Electric Power Generation: Supply Side Economics or Demand Side Management

1. Electric Power Generation: Supply Side Economics or Demand Side Management Sreekumar N Prayas, Energy Group www.prayaspune.org sreekumar@prayaspune.org DCIS, Mysore September 18, 2006 Prayas Energy Group

2. About Prayas Energy Group • Based at Pune, India • Research based, policy advocacy NGO • Focused on protection of “Public Interest” • Especially in policy decisions and actions • With a long term sectoral perspective • Activities • Research and intervention (regulatory, policy) • NGO training, awareness, and support Prayas Energy Group

3. Interaction Plan • Context: Economy to Energy to Electricity • Planning and Integrated Resource Planning • Demand Side Management • Energy Audit • The win - win - win option Prayas Energy Group

4. Context Power Sector • Economy to Energy to Electricity • India is a land of contrasts • Half the population depends on ‘non commercial’ energy • 86% of rural households use firewood/dung cake for cooking (NSS survey, 2000) • Half the total supply of commercial energy is used for electricity generation • Per-capita consumption is low, but High Consumption model will not work • Electricity is a versatile, clean, cost effective energy Prayas Energy Group

5. Context Half the population depends on ‘non commercial’ energy Half the mankind (3 b) live on < $2/day One-third have no access to commercial energy Sub-Saharan Africa, <20% have access to electricity Poor spend one-third income on energy Prayas Energy Group

6. Context Commercial Energy Hydro + Nuclear Gas Coal Oil Prayas Energy Group

7. Context Electrical Energy Others Domestic Agriculture Transport Industry Prayas Energy Group

8. Context Power System Prayas Energy Group

9. IRP Planning • Preparation for tomorrow • Based on • Experiences of Yesterday • Aspirations for Tomorrow • Power sector planning • Generation • Transmission & Distribution • Utilisation • Support systems Prayas Energy Group

10. IRP Planning – Conventional approach Development Economic Growth Energy GDP correlation Energy as an end Demand projection Supply planning Prayas Energy Group

11. IRP Integrated Resource Planning (IRP) • Developed in 1980s • Also called Least Cost Planning (LCP) • Practised by only few utilities “ IRP: A planning approach that considers bothsupply and demand side options to meet the requirement for a resource, while minimising the costs to the utility and society” Prayas Energy Group

12. IRP IRP • Demand projection • Energy service is important, not Energy • Water for irrigation, NOT just electric pumpsets • Hot water, NOT just electric heaters • Light at work place, NOT just electric lights • End use efficiency is part of planning • Lighting, Motors etc for energy reduction • Peak load reduction by Load management • Development orientation • Not just based on growth trends • Promotion of agriculture, small industry, rural households • South Africa household electrification: 40% (1993) to 70% (2003) Prayas Energy Group

13. IRP IRP - Continued • Supply options • Conventional, large centralised • Non-conventional • Small hydro, co-generation • Environmental sustainability addressed • Proper costing of relief & rehabilitation • DSM as a supply option • Minimise cost to Society, not just to Utility Prayas Energy Group

14. Conventional IRP IRP Conventional Planning Vs IRP • Supply Side orientation • End-use orientation • Demand taken as ‘given’ • Policy / DSM to modify demand • Minimises cost to utility, • consumer and society • Minimises cost to utility • Only Centralised, conventional • supply options considered Decentralised, non-conventional options ALSO considered Prayas Energy Group

15. IRP IRP Case studies from India (Karnataka 1990) – HT End use Prayas Energy Group

16. IRP Case studies from India (Karnataka 1990) – Rich Domestic (AV= 200 Units/Month) End use IRP Prayas Energy Group

17. IRP Case studies from India (Karnataka 1990) – Poor Domestic (AV= 33 Units/Month) End use IRP Prayas Energy Group

18. IRP IRP Case studies from India - Karnataka • End use efficiency savings • Industry modernisation–efficient drives etc: 15-25% • CFL for lighting : 14-58% • Solar Water heaters: 28% • LPG instead of electric stoves: 18% • Frictionless foot-valves and HDPE piping for agriculture pumps: 30% Prayas Energy Group

19. IRP IRP Case studies from India • Karnataka 1990 • Energy Requirement : 66% • Power Requirement: 50% • Total Cost: 40% • Maharashtra 1994 • Energy Requirement : 60% • Power Requirement: 50% • Total Cost: 60% Prayas Energy Group

20. DSM Demand Side Management (DSM) Planning, Implementation and Evaluation of programs to influence the Amount or Timing of energy usage by consumers Prayas Energy Group

21. DSM DSM Vs SSM Prayas Energy Group

22. DSM Why DSM? • Peak Shortage (11.7%), Energy Shortage (7.3%) • T&D Loss is proportional to the Square of Current • Incremental generation cost highest during peak load period • Nega Watts cheaper than Mega Watts Prayas Energy Group

23. DSM What is DSM? • Load Management • Reduce Peak Load • Shift loads from Peak to Off-peak hours • Increase load during Off-peak hours • Energy Conservation • Energy Audit • End-use Efficiency improvement • Energy Management at Consumer location Prayas Energy Group

24. DSM DSM Techniques • Involves Utility, Consumer and Equipment manufacturers • Energy service is the key, not energy itself • Ensure same energy service to consumers • Direct & Indirect techniques Prayas Energy Group

25. Energy Audit DSM – Energy Conservation: Energy Audit • Analysis of energy input,output and energy usage by different sub-systems over a period of time and giving recommendations to reduce energy use or alter the electric demand profile. Prayas Energy Group

26. Energy Audit Energy Audit • Promoting efficient devices • Enforcing energy efficient standards - BEE • Distribution Loss reduction (Some include this) • Energy Management • Awareness Campaigns Prayas Energy Group

27. DSM - Thailand Case • World Bank/UNDP Project • 1993 - 2000, US $ 189 Million • Residential, Commercial and Industry Sectors Prayas Energy Group

28. An SEB Case • DSM Potential: Peak demand reduction of 1543 MW, Energy reduction of 6090 MU in 2001 • Cost of DSM for Utility = 3465 Cr • Cost of DSM to participants = 1388 Cr (Jyoti Parikh & Others on MSEB, IGIDR, Mumbai 1994) Prayas Energy Group

29. An SEB Case (Cont’d) • DSM Options • Energy Efficient Motors • Variable Speed Drives • House Keeping measures • Use of Waste heat • Improvement of Electric Arc furnaces • TOD Tariff • Sodium Vapour Lamps, CFLs, Electronic Ballasts • Efficient Pumps and Fans • Power Factor Improvement • Industrial Co-generation Prayas Energy Group

30. CFL Example CFL is costly by 3 (not 20) times Energy bill of CFL is one-fourth CFL option is 2-3 times economical Prayas Energy Group

31. The win-win - win option • Consumer • Lower energy bill • Better power quality • Utility • Saving in Generation, T&D investment • Loss reduction • Society • Better Energy service, faster • Eco friendly Prayas Energy Group

32. Barriers for IRP/DSM - Actors • Energy Consumers • Equipment manufacturers • Energy Producers • Energy Distributors • Government – policy, standardisation • Funding agencies Prayas Energy Group

33. Barriers for IRP/DSM • Low awareness • Need more groups like Energy Conservation Mission (www.save-energy-survive-tomorrow.com) • Bias towards big projects • 100 MW generation plant • Rs. 400 Cr, 1 Project, 1 Site, Few hundred people • 100 MW saving thru DSM • Rs 100 Cr, Few hundred projects, Thousands of locations, Thousands of people Prayas Energy Group

34. Barriers for IRP/DSM • Poor system data availability • Metering for accountability • Lack of focus (planners, utility, manufacturers, consumers, researchers) • High emphasis on load shedding • Absence of Life Cycle Costing approach • Tackling one time cost (eg CFL, efficient pumpsets) • Low correlation of demand to tariff Prayas Energy Group

35. Closing word Supply Side or DSM? Neither, IRP!! What will they do? What can We do? Prayas Energy Group