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
70
Embed
DSM and Resource Planning Jayant Sathaye, Amol Phadke and Ranjit Bharvirkar Energy Analysis Program Lawrence Berkeley National Laboratory Berkeley, CA.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
DSM and Resource Planning
Jayant Sathaye, Amol Phadke and Ranjit BharvirkarEnergy Analysis Program
Lawrence Berkeley National LaboratoryBerkeley, CA
Bob LiebermanRegulatory 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.
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 DemandReference Scenario with Shortage
0
50000
100000
150000
200000
250000
2000 2002 2004 2006 2008 2010 2012 2014
Actual (2002-08) and ProjectedPeak Demand (MW)
Actual (2002-08) and ProjectedSupply Capacity (MW)
• 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 DemandEfficiency Scenario with No Shortage
• 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
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2000 2002 2004 2006 2008 2010 2012 2014
MW
Actual (2002-08) andProjected Peak Demand(MW)
Actual (2002-08) andProjected Supply Capacity(MW)
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
Total Energy Efficiency Savings (MW)
4,372 13.7
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 500 MW during the four hours of evening peak over the year = 730 GWh
Mysterious Regular
Rs/Unit 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 WHNG
WHSolar WH
ACRefrigerat
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
Cost of Demand Side Power Purchase Rs/kWh
1.29 2.25 2.74 1.26 5.00 1.16 0.70
Demand Side Power Purchase: Merit Order Stack
Preliminary Estimate of the Saving Potential (MU) in 3 years (Residential)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0 200 400 600 800 1000 1200 1400 1600Cumulative Saving Potential in 3 years MU FY2008 to FY2011
Rs/
kWh
CCE Rs/kWh Avoided PP Rs/kWh
Refrigrtr(N)
AC(N) CFL(N)CFL(R)
NG WH(N)
T5(N)
LPG WH(N)
T5(R)
AC(R)
SolarWH(N+R
Avoided PP Cost
CCE
`
Average Tariff
Utility Benefit
Consumer Benefit
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
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 appliance-
level 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?
— 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
0%
2%
4%
6%
8%
10%
12%
Sixth Plan (1980-84) Seventh Plan (1985-89) Eighth Plan (1992-96) Ninth Plan (1997-2001) Tenth Plan (2002-07)
GDP Power Capacity Per Capita Electricity Consumption
Construction Cost Estimates
Plant TypePlanned 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 $)