Let’s talk about smart grids: Demand Side Management
Understanding Demand Side Management
DSM is a crucial function of the smart grid. It encompasses a variety of strategies and technologies aimed at modifying and optimizing electricity consumption patterns of consumers. Simply put, it is carried out by DISCOMs (or utilities) by incentivizing the consumers, directly or indirectly, to modify, shift their electricity load consumption. It results in shifting of power load from peak to off peak hours which has various long-term benefits: it allows for reduction in the need for expensive peaking power plants, frequent maintenance of distribution and transmission networks, improve power and load quality, minimizing strain on the grid infrastructure[1]. End consumers are encouraged to shift to off peak hours to utilize the available electricity and benefit from a relatively lower pricing rate. It allows for cost savings, greater control over own electricity use and reliable power supply. It is essential to note that DSM doesn’t necessarily target or result in reduction of power consumption, just the time of use of such electricity is addressed.
Through its approaches, DSM encompass strategic conservation, peak clipping[2], load shifting[3], and valley filling[4] to fulfil utilities’ load-shape objectives. Studies from around the world have demonstrated that, in general, DSM initiatives can significantly decrease total electricity consumption at peak periods by approx. 20-40%. Merely by employing energy efficient appliances, demand can be further reduced by 20-30%[5].
Approaches to implementing DSM
Broadly, DSM initiatives are divided intiative are divided into[6]:
- Programs aimed at narrowing the energy supply-demand gap via energy efficiency initiatives,
- Measures encouraging customers to voluntarily reduce their demand in response to requests by participating in demand response programs which can further be divided into price based and incentive based.
These programs help DISCOMs/utilities in learning about the energy usage patterns of said consumers and has benefits in improving end-use energy efficiency among other things. [7].
Energy efficiency initiatives
Energy efficiency initiatives empower consumers to take control of their energy usage and make informed decisions about energy conservation. It involves installation and use of energy efficient end-use equipment that consume less power without any decrease in the quality of output. Discovering opportunities for energy efficiency within energy-intensive equipment and processes can unlock substantial cost savings which can open up multiple benefits for consumers and utilities alike.
For example, in India, Bureau of Energy Efficiency (BEE) has brought in DISCOMs/utilities to undertake activities to cultivate an environment of DSM. Most of these have happened through replacement of existing appliances/systems with energy-efficient systems. Some of the notable initiatives are the Distribution of LED bulbs, LED tube lights, 5 stars rated Energy Efficient fans, replacement of old inefficient ACs with efficient ones[8]. Tata Power Delhi Distribution Limited, a DISCOM, launched a ceiling Fan program using newer-technology (Brushless DC Motor) that is more efficient in comparison to the old and non-star rated ceiling fan duly validated by the BEE. The scheme was available for Residential, Commercial & Industrial consumers from 2018-2019. Joined by a private entity specializing in supplying energy efficient appliances, Atomberg, the Super-Efficient Ceiling Fans were offered at discounted rates[9].
Such schemes are advertised through consumer awareness programmes by DISCOMs/utilities. To make it more well-known, BEE initiated the Standards & Labelling programme for equipment and appliances in 2006 to provide consumers an informed choice about their energy savings and thereby, the cost saving potential of the relevant marketed product.
Within the systems of a smart grid, the DISCOM/utility manages the residential demand profile including consumption of power based on a specific set of rules, which are better understood as demand response (DR)[10]. This entails sending price signals to consumers to shift their electricity consumption from peak to off-peak hours in exchange for incentives. The objective is to reduce the strain on the grid during peak hours, which helps alleviate stress on the power plant for generation, thus reducing the need to run expensive, polluting plants. It helps in reduction of managing the costs of grid maintenance, as a result. Also, DR programmes take into account the variability of renewable energy sources and helps in balancing supply with demand, promotes grid stability. Putting it simple, DR focuses on activities that reduce or shift electricity demand in response to real-time events on the grid, therefore addressing short-term fluctuations in demand or supply.
On the residential consumer side, there are various demand-response-based techniques being used. The primary focus of these methods lies in scheduling residential appliances through price-based demand response programs. These techniques make use of various inputs such as (i) household electricity demand, (ii) user preferences for appliance scheduling, (iii)environmental factors such as temperature and weather, and (iv) electricity pricing signals[11].
Broadly, there are 2 kinds of demand response programs: price based and incentive based.
In price-based DR, the cost of electricity fluctuates within a specific range in response to changes in power demand. They make use of differential tariffs to shift consumer load during peak and off peak hours. Consumers can be incentivised to modify their consumption pattern through the use of tariff programs like:
- Time of use pricing (rates dependent on 24h day divided into different periods),
- Real time pricing (rates based on real time market transactions),
- Critical peak pricing (higher prices for critical overload events during peak hours, similar to time of use), etc[12]
Overall, the onus is on consumers who directly benefit from shifting their load to off peak hours which also represent lower pricing structure.
In incentive based DR, programs are usually designed and implemented by DISCOMs for consumers. These entail contractual agreements to modulate the energy consumption of consumers at certain time periods throughout the day for which they are compensated through a varied set of incentives. Some examples include:
- Emergency DR (load reduction price signals during special fault conditions on the grid),
- Direct load control (utilities given direct access to partial consumer loads like ACs, water heaters to shut down usage to mitigate supply shortages),
- Demand bidding (consumers offering prices to utilities in exchange for load curtailment), etc.
Here, the onus is on DISOMs/utilities to ensure the demand and supply of electricity is matched as per their objectives by entering into these contracts with consumers. Their comfort must be kept in mind during residential appliance scheduling by DISCOMs.
Challenges in implementation of DSM
There is a variety of reasons attached that have prohibited scaling of DSM programmes which can largely be reduced to: technical challenges, socio-economic challenges, behavioural barriers, policy ecosystem.
- Implementing DSM at a larger scale requires sophisticated technical solutions and infrastructure. This includes advanced metering systems, data collection, management and analytics platforms, communication networks, tariff revisions, implementation of dynamic tariffs and control systems. Ensuring interoperability and compatibility among different technologies can also be challenging[13].
- Several socio-economic challenges also stem while implementing DSM such as basic affordability of energy-efficient appliances, digital divide or home retrofits that require upfront investments which can be unaffordable for low-income households. This can create disparities in access to DSM benefits, exacerbating socio-economic inequalities.
- Since consumer participation is key, awareness through education and empowerment underlie the behavioural factors since in the absence of these, a lack of apathy and scepticism about the benefits of DSM may develop and hinder widespread adoption, which is a huge behavioural
Uncertainty in policy direction or regulatory frameworks can deter investment in DSM initiatives. The DSM policy ecosystem is complex and fragmented involving multiple agencies at the federal, state, local levels, as well as private players, so balancing the interests of various stakeholders become central. Traditional utility business models may not provide sufficient incentives for utilities to invest in DSM programs due to lack of budgetary allocation. Regulatory frameworks that rely on fixed-rate recovery.
- mechanisms may disincentivize utilities from promoting energy efficiency or demand response, as these measures could reduce electricity sales and revenue streams[14].
- Lack of know-how among those assigned to DSM monitoring cells, which arises due to DSM being treated as an ad-hoc responsibility either by DISCOMs or the relevant state electricity regulatory commission[15].
To sum up
Overall, demand-side management (DSM) represents a pivotal strategy for enhancing energy efficiency, grid reliability, and sustainability in the face of evolving energy challenges. By empowering consumers, optimizing energy usage, and integrating innovative technologies, DSM initiatives offer a pathway towards a more resilient, flexible, and environmentally responsible energy system. However, successful DSM implementation requires overcoming various technical, economic, policy, and regulatory hurdles. Through collaboration, innovation, and stakeholder engagement, we can unlock the full potential of DSM to create a smarter, more efficient, and sustainable energy future for generations to come.
[1] Chunekar, Aditya, Mrudula Kelkar, Shantanu Dixit, Shantanu Dixit Prayas, and Joshi Museum Lane. 2014. “Demand Side Management in India: An Overview of State Level Initiatives.” http://www.prayaspune.org/peg.
[2] Peak clipping: reduction of load on the grid during peak demand periods, can be done through time of use tariffs, direct load control programs
[3] Load Shifting: moving energy consumption from peak periods to off peak periods when there’s excess capacity on the grid, can be done through smart appliances
[4] Valley Filling: focuses on increasing electricity usage during off-peak hours (typically nights and weekends) to improve grid efficiency, can be done through offering time based incentives
[5] Alliance for an Energy Efficient Economy. 2020. “Demand Side Management and Demand Response Programmes.” July 2020.
[6] SHAKTI SUSTAINABLE ENERGY FOUNDATION. 2014. “Technology-Assessment-for-DSM-in-India.” https://shaktifoundation.in/wp-content/uploads/2014/02/Technology-Assessment-for-DSM-in-India.pdf.
[7] Bureau of Energy Efficiency. n.d. “Compendium on DSM Measures by Distribution Companies (DISCOMs).” Accessed June 24, 2024. https://beeindia.gov.in/sites/default/files/publications/files/Compendium%20on%20DSM%20measures%20undertaken%20by%20DISCOMs_0.pdf.
[8] Bureau of Energy Efficiency. n.d. “Compendium on DSM Measures by Distribution Companies (DISCOMs).” Accessed June 24, 2024. https://beeindia.gov.in/sites/default/files/publications/files/Compendium%20on%20DSM%20measures%20undertaken%20by%20DISCOMs_0.pdf.
[9] Bureau of Energy Efficiency. n.d. “Compendium on DSM Measures by Distribution Companies (DISCOMs).” Accessed June 24, 2024. https://beeindia.gov.in/sites/default/files/publications/files/Compendium%20on%20DSM%20measures%20undertaken%20by%20DISCOMs_0.pdf.
[10] Shewale, Amit, Anil Mokhade, Nitesh Funde, and Neeraj Dhanraj Bokde. 2022. “A Survey of Efficient Demand-Side Management Techniques for the Residential Appliance Scheduling Problem in Smart Homes.” Energies. MDPI. https://doi.org/10.3390/en15082863
[11] Shewale, Amit, Anil Mokhade, Nitesh Funde, and Neeraj Dhanraj Bokde. 2022. “A Survey of Efficient Demand-Side Management Techniques for the Residential Appliance Scheduling Problem in Smart Homes.” Energies. MDPI. https://doi.org/10.3390/en15082863
[12] Zhang, Ning, Luis F. Ochoa, and Daniel S. Kirschen. 2011. “Investigating the Impact of Demand Side Management on Residential Customers.” In IEEE PES Innovative Smart Grid Technologies Conference Europe. https://doi.org/10.1109/ISGTEurope.2011.6162699.
[13] Ibid.
[14] Strbac, Goran. 2008. “Demand Side Management: Benefits and Challenges.” Energy Policy 36 (12): 4419–26. https://doi.org/10.1016/j.enpol.2008.09.030.
[15] Aggarwal, Dhruvak, Muskaan Malhotra, Shalu Agrawal, and Mahesh Patankar. 2024. “How Can India Scale Up Electricity Demand-Side Management? Insights from a Multi-State Assessment of DSM Regulations and Discom Action.”