell is necessary• DL to initiate various program based on

load pattern & consumer behaviour• Need for innovative Financing• Consumer awareness to increase the

participation in DSM Programs• Need for Implementation of DSM/DR

Programs• SERC: Devising the suitable pricing

mechanism to enable maximumparticipation

• M&V of DSM project: IMP Issue & difficult

When ‘I’ is replaced by ‘WE’ Even ‘ILLNESS’ becomes ‘WELLNESS’!!

Thanks!!UDAY: SAB KA SATH SAB KA VIKAS

(contact me vlsonavane@gmail.com/ M: 98333 62062)

Perform Achieve & Trade (PAT) Scheme

• PAT: A regulatory instrument to reduce Specific Energy Consumption (SEC) in energy intensive industries, with an associated market based mechanism to enhance the cost effectiveness through certification of excess energy savings, which can be traded.

• During 2010-11: EC Act amended to make provisions for issue of Energy Saving certificates, imposition of penalty for non-compliance & trading of ESCerts

• Gate to Gate approach while calculating Specific Energy Consumption

Perform Achieve & Trade (PAT) Scheme

• Energy Input (E) = Electricity (KWH)+ FO (Lit) + NG (SCM) + Coal (Kg)

• Output: Product (P) in KG

• Specific Energy Consumption (SEC) = E/P

• Base Line SEC is computed & Target SEC for 3 years is set . Reduction SEC (expressed in %) is computed after 3 years

• PAT I: First compliance period began (2012-2015). 2014-15: Target year

• PAT I: 8 Sectors: 478 DC: THM Power/ Iron & Steel/ Cement / AL/ Fertilizer/ Paper& Pulp/ Textile / Clore-Aklali: I (36% Share of total energy consumption) (2009-10 Level) 2015-16: Performance Verification

• % Energy Reduction in 3 years : 5.23%

PAT Scheme: Schematic

Roles & functions of Stakeholders :BEE: Administrator & Market Regulator: Issuance of ESCerts

Designated Consumer: Implementer SDA/ SERC: State Nodal Agency/ Adjucator: appointed by SERC for holding EnquiryEmpanelled Accredited Auditor: VerifierCERC/POSOCO: Trading Regulator/ Registry

PAT Cycle II: Way Forward • PAT Cycle II: (2016-17 to 2018-19) Assessment Year: 2018-19

• PAT Cycle II Baseline Year: 2014- 2015

• In addition to 8 Sectors in PAT I, 3 new sectors are included: 18 DC Refinery, 44 DC Discoms, 22 DC Railways: TTL 11 Sectors (621 DC) (50% Share of total energy consumption (2009-10 Level)

• Energy Saving Target = 8.869 Mtoe (3.90%)

• Consider Base line SEC = 100 Units Target SEC = 90 Units

• Scenario 1: Achieved SEC= 85 Units, 5 Units of ESCerts issued (Incentive)

• Scenario 2: Achieved SEC= 93 Units, 3 Units of ESCerts will have to be purchased (Penalty)

• Target is Plant Specific …… Less for Energy Efficient & more for Inefficient Plants (Target Range: 3.04 to 8.51%)

• With 1 mToE = 1 ESCert Banking of ESCerts allowed during each cycle