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Presentation at Forum of RegulatorsLawrence Berkeley Laboratory Team
Mahesh Patankar, PhD, CMVP;Director – Market Innovations (Asia) – Customized Energy Solutions
and Cathie Murray; Regulatory Assistance Program
November 16, 2010
Part 1: Recapping need for DSM initiatives Part 2: DSM design and implementation
plans Part 3: Key attributes of DSM programs (and
plans) Part 4: Structure of DSM plan and program
design document
November 2010 2
Incorporation of customer load modifications as alternatives or additions to traditional resource planning
Intervention by utility on the “customer side of the meter” to change magnitude or shape of customer loads
Broad range of alternatives for reducing, adding or changing load
Partnership between customer and utility with benefits to both
Usually involves actions by utility on the customer side of the meter
November 2010 4
Cost
Without DSM
With DSM
Time
November 2010 5
Cost-effective end-use electricity efficiencymeasures have the potential to eliminate the
expected electricity deficit by 2014 while atthe same time requiring less investment for
new power supply compared to the BAUscenario. Removal of the electricity deficit through these
means leads to a $505 billionand $608 billion increase in India’s economic
output by 2017 and 2020 respectively(Reference – 2010 publication by Dr. Jayant
Sathaye et al)
November 2010 6
BENEFITS OF DSM
CUSTOMERBENEFITS
• More Reliable Energy Service
• Reduced tariff
• Improved Value of Service
• Maintain/Improve Life-style & Productivity
SOCIETALBENEFITS
• Reduce Pollution
• Conserve Resources
• Protect Global Environment
• Maximize CustomerWelfare
UTILITYBENEFITS
• Lower Cost of Service
• Improve OperatingEfficiency, Flexibility
• Reduce Capital Needs
• Improve Customer Service
November 2010 7
Peak Clipping Valley Filling Load Shifting Strategic Conservation Strategic Load Growth (Load Building) Flexible Load Shape
November 2010 8
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November 2010 12
Source – Wartsila presentation/analysis
Capital availability Energy prices Lack of information/motivation Other investment opportunities High transaction costs Perception of risk Management priorities Split-incentives (ownership)
November 2010 13
November 2010 14
INPUTS TO DSM ANALYSIS
• Market Research• Rate Design• Profitability Analysis
• Load Research• Competitive Analysis• Benefit/Cost Analysis
ExternalOperatingEnvironment
CustomerNeeds andBenefits
UtilityCharacteristicsand Mission
DSM GoalsandObjectives
ConductSituationAnalysis
ScreenProgramChoices
SegmentMarkets
DevelopMarketingStrategies
AssessEnd Uses/Technologies
EstimateMarketPotential
EvaluateImpacts
DevelopMarketingStrategies
ImplementPrograms
EvaluatePrograms
CONDUCT DETAILED ANALYSIS
November 2010 16
Utility Characteristics
MarketSegments
Supporting Data
DSM OPTIONSANALYSIS
DSM PLANDEVELOPMENT
• Technologies• Marketing strategies• Incentives• Benefits/costs
Analysis ofcost-effectiveprogram packages
Information forIntegrated Resource Planning
Load Shapes
TechnologyCharacteristics
%
CustomerAcceptance
$
Rate Structures
DSMPlan
November 2010 17
November 2010 18
Forum of Regulators issued a Draft Model DSM Regulations document◦ http://www.forumofregulators.gov.in/
Maharashtra Electricity Regulatory Commission issued 2 regulations◦ http://www.mercindia.org.in/Regulations.htm ◦ DSM Implementation Framework Regulation◦ Cost-effectiveness Assessment Regulation
November 2010 19
Customer reach ~ equity Meets the load-shape objectives
◦ Peak and non-peak demand benefits – load shifting◦ Conservation and efficiency
Provides long-lasting savings◦ Equipment with high useful life
Facilitates market transformation◦ One-time intervention towards technical standards◦ Pricing policies◦ Behavioral change
Incentivizing high-cost DSM interventions◦ Getting over high first-cost barrier
November 2010 21
TRC/
Societal Utility Ratepayer Participant
Avoided energy costs (fuel, O&M of power plants, T&D lines)
Benefit Benefit Benefit
Avoided capacity costs (constructing power plants, T&D lines, pipelines, balancing, storage)
Benefit Benefit Benefit
Participants’ incremental cost (above baseline) of efficient equipment
Cost Cost
Incentives (rebates) Transfer Cost Cost Benefit
Program administration costs (staff, marketing, evaluation, etc.)
Cost Cost Cost
Other benefits (fossil fuel savings, water savings, equipment O&M, etc.)
Benefit (Cost) Benefit (Cost)
Externalities (e.g., environmental benefits like emissions reductions)
Benefit
Lost utility revenue / lower energy bills (due to lower sales)
Transfer Cost Benefit
November 2010 22
Three tests proposed around the Net Present Value (NPV) of Benefits - Costs:◦ Total Resources Cost (TRC) Test (Hurdle Test)
Compares total cost of technology and benefits over its life cycle (B-C >0 q)
NPV of Benefits = ∑ [(Bt)/ (1+r)t-1 ] (equation 1)NPV of Cost = ∑ [(Ct)/ (1+r)t-1 ] (equation 2)Benefits = Avoided power purchase cost
◦ Ratepayer Impact Measure (RIM) Compares utility expenditure and avoided costsCost includes “Loss of Revenue” for the utility; cost socializes
for non-participants as well◦ Life-cycle revenue impact (LRIIRM) (B-C/total MWh sales)
Should be less than INR 0.01/kWh or less than 1% of existing tariff
◦ Other two supporting tests for structuring incentives Participants’ Cost Test (PCT) and Societal Cost Test (SCT)
Confidential (www.ces-ltd.com)23
November 2010 24
Adoption curves by measure◦ ƒ(participant test w. and w/o program)
0%
10%
20%
30%
40%
50%
60%
70%
80%
0 5 10 15 20 25 30
Participant Benefit-Cost Ratio
Max
imum
Pen
etra
tion
Rat
e
B-C Ratio: With 50% incentive
Initial B-C Ratio: No incentive
Net increase in adoption
November 2010 25
Adoption curves for different EE measures reflect different levels of market barriers, e.g.:
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5 10 15 20 25 30
Participant Benefit-Cost Ratio
Ma
xim
um
Pe
ne
tra
tion
Ra
te
Moderate Barriers
High Barriers
No Barriers
Low Barriers
Extremely High Barriers
November 2010 26
Macro-level◦ Coincident feeders with the utility load shapes◦ Historic and current seasonal variations
Sector-level◦ Sector-wise peak and non-peak load contribution◦ Cost-to-serve and tariff realization
Segment-level◦ End-uses by sectors, segments and tariff
categories◦ Ownerships and vintage of appliances/equipment◦ Appliances/equipment saturation◦ Efficiencies of existing stocks
November 2010 27
Components of LR of Mumbai utilities Strategies are multifold
Top-down, metering approach (Automated Meter reading)
Focused Energy Audits of sample clients
Questionnaire-based Surveys of residential customers
November 2010 28
Sector Proposed load research strategy
Implementing agencies
Large Commercial and Industrial
Sponsored sample-audits
Utility Energy Accounting Dept + External Auditors
Small Commercial and Industrial
Sample walk-through audits and questionnaire-based surveys
External Auditors + University Students
Large Public Buildings Sponsored sample-audits
External Auditors
Public Water Works Sponsored sample-audits
External Auditors
Residential Questionnaire-based survey instruments
Market Survey Agency
November 2010 29
Distribute annual savings by energy period Generally by end use and building type Can derive from hourly 8760 usage data
◦ Specific to geographic region & climate
LoadshapeName
Summer On-Peak
Energy
Summer Off-Peak
Energy
Summer Intermed.
Energy
Winter Off-Peak
Energy
Winter Intermed.
EnergyGrocery_Cool 44.1% 15.8% 23.8% 0.8% 15.5%Grocery_ElecDHW 16.7% 3.9% 9.1% 9.3% 61.0%Grocery_ElecTotl 18.7% 9.6% 11.1% 15.5% 45.1%Grocery_Heat 0.0% 0.0% 0.0% 48.6% 51.4%Grocery_InLight 17.8% 6.2% 9.6% 12.3% 54.2%Grocery_OutLight 6.9% 15.5% 7.1% 34.4% 36.1%Grocery_Refrig 16.0% 9.6% 9.9% 17.9% 46.5%Grocery_Vent 14.2% 9.7% 9.4% 19.5% 47.2%
November 2010 30
Portion of demand reduction occurring at peak demand period(s)
Can derive from 8760 usage data ◦ Based on max kWh/kW ratio
LoadshapeName
Summer Gener.
Capacity
Winter Gener.
CapacityGrocery_Cool 0.95311 0.01925Grocery_ElecDHW 0.71869 0.83869Grocery_ElecTotl 0.86659 0.59967Grocery_Heat 0.00000 0.27096Grocery_InLight 0.94737 0.91866Grocery_Misc 0.71869 0.59967Grocery_OutLight 0.05000 0.13571Grocery_Refrig 0.94380 0.81351Grocery_Vent 0.99381 0.99916
November 2010 31
1. Executive Summary2. Introduction3. Characteristics of distribution licensee system4. DSM plan targets and resource availability
estimates5. Identification of sectors, segments and end-
uses6. Identification of DSM technologies7. Individual program description8. Annual and cumulative achievements9. DSM plan monitoring and EM&V10. Implementation plan
November 2010 33
1. DSM program descriptionDescription of target sector, segment, geographical reach, technologies, standards, pricing, replacement/guarantee facility, stakeholders, financiers; barriers addressed, program delivery strategy (incentives/promotion), program management and oversight
2. EM&V and reportingBaseline calculations, metering/measurement requirements, third-party engagement,
3. Detailed implementation planPhase-wise implementation of the DSM program, milestones, reporting mechanism
4. Estimates of annual and cumulative savings5. Annual program funding requirements6. Cost-effectiveness calculations7. Dispute resolution mechanism
November 2010 34
LBNL training at FOR and utilities USAID ECO II presentations
November 2010 35