Potential, Cost, and Impact of DSM: Role of Load Research and Evaluation, Monitoring, and Verification (EM&V) Dr Amol Phadke, LBNL NPTI DSM Training Workshop Nov 2010

Outline  Estimating DSM Potential: Role Load Research  DSM Costs – Simple ways to compare with supply side resources  Estimating DSM Impact: Role of EM&V  Putting in all together – Super Efficient Equipment Program by BEE (presentation on behalf of Dr Garg, BEE)

DSM Potential Estimate and Load Research : Hands on exercise  What is the morning peak contribution of electric water heaters in  Your city  Your state  Overall in India  If all electric water heaters are replaced by either solar or gas water heaters, how much peak power will be saved  Any guess for India peak demand  100 MW, 500 MW, 2000 MW, 5000 MW, 20,000 MW???

Key information needed  Consumption  kW  kWh  Number of water heaters (penetration)  Usage pattern  Future trends

Load Research Basics  Need to sample – surveying all consumers not possible and not needed  Are customers being surveyed similar to your customer base in general ?  Deciding the use of meters, survey questions, bill information, system data

Load Research: Hands on Exercise  Estimate the penetration per household and usage (number of hours per year) of the following appliances  Lights (CLFs, tube lights, incandescent)  Fans  TV  AC  Water heater  Refrigerator  Computer  Estimate the average morning (9-10 am)and evening peak demand (8 pm) of households in the group  Max in the group and min in the group

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.

Load Research Results: Examples

Customer Class

End-use wise results

DSM – Simple Ways to Compare With Supply Side Resources

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 MysteriousRegular Rs/Unit1.25 Total Cost Rs Cr/ Year88 Cr.365 Cr.

What is Demand Side 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 lack incandescent with CFLs  45 Watt saving/replacement ; 88 lack 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 CFLT5LPG WH NG WH Solar WHAC Refrigerat ors Peak power saving at bus bar (W) 49292, Total Energy saving kWh/yr Cost of Demand Side Power Purchase Rs/kWh

Demand Side Power Purchase: Merit Order Stack 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”

ARR and Tariff Impact of Demand Side Power purchase

ARR and Impact on Consumer One line summary If the demand side power purchase is less half of the cost on 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

Topics Covered  Role of Regulators  Role of Utilities and Implementation Models for Demand Side Power purchase  Next Steps and Potential Agenda

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)

MEASURING IMPACT OF DSM: ROLE OF EM&V

Types of Evaluation

Formative EM&V Used to improve existing and future programs Energy Efficiency Potential Studies – What is the potential for additional energy savings by market segment Market Assessment and Saturation studies – Residential Appliance – Commercial End Use –Industrial/Manufacturing end use –

Change vs. Impact Time Energy Use In the Absence Of the Program Actual Baseline Impact Change Installation 28

When Do You Evaluate? (Impact Evaluations Only) Energy Use Installation Pre-installation Period Post-installation Period Time 29

30 DSM Programme in India - Concept of SEEP Presentation by Dr Sandeep Garg Energy Economist Bureau of Energy Efficiency

The Appliance EE Challenge: Global appliance electricity consumption expected to double in 25 years TWh Four appliance categories, each with major efficiency potential, constitute about two-fifths of residential consumption. Source: LBNL, May 2010

Savings Potential in Appliances 32 Saving potential in household and commercial appliance is about 57 B KWh per year in Source: Prayas Energy Group

33 Possible Impact of SEAD Type of appliance Stock in million Billion KWh/yearTotal Billion KWh Saving potential (%) Savings in billion KWh Fan Incandescent bulb Refrigerator Television (TV) * Tube light Air conditioner Room heater Electric Water heating (Geyser) Air cooler Stand-by-power Washing machine Total Electricity use of appliances constitutes about 22% of consumption The average annual growth rate of these appliances is between 10-15%

34 Impact of SEEP on DSM Programme Transaction costs reduces by: (1) Enlarging geographical scope of the program, moving from utility to state, national and then global programs; and the (2) Product chain stakeholders starting from the customer and moving upstream to retailer, wholesaler and finally the manufacturer. SEEP could aggregate of SEE demand significantly

35 SEEP – Leveraging Energy Savings Implementation of RMSDP Monitoring sale of SEE in Utility coverage area Allow payment of incentives to manufacturers Regulatory Approvals Allow regulatory charge as a part of ARR of Utilities Creation of DSM fund for collection of regulatory charge Establishment of SEE Establish specifications for ‘super- efficient’ devices Cost-benefit analysis and of period of incentive Labeling of ‘super- efficient’ equipments (SEE) Determination of incentives based on peak load reduction Monitoring sale of SEE, verification and incentive payout

36 Mechanics of SEEP Incentives for SEE - The incremental cost of SEE is within reasonable limit as compared to normal equipment. The Standards and Labeling programme of BEE has initiated market Direct Procurement by Utility The incremental cost of SEE is many times higher that a similar in- efficient equipment (like LEDs vis-à-vis the incandescent bulbs). The technical standards are in an evolutionary stage and the testing facilities are not adequate. Project Based SEE Deployment Encourage project development by utilities to promote DSM under a regulatory oversight Provide a suitable payment security mechanism by leveraging the regulatory charge to encourage ESCOs.

37 Mechanics of SEEP – Building Blocks  In-principle approval of FOR  Selection of Equipments  Technical specifications of Selected Equipments  Calculating the amount to be recovered from ARR of utilities  Monitoring of SEEP  Payment of Incentives/Procurement Costs  State Specific Regulatory Approval  Evaluation and Impact Analysis  Project Based Intervention

38 Interface with Climate REDI- SEAD Concept of incentives to manufacturers for sales of SEE – exchange of information and best practices/ coordination Harmonisation of technical standards in most equipments not feasible – except in some products for which common international specifications are possible- eg. TVs Harmonisation of testing procedures Exchange of technical information and expertise Capacity building of Utilities/ regulators/ Manufactures, etc Need of seed fund to kick start the process- BEE is in the process of seeking funds from Government – possibility of enhanced funding to this seed fund

Source: LBNL, June 2010 The Appliance EE Challenge: Growing global demand Five global suppliers produce ~60% of televisions Fifteen global suppliers produce ~75% of major appliances Five global suppliers produce ~45% of room ACs

The Opportunity: Untapped energy savings potential from highly-efficient commercially- available devices Source: Noah Horowitz, NRDC, May 2010 Dots show commercially-available TVs that are more efficient than Energy Star 4.0. BUT… about 60-70% of TVs sold in North America are less efficient than Energy Star 4.0. Energy Star and California Performance Tiers CA T20 Tier 1 (2011 MEPS)

SEAD is a global market transformation initiative for super- efficient products Number of Customers Energy Intensity “Pull” with incentives/labels “Push” with mandatory standards Business as usual Market transformation

Number of Customers Energy Intensity “Pull” with incentives/labels “Push” with mandatory standards Business as usual Market transformation 1) “Raise the ceiling” by coordinating incentives for highly-efficient globally traded devices (e.g., employing similar definitions of tiers) 2) “Raise the floor” by coordinating and accelerating MEPS schedules and engaging in relevant technical exchange 3) “Strengthen the foundations” by dialogue on test methods, certification data sharing, policymaker toolkit development, and technical support SEAD increases the benefits of appliance EE programs through global coordination

 Major Indian interest (20% of household energy use; Prayas estimates DSM program could avoid 6 TWh peak consumption by 2020)  Ceiling fans consume ~10 TWh/year in U.S. (~3 500 MW power plants)  Several US utilities provide incentives for Energy Star fans  DOE has authority to consider ceiling fan MEPS One possible “quick start” area: Ceiling fans “Tier 1”? “Tier 2”? “Tier 3”? Source: Prayas Energy Group, March 2010

End-use Efficiency Lowers Electricity Sales and Can Lower Utility Revenue l Increasing efficiency of use amounts to asking utility companies to reduce sales of their product l How are utility companies to be compensated for existing capacity and slower growth in future assets? l Not a problem in India because electricity shortage means saved electricity can be sold to another customer, but first cost is an issue l Maharashtra Electricity Regulatory Commission has allowed utility companies to pass along all costs of demand-side management programs to customers

Example of SEEP

48 Contact information: Sandeep Garg Bureau of Energy Efficiency (Ministry of Power, Govt. of India) 4th Floor, Sewa Bhawan R.K.Puram New Delhi –