What is DSM Making an Electricity available to consumers at optimal and efficient price

Why DSM?
Traditionally, electric utilities planned their supply to meet all the needs of their customers with little regard to how or when customers use energy. But in the economic realities of the electric utility industry today, DSM really can be the least cost planning option. There are three major reasons that energy services program sponsors (usually utilities) are starting to reevaluate the need to implement DSM programs: DSM programs benefit customers, the program sponsor and society. As a customer strategy, DSM programs encourage the installation and use of end-use technologies that will use less energy, thereby reducing and/or shifting the customers overall electric bill. Energy efficient technologies also have higher efficiency operating characteristics; they tend to last longer, thus reducing the operation and maintenance costs. This is especially true for programs that encourage the use of high efficiency heating, cooling, and ventilation equipment (HVAC), energy efficient lighting, and process technologies, such as fans and motors. So DSM programs make sense for a customer perspective because the energy savings more than offsets the higher first costs of these technologies. Utilities, however, can benefit from these reductions or shifts in customer energy use. For some utilities, DSM programs can help them reduce their peak power purchases on the wholesale market, thereby lowering their overall cost of operations. In the near term, DSM programs can reduce energy costs for utilities, and in the longer term, DSM programs can help limit the need for utilities to build new power plants, distribution, and transmission lines. In short, a DSM program can be much cheaper to implement than building a new generation plant. Society benefits when DSM is green. Reduced or shifted energy usage can directly translate into less air pollution, less carbon emissions, and a way to lower the potential environmental threats associated with global warming. DSM programs are a promising alternative strategy to the increased concerns customers, utilities, and government agencies have now regarding global warming and carbon emissions. Moreover, a properly designed DSM program can actually track the program impacts and measure the amount of carbon reduced or saved based on program activities.

DSM Strategies
There are four basic DSM strategies that utilities use depending on their overall objectives and needs.

1. Energy Efficiency: Reduce energy use overall 2. Peak Load Reduction: Reduce peak load consumption 3. Load Shifting: Move load to cheaper times 4. Load Building: Increase consumption to off-peak hours or increase overall consumption

What is Demand Side Management? DSM measures are designed to influence and, if necessary, change customer behavior to achieve benefits for both the customer and the electricity industry

Demand side management (DSM) refers to actions which change the demand on the electricity system, including: actions taken on the customer side of the electricity meter(the demand side), eg energy efficiency and load shifting arrangements for reducing loads on request, such as interruptibility contracts, direct load control and demand response fuel switching, such as changing from electricity to gas for water heating power factor correction distributed generation, such as stand by generators in office buildings or photovoltaic modules on rooftops; and pricing initiatives, including time of day and demand-based tariffs based on some form of smart metering Types of DSM There are three types of DSM based on the overall purpose of the DSM program: Environmentally-drivenachieves environmental and/or social goals by reducing energy use, leading to increased energy efficiency and/or reduced greenhouse gas emissions Network-drivendeals with problems in the electricity network (grid) by reducing demand in ways which maintain system reliability in the immediate term and over the longer term defer the need for network (grid) augmentation Market-drivenprovides short-term responses to electricity market conditions (demand response), eg by reducing load during periods of high market pricescaused by reduced generation or network capacity

Using DSM to Support Electricity Grids What is Network-driven DSM Network-driven DSM comprises demand-side measures used to relieve network (grid) constraints and/or to provide services for network system operators Network-driven demand-side management is concerned with reducing demand on the electricity network in specific ways which maintain system reliability in the immediate term and over the longer term defer the need for network augmentation two prime objectives for network-driven DSM: to relieve constraintson distribution and/or transmission networks (grids) at lower costs than building poles and wires solutions; and/or

to provide servicesfor network system operators, achieving peak load reductions with various response times for network operational support

Characteristics of Network Constraints Network-driven DSM measures must address the particular characteristics of network constraints In relation to timing, network constraints may be: narrow peak relatedoccurring strongly at the time of the system peak and lasting seconds, minutes or a couple of hours; or broad peak relatedless strongly related to the absolute system peak, occurring generally across the electrical load curve and lasting several hours, days, months, years or indefinitely In relation to the spatial dimension, network constraints can: occur generally across the network; or

be associated with one or more specific network elements such as certain lines or substations

Projects were classified by the major DSM measure: demand response direct load control distributed generation, including standby generation and cogeneration energy efficiency fuel substitution interruptible loads integrated DSM projects load shifting power factor correction pricing initiatives, eg time of use and demand-based tariffs smart metering

DEMAND SIDE MANAGEMENT ENERGY EFFICIENCY & ENERGY CONSERVATION - Working Group on Power for 12 Plan
th

The schemes of the Ministry of Power (MoP) include Energy Conservation Awareness, Energy Conservation Awards & Painting Competition on Energy Conservation for school students and National Mission for Enhanced Energy Efficiency (NMEEE). In the 11th Five Year Plan (200712), it was proposed to achieve the energy saving of 5% of the anticipated energy consumption level in the beginning of the 11th Five Year Plan. The outcomes of these schemes are quite encouraging; various activities under different schemes of BEE and MoP have resulted in savings in avoided power capacity of 7,415 MW (verified; till Dec 2010) and 250 MW (unverified for 4th Quarter of year 2010 11) and 3409 MW avoided power capacity savings is projected during the last year of the 11th Five Year Plan (2011-12). BEE would provide the technical assistance for establishment of DSM cells in the DISCOMs and capacity building of personnel of DSM cells for enabling them to undertake the following strategies and schemes of DSM in 12th Five Year plan: Load Survey Load Strategies o Demand Response o Load Management Programmes Dynamic/Real Time Pricing: Based on real time system of supply & demand Time-of-Use Rates: Customers are offered different rates for electricity usage at different times of the day. Automated/Smart Metering: Implementing Dynamic/ Real Time Pricing or Timeof-use rate bstructure and billing accordingly Web-based/Communication System: This is a tool used along with the above to convey to the customer about the prevailing demand, supply, prices on real

time basis and the incentives and options for him, which are used by the customer to manage the demand Demonstration Studies Advanced Metering DSM Financing DSM and Demand Response (DR) Activity are utilized to curtail the peak electricity demand. In other words, it helps to negate spending on generation, transmission and distribution infrastructure by curtailing the peak. Thus, it can be said that funds are freed up which would otherwise be utilized to meet the peak demand. At the National level, the load growth should be reviewed with and without DSM and the fund freed up because of lower peak growth should be used for DSM/DR activity. In other words, the DSM/DR should have a target (say 0.5% to 1%) of peak demand reduction and the net saving in infrastructure due to that should be used for DSM/DR activity. The total funds required for providing technical assistance for capacity building of DSM cells established by DISCOMs under 12th Five Year Plan is Rs. 300 crore.

ENERGY CONSERVATION STRATEGY IN THE 12TH PLAN

The strategies adopted during the 11th Five Year Plan have started showing encouraging outcomes. It is necessary to carry forward the existing schemes as well as further strengthen the activities to accelerate the process of implementation of energy efficiency measures to achieve the desired energy savings. Further, large scale energy savings can be realized through strengthening of the schemes in industrial, commercial, residential and agriculture sectors as well as expanding and reaching out to new areas. Projected electrical energy saving potential at the end of 12th Five Year Plan i.e during the year 2016-17 is 44.85 BU on the demand side (equivalent to 60.17 BU at Bus bar) and an additional energy saving equivalent of 21.3 mtoe in the industrial sector (including Thermal Power Stations (TPS) and Small and Medium Enterprises), Transport Sector and Energy Conservation (EC) award scheme. The share of target energy saving (Electrical & Thermal) for various proposed schemes under 12th Plan is given below:

The proposed activities for the 12th Plan include sector specific interventions in areas like municipality (drinking water and sewage treatment), agriculture sector (pumping), street lighting, commercial buildings, government buildings and waste heat recovery in SMEs including demonstration projects. Following initiatives of SDA are proposed to be supported that would help in strengthening the

capacities of SDAs and undertaking of various projects and programmes to promote energy efficiency in their respective states: Support for implementing state-wise sector specific energy saving plan by the SDAs Continued engagement of SDAs with energy efficiency professionals like energy auditors, energy managers and ESCOs Implement various EE demonstration projects in the states to showcase the effectiveness of the most advanced energy efficient technology and pursue state governments to replicate the project in other parts of the state. LED village campaign in the villages and pursue state governments to replicate the project in other parts of the state. Publicity /awareness on EE in the states Workshops/ training programmes for all the stakeholders Capacity building programmes for the SDAs The total funds requirement for the above proposed activities is Rs. 140 crore

Industrial Sector
(a) Large Industries (Designated Consumers) The projected energy saving potential in the 12th Plan is 11.43 mtoe which consists of a saving of 6.2 mtoe from the seven energy intensive industries (DCs) and 5.23 mtoe from thermal power stations sector. The total energy saving per year during 2011-12 to2016-17 for 7 DC sectors is calculated on the basis of 1.2% p.a. of the total energy consumed and at 1% p.a. of the total energy consumed for the Thermal Power Plant sector during the 12th Plan period. With the above assumptions, the extrapolation is also made further to see the expected energy saving in 2019-20 in 7 Industrial Sectors. The projected energy savings stand at 10.03 mtoe and 11.53 BU in thermal and electrical energy respectively in 2019-20. The tabular and graphical representation of projected energy consumption trend (electrical and thermal) and saving targets in 7 industrial sectors (Designated Consumers) is given in below. The details of projected energy consumption trend (electrical and thermal) and saving targets in 7 industrial sectors (Designated Consumers) are given in below.

Continuation of on-going Schemes/Programs by Bureau of Energy Efficiency and Ministry of Power National Energy Conservation Award Notification of Energy Intensive Sectors as Designated Consumers (DC)Enhanced Capacity Building of Energy Management Professionals (National Certification Examination for EA/EM) Implementation of Perform, Achieve & Trade (PAT) Scheme

The total projected saving in the year 2016-17 i.e end of 12th Five Year Plan is of the tune of 11.43 mtoe in which 10.41 mtoe is contributed by thermal energy. The rest, which is equivalent to 11.96 BU of electricity saving is estimated at bus-bar in 2016-17. The fund requirement is Rs. 190 crore to support the proposed PAT schemes. The total funds requirement for Industrial Sector (excluding SMEs) under the 12th Five year plan is Rs. 3767 Crore. (b) Small & Medium Enterprises The targeted goal is proposed to be achieved by introducing innovative business models and financial instruments (like Venture Capital Fund/Revolving Fund, Partial Risk Guarantee Fund). The proposed schemes/activities to be undertaken in 12th Plan are as mentioned below: Sector specific approach for energy efficiency and technology upgradation through facilitation of implementation of DPRs Energy mapping of the targeted SME Sector on all India basis Undertaking of Innovative Financial Schemes for adoption of EE Technologies in the SMEs Technical assistance and capacity building SMEs Product Labelling Promotion Scheme The details of projected energy consumption trend (electrical and thermal) and saving targets in energy intensive SMEs are given in below.

The projected saving in the year 2016-7 of 12th Five Year Plan is 1.75 mtoe in which 1.59 mtoe is thermal energy and rest is equivalent to the 1.83 BU of electricity with the financial budget requirement of Rs. 55 crore. In addition to this, Rs. 400 crore is also proposed for setting-up of Revolving fund and partial risk guarantee fund. The total funds requirement for SMEs under the 12th plan is Rs. 455 Crore.

Equipment and Appliances

(a) Standard & Labeling (S&L) Programme The proposed activities in 12th Five Year Plan under S&L for equipments and appliances include: Inclusion of at least 5 selected new equipment and appliances (selection is to be made from the list provided in the table given below). Standby power loss reduction in few of the electrical appliances will also be focussed in the 12th Plan. Awareness creation among all the stakeholders, Undertaking of check testing, label verification, market impact assessment for appliances/ equipments covered under S&L scheme and Up-gradation of energy performance standards for equipment/ appliances covered during 11th Plan

(b) Super Efficient Equipment Program (SEEP) SEEP is a part of Market Transformation for Energy Efficiency (MTEE) initiative, one of the four initiatives of the National Mission on Enhanced Energy Efficiency (NMEEE). The primary objective of MTEE is to accelerate the shift to energy efficient appliances through innovative measures to make the products more affordable. NMEEE seeks to achieve annual savings of 19,598 MW of power and 23 million tonnes of fuel and greenhouse gas emissions reduction of 98.55 million tonnes. The mission is one of the eight mission under the Prime Minister's National Action Plan on Climate Change (NAPCC). BEE is the mission implementing agency for NMEEE. This programme proposes to deal directly with the manufacturers of select key appliances. Usually, only a handful of manufacturers account for 70 to 90% of the market share of these appliances. SEEP would compensate the manufacturers for a major part of the incremental cost of producing Super Efficient Appliances (SEAs), and encourage them to not just produce but also sell SEAs at an affordable price to common consumers. The need for incentive is expected to reduce very fast as volumes pick up. Super efficient appliances (SEA) may consume 30 to 50 percentages less energy than the five star rated equipments of BEE. SEAs will have their high first cost which can be decreased by large scale production facilities, but due to uncertainty of market demand, manufacturers feel reluctant to make the initial investment to change production lines for super efficient appliances. This barrier needs to be removed by innovative policy interventions. BEE has already announced the SEEP for ceiling fans, and has initiated a dialogue with manufacturers on setting the technical specification, monitoring process etc. SEEP would also be extended to LED Tube lights & LED bulbs. Financial incentives of Rs 244 crore per year would be required (depending on the market situation and technical preparation). The ceiling fan market will undergo a significant transformation because of the SEEP intervention. It is expected that 26.86 million SEA ceiling fans will be sold in 12th Plan which will provide savings of 2.2 billion units in the year 2016-17 of 12th five year Plan. The details of sales (total sales of appliances and sales of SEAs) and energy saving is given in the table that follows (base year 2012-13):

The energy saved from appliances under SEEP is about 6.6 BU in the year 2016-17. The financial support required for the proposed activities is Rs. 1470 crores which includes Rs. 250 crore for capacity building and creating awareness regarding S&L and SEEP. Commercial Sector Energy Conservation Building Code & Energy Efficiency in Existing Buildings To set the minimum energy performance standards for new commercial buildings, having connected load of 100 kW and above, as well as to promote energy efficiency in the existing buildings through retrofitting, Energy Conservation Building Code (ECBC) was launched during the 11th Plan. Rajasthan and Orissa have notified ECBC and three other states (, Kerala and Uttrakhand) are in the process of notification. Star labelling programme (Voluntary) for day use office buildings, BPOs and Shopping complexes have been developed and 123 buildings have been awarded energy star ratings label. The draft report on Low Carbon Strategies for Inclusive Growth indicates that by mandating ECBC for new commercial complexes and energy audits in existing buildings, 75 % of new commercial buildings constructed during the 12th Plan would be compliant to the ECBC. Similarly, 20% of existing buildings would reduce their present energy consumption by 20% through energy audits & retrofits. Consequently, the estimated savings in energy use in new and existing buildings over the Business As Usual (BAU) scenario is likely to be 5.07 BU. The projected energy saving at the end of the 12th Five Year Plan i.e. 2016-17 is 5.07 BU with the financial budget requirements of Rs. 65 crore.

Residential Sector
Bachat Lamp Yojana The residential sector accounts for 25.87 percent of the electricity demand in the country. The lighting load comprises of 28% of this electricity demand in the residential sector and contributes almost fully to the peak load as well. To promote the penetration of energy saving CFLs in the residential sector, BEE has developed the Bachat Lamp Yojana (BLY) Scheme. Under the BLY scheme, a maximum of 4 nos. long-life, quality CFL would be distributed by the CFL supplier to the grid-connected residential households in exchange of equivalent no. of incandescent lamp (ICL) and Rs. 15 per CFL. The savings in

electricity that would mitigate GHG emissions will be leveraged in the international market by the CFL supplier under the Clean Development Mechanism (CDM) of the Kyoto Protocol. To bridge the cost differential between the market price of the CFLs and the price at which they are distributed to households, the Clean Development Mechanism (CDM) is harnessed. The CFL supplier (Investor) would cover the project cost through the sale of greenhouse gas (GHG) emission reductions achieved in their respective, project areas. In 12th Five Year Plan, activities proposed to be undertaken are: strengthen the on-going BLY scheme by continued engagement with the state electricity distribution companies and streamlining and sustaining operations-mainly database management, data security, BLY system audit, PoA updation & revalidation, and CDM Project Activities (CPA). The projected electricity saving at the end of 12th Plan is i.e. 2016-17 about 4.4 BU with the financial budget requirement of Rs. 6 crore.

Agriculture Sector
Agriculture DSM (Ag DSM) Electricity consumption in agriculture sector has been increasing mainly due to the subsidized electricity rates and meeting the growing irrigation need of agricultural land. To tap the energy saving potential in the agriculture sector, which is estimated to be 20.75% (2007-08) of the total energy consumption, the activities planned to be undertaken in the 12th Plan would focus on development of innovative financial mechanisms like Venture Capital Fund (VCF) and Partial Risk Guarantee Fund (PRGF) for the large-scale implementation of AgDSM projects on Public Private Partnership (PPP) mode, in the states for which DPRs have been prepared in the 11th Five Year Plan. The major impacts of the Ag DSM scheme during the 11th Five Year Plan includes 97 MU of annual energy saving potential assessed across eight different states covering about 20,885 pump sets. Based on the results achieved during the 11th Plan, the targeted reduction in electricity consumption at the end of 12th Plan is 0.7 billion units (BU) which would be about 0.57% of the electricity consumption in the agriculture pumping system. The following instruments are proposed to meet the proposed target: Financing mechanism for promoting investments in Ag DSM projects (Target 0.25 million pump sets, 0.7 BU of energy savings, Total Budgetary Provision: Rs. 352 crore). Placement of partial risk guarantee fund for risk mitigation of Manufacturer/Implementer/ESCOs/FIs. Placement of capital subsidy fund/venture capital fund for providing incentive to Manufacturer/Implementer/ESCOs. Monitoring and verification protocol under the AgDSM scheme (Total Budgetary Provision: 25 crore) Monitoring and verification protocol under the AgDSM scheme (Total Budgetary Provision: 25 crore) Integrated water and energy conservation scheme 100 Joint Demo projects implementation(Total Budgetary Provision: Rs. 10 crore) Technical assistance & capacity development of all stakeholders (Total Budgetary provision Rs. 6 crores)

The projected electricity saving at the end of 12th Plan i.e. 2016-17 is about 0.7 BU with the financial budget requirement of Rs. 393 crore.

Municipal and Public Utility Sector

Municipal DSM (Mu DSM) The basic objective of the Municipal Demand Side Management (MuDSM) programme is to improve the overall energy efficiency of the Urban Local Bodies (ULBs) which could lead to substantial savings in the electricity consumption, thereby resulting in cost reduction/savings for the ULBs. The situation analysis was carried out in the Municipal sector in 2007 covering 23 States/UTs. The finding across all the 171 cities spread in 23 states points out that only 9 cities have exclusive energy cell. Other Municipals region neither had energy cells nor having any medium for collection of data for improvement of energy efficiency. Energy Efficiency in ULBs As low as only 38 cities out of 171 have separate allocation in their budget for any energy efficiency initiative. Notably out of total budget allocation of Rs. 12,123 crore across these 171 cities, only Rs 128.5 crore (1.06%) was allocated exclusively for energy efficiency initiatives in the year 2006-07. This subsequently went down to 0.88% in 2007-08 with the allocation of Rs 161.8 crores out of total budget provision of Rs 18,430 crore. Based on the data collected in the situation analysis survey, the energy saving potential for 12th Plan has been estimated as 257 million units (MU) in the urban local bodies. Energy Efficiency in Water pumping During the course of initial Investment Grade Audits (IGAs) of ULBs, it was found that over a period of time, many of the water pumping bodies (Jal Nigam/ Jal Sansthan/ Water Department) have separated out from the scope of ULBs and therefore, a separate situation analysis of these bodies was carried out. The representative water bodies, encompassing total of 3520.65 lakh of population in 1896 Sq.km spread across 105 cities, were covered during this sample based survey for situation analysis covering 19 states. In this study, the overall estimated electricity consumption in the pumping was 1040 MU with an estimated electricity saving potential of 208 MU. Based on the above survey, funding requirement of Rs. 45 crores is assessed for the MuDSM Scheme as this scheme would create an institutional mechanism for implementation of the MuDSM in the country. The above budget is meant for undertaking investment grade energy audits in both ULBs and JalNigams. It is envisaged that implementation of the proposed IGAs can be achieved through funding under JNNURM and linking the same through development fund of MoUD to realize the savings. Any implementation programme under BEE scheme is to be considered for separately funded. The projected electricity saving at the end of 12th Plan i.e. 2016-17 is about 0.47 BU with the financial budget requirement of Rs. 45 crore.

Energy conservation awareness, awards and painting competition

It is proposed to strengthen all ongoing activities during the 12th Plan and introduce the following specific activities: Creation of data base and its analysis EC Award participating units Compilation and dissemination of best-practices in industry and building sector Continuation of EC Awards and paintings competition on energy conservation Awareness creation on energy conservation through print, electronic and other media for

general public

The projected saving in the year 2016-17 of 12th Plan is about 3.42 BU of electrical energy and 5 mtoe of thermal fuel saving with the financial budget requirement of Rs. 100 crore.

HUMAN RESOURCE DEVELOPMENT PROGRAMMES

the HRD activities undertaken in each of the scheme of BEE and MoP, the following initiatives are also proposed to be undertaken in the 12th Five Year Plan: Student awareness programs Training, skill up gradation and refresher training of energy managers and energy auditors Training, skill upgradation and refresher training of operators handling fuel fired furnaces and boilers. Inter-institutional networking in energy efficiency training Training of Power plant personals

It meets the need of most of the sectors such as the power sector, SME, North East, agricultural, buildings, etc. The total budget proposed is Rs. 288 crores in the 12th Plan.

OTHER TECHNOLOGIES/AREAS FOR ENERGY CONSERVATION Award for manufacturer offering the most energy efficient appliance models Energy Efficiency Research Centers Other strategies and Initiatives
Railways The Indian Railways in past has undertaken many initiatives to conserve energy. However, still many opportunities may exist for improving the energy efficiency in the railway sector as a whole. Given the energy saving potential that may exist in this sector, it is proposed to initiate studies and various schemes in coordination with the Ministry of Railways. Additional sectors A few additional sectors are proposed under the 12th Plan, where possibilities to reduce energy consumption exist, which are not presently/ adequately covered under the existing BEE schemes. These include the defence establishments like ordinance factories (purely on a voluntary basis), Public Sector Units (PSUs) township and large engineering/ manufacturing industries.

Lighting Center of Excellence

Following recommendations/new initiatives are suggested for 12th Plan. Continuation of on-going Schemes/Programs by Bureau of Energy Efficiency and Ministry of Power State designated agencies (SDAs) in different states need to play a very important role in terms of carrying forward various energy efficiency initiatives at the state level. The thrust of the SDA program during the 12th Plan will be on strengthening the 32 SDAs which would enable them to implement various programs and activities initiated by BEE or SDAs themselves. In the 12th Plan, it is proposed to set up State Energy Conservation Fund (SECF) in all the States and pursue with SDAs for constitution of SECF in the states to implement various energy

conservation activities and utilization of fund under SECF. Matching contribution may be made by the state governments to the SECF. The proposed activities in 12th Five Year Plan under Standard & Labelling Programme (S&L) for equipments and appliances include:

Inclusion of at least 5 selected new equipment and appliances. Standby power loss reduction in few of the electrical appliances will also be focussed in the 12th Plan. Awareness creation among all the stakeholders, Undertaking of check testing, label verification, market impact assessment for appliances/ equipments covered under S&L scheme and Up-gradation of energy performance standards for equipment/ appliances covered during 11th Plan. Under the labelling scheme, the following activities are proposed Introduction of fuel economy norms effective from 1st year of 12th Plan, Technical study for 2 & 3 wheelers and commercial vehicles (Truck & Buses) to finalise S&L programme

WHAT DRIVES DSM?

Cost reduction and environmental motives
Reduce utility costs / customer costs Rising fuel prices Opposition/financial limitation to building new plants emission/environmental concerns

Reliability and network motives

Delay or avoid expansion Competition Demand shifting

Energy Reduction Programmes

Energy management
Energy purchasing Metering and billing Performance measurement Energy policy development Energy surveying and auditing Awareness-raising, training and education Capital investment management

Load Management Measures

Load levelling:
Peak clipping Valley filling Load shifting Loads (e.g. heating, cooling, ventilation, and lighting) switched on or off, often remotely, by the utility Time-of-use & real time pricing Power factor penalties

Load control:

Tariff incentives or penalties:

DSM Programme Challenges

Developing countries
Awareness Technical capabilities

Production and safety constraints Cost to customer Financing constraints

The relatively low utilisation of generation and networks means that there is significant scope for DSM to contribute to increasing the efficiency of the system investment. The importance of the diversity of electricity load is discussed and the negative effects of DSM on load diversity illustrated. DSM and Energy efficiency can be

Key features and the opportunities for demand side management (DSM) Generation capacity, plant utilisation and efficiency Utilisation of transmission and distribution networks Key features of demand Load diversity and DSM

Power Ministry
PAINTING COMPETITION ON ENERGY CONSERVATION, 2010 Ministry of Power has undertaken National Campaign on Energy Conservation 2010. Under this campaign, a painting competition on energy conservation at School, State and National level are conducted. The painting competition is first conducted at the School level and two best paintings from the participating school are included in the concerned State/UT level Competition. First two winners from each State and UTs are invited to participate at the national level competition. This year, 47155 Schools and 15.63 lakhs students of 4th, 5th and 6th standards of the 35 States and Union Territories participated in the School Level Painting Competition, which was quite encouraging. This competition is aimed at motivating the children towards energy conservation and offers them a chance to explore their creativity. The expressive paintings of the children reflected their interest in the energy conservation activities and their concern about climate change. NATIONAL MISSION FOR ENHANCED ENERGY EFFICIENCY (NMEEE) The National Mission for Enhanced Energy Efficiency is one of the eight missions under the National Action Plan on Climate Change. The scheme has been approved by the cabinet and its implementation will commence in 2010-2011. The objective of the Mission is to achieve growth with ecological sustainability by devising cost effective strategies for end- use demand side management. The Ministry of Power (MoP) and Bureau of Energy Efficiency (BEE) have been entrusted with the task of preparing the implementation plan for the National Mission for Enhanced Energy Efficiency (NMEEE) and to upscale the efforts to create and sustain market for energy efficiency to unlock investment of around Rs. 74,000 Crores. The Mission, by 2014-15, is likely to achieve about 23 million tons oil-equivalent of fuel savings- in coal, gas, and petroleum products, along with an expected avoided capacity addition of over 19,000 MW. The carbon dioxide emission reduction is estimated to be 98.55 million tons annually. The Cabinet approved the financial outlay of Rs.235.35 crores and a budgetary provision for Rs 108.30 crores has been made for the current financial year. NMEEE will usher in the following four initiatives, in addition to the policies and programmes for energy efficiency being implemented by BEE. These initiatives are as follows:

Perform, Achieve and Trade (PAT), which is a market, based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy-intensive large industries and facilities, through certification of energy savings that could be traded. Targets for improvements in energy efficiency will be set under Section 14 of the Energy Conservation Act, 2001 in a manner that reflects fuel usage and the economic effort involved. The Government, in March 2007, notified units in nine sectors, namely aluminium, cement, chlor-alkali, fertilizers, iron and steel, pulp and paper, railways, textiles and thermal power plants, as Designated Consumers (DCs). Designated Consumers (DCs) in 8 industrial sectors will have mandatory participation in the 1st cycle of PAT scheme which will be implemented during 2011-12 to 2013-14. It is estimated that the total energy consumption by about 462 DCs in 8 energy intensive sector is about 165 million tons of oil equivalent (MTOE) with Power Plant sector having the lion's share (i.e. 64%). Moreover, only 5 sectors like Power plant, Iron & Steel, Cement, Fertilizer and Aluminium do consume 97% of total energy consumed by 8 sectors. About 5.4% reduction which is estimated as 8.97 MTOE are targeted in 3 years from energy intensive industries. Among the 23 MTOE set as target from NMEEE, implementation of PAT scheme do focus on achieving 8.97 MTOE by the end of first PAT cycle. In an effort to provide an online platform to operationalize the PAT scheme, development of an internet based system (PATNET) is under process and work-order on PATNET has been awarded to NIIT to develop the e-platform of entire PAT scheme.

Market Transformation for Energy Efficiency (MTEE) to accelerate the shift to energy efficient appliances in designated sectors through innovative measures to make the products more affordable with focus on leveraging international financial instruments, including Clean Development Mechanism (CDM) to make energy efficient appliances affordable and increase their levels of penetration. Since the public sector holds the key to aggregation of CDM projects so as to reduce transaction costs, barriers to widespread adoption of CDM need to be removed through the following measures.
o o o o o o o

Make it mandatory for all public investment and over time, all public operations to be assessed for their potential to attract carbon finance Promote programmatic CDM to reduce transaction costs and aggregation of small energy-efficiency projects Develop and implement a national CDM strategy for energy efficiency Promote market access of small industries in energy-efficiency projects Promote transparency in pricing Ensure that the legal status of CERs is clear to avoid disputes related to taxation Enhance capacity-building and training

Under this initiative of NMEEE, BEE has developed the umbrella framework BLYProgramme of Activities (PoA) which has been registered under UNFCCC-EB on 29th April 2010. The PoA would define key CDM requirements, including the project baseline, additionality, methodology, monitoring protocols through which CO2 emission reductions would be assessed. The PoA approach reduces time and transaction costs for registering the projects since the key CDM requirements will not need to be addressed by area-specific projects within the PoA. BEE plays a role of a coordinating and managing entity (CME) in the BLY - PoA. Kerala State has distributed the CFLs in the entire state. Karnataka State has also launched the scheme and CFL distribution has started. BLY is at different stages of implementation in many other states like Punjab, Haryana, Andhra Pradesh, Orissa, Andhra Pradesh, Chhattisgarh , Madhya Pradesh, Uttar Pradesh, Uttarakhand , Rajasthan, Goa, West Bengal, Tamilnadu and Delhi. These projects can be added to the registered umbrella framework as and when they are developed during the lifetime of the PoA. Another program under this initiative is the development of Super Efficient Equipment Programme (SEEP). This program is proposed to develop superefficient appliances with an aim to reduce consumption and enable demand side management. The goal is not only to reduce cost of energy efficient equipments to stimulate accelerated market transformation but also to encourage domestic manufacturing to sustain the market.

Energy Efficiency Financing Platform (EEFP), to help stimulate necessary funding for Energy Service Company (ESCO) based delivery mechanisms for energy efficiency. The costs will be recovered from the energy savings, which will also reduce the subsidy bill of the state government. The scheme has the potential to be replicated across the country. BEE has undertaken the following measures, in addition to those related to implementing demonstration projects in government buildings, in order to stimulate the market.
o o o o o

Putting in place a government-supported standard methodology that covers the entire project chain from audit to performance measurement and verification Designing a standard performance contract Designing appropriate financial mechanisms to fund projects Implementing projects and evaluating their impact Building capacity in ESCOs and project owners

In an effort to provide EEFP, MoUs with M/s. PTC India Ltd, M/s. SIDBI and HSBC Bank have been signed by BEE. PTC India Ltd. has commenced financing of several building energy efficiency projects in Rashtrapati Bhavan Estate, ESIC Hospitals at Rohini and East Delhi, AIIMS, Safdarjung Hospital. SIDBI has taken up project preparation of energy efficiency projects in 25 SME clusters which will then be offered financing. Further, investment grade energy audits have been completed for large public buildings in the country. Based on the recommendations of these audits iconic buildings in the states will be taken up for implementation through ESCO route.

Framework for Energy Efficient Economic Development (FEEED), seeks to develop fiscal instruments to promote energy efficiency including innovative fiscal instruments and policy measures like the Partial Risk Guarantee Fund (PRGF) and Venture Capital Fund for Energy Efficiency (VCFEE), Public Procurement of energy efficient goods and services, Utility based Demand Side Management (DSM), etc. Efforts of the government to create a market for energy efficiency need to be supplemented with appropriate fiscal instruments, which must be designed to address the following objectives:
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Reassuring lenders by providing a guarantee for performance contracts Providing a venture capital fund from the Government to provide equity for energy-efficiency projects Promoting leadership in the public sector on energy efficiency Promoting energy efficiency in public procurement based on life cycle cost analysis Promoting regulatory incentives to state utilities through electricity regulatory commissions for DSM projects Offering concessions on taxes and duties to attract investment

Partial Risk Guarantee Fund (PRGF) A PRGF is a risk sharing mechanism lowering the risk to the lender by substituting part of the risk of the borrower by granting guarantees ensuring repayment of part of the loan upon a default event. The guarantee can seek to directly support financing of energyefficiency projects by:
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Addressing credit risk and barriers to structuring the transactions involved in financing energy-efficiency projects and Engaging commercial financial institutions and building their capacity to finance energy-efficiency projects on a commercially sustainable basis.

Venture Capital Fund for Energy Efficiency (VCFEE) VCFEE as envisaged by the Government of India under the National Mission for Enhanced Energy Efficiency can go long way in addressing these barriers and kick starting some of the long awaited energy efficiency projects in the country. This fund will work with following criteria:
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It is a Fund providing risk capital support to energy efficiency investments in new technology, goods and services, etc It is a leveraging fund with a view to leverage private venture investments in energy efficiency sector by identifying the possible co-investment opportunities (not in competition with other private funds) with other venture capitalists into Energy Efficiency projects & companies.

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It allows private venture fund players to capitalize the transaction costs associated with specific EE investments It helps to create the volume in energy efficiency deal flow by the fund manager of VCFEE through advertising & soliciting opportunities in energy efficiency area. In investments, where it co-invests with other venture capitalist on same return expectation as private venture capitalist, this Fund could be last to be paid in case of liquidation of investment in projects In investment, where it co-invests with other venture capitalist on lesser return expectation than private venture capitalist, this Fund then should be the first paid in case of liquidation of investment. Under this initiative, framework development for financial institutions to promote energy efficiency is in process. Document on institutional framework and RfP for hiring fund manager for Partial Risk Guarantee Fund (PRGF) and Venture Capital Fund (VCF) are being finalised. Study on fiscal and monetary policy of energy efficiency projects have been awarded to National Institute of Public Finance and Policy (NIPFP).

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