Electric Energy Efficiency

Demand Side Management Methods and Programs

Dr. Mohammad Al-Muhaini

 References

[1] Association of Energy Engineering (AEE).

[2] Slides of Dr. Mohammed Muaafa, Senior Energy Researcher at KAPSARC USGBC Faculty.
[3] Dr. Fahd AlIsmail Lecture Notes, EE459
[4] Demand Response Discussion For the 2007 Long-Term Reliability Assessment Report, NERC.
[5] Slides of Dr Xavier LEMAIRE Sustainable Energy Regulation Network/REEEP.
[6] POWER RESEARCH & DEVELOPMENT CONSULTANTS PVT. LTD.
[7] Time Varying Rates: An Idea Whose Time Has Come, March 16, 2015 by Coley Girouard.
[8] Demand Response Measurement & Verification, The AEIC Load Research Committee.
[9] Class slides of Dr. Vineeth Nambiar, Dept of EEE SDMIT, Ujire , D.K, Karnataka.
[10] Dubai Demand Side Management Strategy, Taqati Annual Report, 2017
[11] Dr. Herb Wade; Demand Side Management Workshop, 2009
[12] sustainable energy regulation and policymaking for Africa
[13] Jason W Black, MIT
[14] Asa S. Hopkins, Synapse Energy Economics
Demand Side Management Methods and Programs

Energy challenges & opportunities

Supply Side
More Efficient and Cleaner
Supply

Demand Side
More Efficient Use Conservation
& Management
 Demand Side Management Methods and Programs

What is Demand Side Management ?

 Demand Side Management Methods and Programs

Definition 1:

Programs consist of the planning, implementing, and

monitoring activities of electric utilities which are
designed to encourage consumers to modify their level
and pattern of electricity usage.
 Demand Side Management Methods and Programs

Definition 2:

Programs that attempt to influence customer

consumption patterns of electricity to match current or
projected capabilities of the power supply system.
 Demand Side Management Methods and Programs

Definition 3:

Actions carried out by the utility on the customer’s

premises that help manage the customer’s
electrical usage
Demand Side Management Methods and Programs

DMS vs DR
 Demand Side Management Methods and Programs

• DSM is a general term referring to any activity

adopted on the demand side that ultimately
changes the utility's system load profile. The
DSM is a key approach in the field of smart
energy systems.

• DR is based on a set of techniques to induce

the customer to change their energy demand.
Demand Side Management Methods and Programs
Demand Side Management Methods and Programs

Why Promote DSM?

 Demand Side Management Methods and Programs

Objectives of DSM by Utilities

• Financial benefits
• Political benefits
• Socio-Economic benefits
• Improved quality of electrical services – Avoiding
the need for power cuts and rolling blackouts –
Improving voltage stability in distribution
 Demand Side Management Methods and Programs

How can a Utility Make More Money by Selling

Less Electricity?
 Demand Side Management Methods and Programs

• Government forces the utility to sell electricity

below actual cost – Often residential rates are
substantially below the real cost of service and are
subsidised by higher commercial and government
customers rates. residential DSM allows the utility to
keep more of the revenue from commercial and
government customers
 Demand Side Management Methods and Programs

• For each kW of new capacity needed the per kWh

generation cost is higher than current costs – Slow
down rate of demand growth to limit the need for
higher cost new capacity
 Demand Side Management Methods and Programs

How are Users Encouraged to do DSM?

 Demand Side Management Methods and Programs

Usually by financial incentives

• Lower electric bills

• Lowered rates for desired actions
• Higher rates for undesired actions
• Finance for investing in energy efficiency measures
Demand Side Management Methods and Programs
Demand Side Management Methods and Programs
 Demand Side Management Methods and Programs

Peak clipping—where the demand peaks (high demand periods)

are “clipped” and the load is reduced at peak times. This form of
load management has little overall effect of the demand but
focuses on reducing peak demand.

Valley filling—where the demand valleys (low demand periods)

are “filled” by building off-peak capacities.

Load shifting—where loads are “shifted” from peak to valley

times (achieving clipping and filling). Examples of applications
include storage water heating, storage space heating, coolness
storage, and customer load shifting.
 Demand Side Management Methods and Programs

Tariff Design
• Regulators set prices where retail/distribution is a
monopoly.

• Prices should be set to reflect the full marginal cost

of producing, distributing and using electricity.

• Ideally, this includes externalized environmental

costs.
 Demand Side Management Methods and Programs

Various kind of tariff to consumers

Flat - i.e. the same price is charged to all consumers.

Time of day - i.e. different prices for energy consumed at

peak and off-peak times

Declining block - i.e. consumers pay a fixed charge

irrespective of the amount used and then a fixed rate per unit

Inverted block - i.e. no fixed charge, a first block of units at a

low rate followed by higher rates for additional blocks of units
Demand Side Management Methods and Programs
Demand Side Management Methods and Programs
 Demand Side Management Methods and Programs

Time-Based Rate Programs

Retail consumers receive a price signal reflecting the costs of

production and delivery which provides a vehicle to deploy
resources more efficiently.

There are three highlighted Time-Based Rate Programs:

➢ Time of Use Rates (TOU)

➢ Critical Peak Pricing (CPP)
➢ Real-Time Pricing (RTP)
 Demand Side Management Methods and Programs

Time-of-Use Rates (TOU)

• Time-of Use (TOU) rates are pre-set rates offered in a wide

variety of time-periods: from seasons to time-of-day
depending on the desired application.

• The pre-set rates reflect underlying costs for production in

hopes that consumers will reduce/curtail their use during the
higher priced time-periods.

• Investment in meters is required to enable time-stamped

billability.
Demand Side Management Methods and Programs

Time-of-Use Rates (TOU)

 Demand Side Management Methods and Programs

Critical Peak Pricing (CPP)

A form of TOU relies on very high prices during critical

peaks rather than average TOU rates. The rates are pre-
set, but dispatched dynamically on short notice when
needed.
 Demand Side Management Methods and Programs

Real-Time Pricing (RTP)

Prices in this program vary continuously directly

reflecting wholesale prices are not pre-set and are
provided hourly and/or day-ahead for pre-planning.
 Demand Side Management Methods and Programs

Incentive-Based Demand Response Programs

• These programs include an inducement or incentive for customer

participation and they provide an active tool for load-serving entities,
electric utilities or grid operators to manage their costs and maintain
reliability.
 Demand Side Management Methods and Programs

Direct Control Load Management

Direct control load management programs refer to

programs where the utility or system operator
remotely shuts off or cycles a customer’s equipment
on short notice to address system or local reliability
contingencies in exchange for an incentive payment or
bill credit
 Demand Side Management Methods and Programs

Emergency Demand Response Programs

• Emergency Demand Response programs provide

incentives for customers to reduce loads during
reliability events, though the curtailment is
voluntary.

• These programs are voluntary and part of emergency

procedures.
 Demand Side Management Methods and Programs

Load Reduction Acting as Capacity

• Customers commit to providing specific load

reductions during events in return for payments and
are penalized if they do not comply.

• They offer a firm, quickly deployed resource (both

emergency operating procedure and a mid- to long-
term supply option) which can be forecasted for
operations and planning.
 Demand Side Management Methods and Programs

Interruptible Demand

• The magnitude of customer demand that, in accordance with

contractual arrangements, can be interrupted at the time of
the Regional seasonal peak by direct control of the System
Operator or by action of the customer at the direct request of
the System Operator.

• Customers on Interruptible Demand programs receive a

discount or bill credit in exchange for agreeing to reduce load
during system events.
 Demand Side Management Methods and Programs

Demand Bidding/Buyback Programs

Demand Bidding/Buyback Programs enable large

consumers to offer specific bid or posted prices for
specified load reductions.
 Demand Side Management Methods and Programs

Ancillary Services

This program is called Load Acting as a Resource (LaaR).

Consumers bid load curtailment for operating (i.e.
spinning) reserves.
 Demand Side Management Methods and Programs

Deferrable Loads ( Residential )

Deferrable Loads Non-Deferrable Loads

Charge EV Water Pump
Washer Lights
Water Heater Oven
Ironing Security
Dryer AC
TV Fridge
Vacuum Cleaner
Demand Side Management Methods and Programs

Worldwide Share of DR Participation, 2013 and 2020

Demand Side Management Methods and Programs

Moscow School of Management

 Demand Side Management Methods and Programs

Distributed Generation (DG)

A small scale generator that is located close to the particular load that it is intended to
serve.
❖ Advantages:
✓ Lowering costs
✓ Improving reliability
✓ Reducing emissions and expanding energy options
Demand Side Management Methods and Programs

Distribution Generation Technologies

 Demand Side Management Methods and Programs

Renewable Energy

• Renewable energy resources have the disadvantage of having uncertain

availability of energy sources.

• For example, cloud effects on a large scale solar PV

 Demand Side Management Methods and Programs

Energy Storage

While electricity cannot be economically stored, energy can be – with the application
of Smart Grid technologies.

Market Driver for Energy Storage

• Managing Increased Wind Penetration.
• Ancillary Services – Avoiding the cycling of
thermal power plant.
• Managing Grid Peaks and Outage Mitigation
• Increasing the value of Distributed Photovoltaic.
 Demand Side Management Methods and Programs

Plug-in Hybrid Electric Vehicles (PHEV)

PHEVs take advantage of lower cost and off-peak capacity and can provide grid
support during the peak periods.

Source: EPRI
 Demand Side Management Methods and Programs

Sensing and Measurement

Core duties are evaluating congestion and grid stability, monitoring equipment health,
energy theft prevention, and control strategies support.

Technologies include:

• advanced microprocessor meters (smart meter),

• wide-area monitoring systems, (using PMUs and other smart meters)
• time-of-use and real-time pricing tools

AMI vs. AMR

AMI: Advanced Metering Infrastructure is a term denoting electricity meters that
measure and record usage data at a minimum, in hourly intervals, and provide it to
both consumers and energy companies at least once daily.

AMR: Automated Meter Reading is a term denoting electricity meters that collect
data for billing purposes only and transmit this data one way, usually from the
customer to the distribution utility.