1
Role of Demand Side Management for Power
Distribution Utility in India
Arup Sinha,MemberIEEE, S.Neogi,Non-Member, R.N.Lahiri,MemberIEEE, S.Chowdhury,
MemberIEEE, S.P.Chowdhury,MemberIEEE, N.Chakraborty,MemberIEEE
Abstract-- A major challenge for India’s policy makers is to
determine how best to provide the necessary energy for India’s
extraordinary economic growth. The traditional approach has
been to rely on increasing the supply of conventional energy
resources, particularly coal, which accounts for nearly 70% of
India’s current energy consumption. Yet energy is not an
economic output that must be maximized at all costs. Rather, it is
an input to the generation of goods and services, such as heating,
lighting, mobility, industrial products, and consumer goods.
Demand Side management (DSM) is considered as a new facet in
Indian power industry to solve the problems of power shortage
and energy shortage. Load management or rather peak power
management is the only focus of DSM programs in Indian
utilities. "Load shedding" is the main tool for load management
across the utility in all state in India. DSM in its true sense is yet
to be implemented in Indian power market. Demand Side
Management involves steps taken by the customer on their meter
to change and regulate the amount or timing of energy
consumption. Power supply utilities offer a variety of measures
that can reduce energy consumption and consumer energy
expenses. To mitigate the acute shortage of power in the country,
Utilities are faced with the challenge to enhance end-use
efficiency and manage the power demands of the country for
sustainable and environment-friendly development. This paper
describes role of DSM and its benefit to migrate the growing
energy crisis in India.
Index Terms—Demand Side Management (DSM), Energy
Efficiency, Indian Economy, Restructuring, AT &C (Aggregated
Technical and Commercial) Loss.
I. INTRODUCTION
I ndian economy is forecasted to grow at 8 to 9% in 2010-
2011 fiscal year, which in the coming years is set to reach
double digit growth (10%+). The rapid pace of India's
industrial development has altered the demand-supply
situation for power generation and also set the process of
Arup Sinha is with Energy & Utilities Group of Capgemini India Private
Ltd., Kolkata, India, (e-mail: arup.sinha @capgemini.com).
Sanjay Neogi is with Energy & Utilities Group of Capgemini India Private
Ltd., Kolkata, India, (e-mail: sanjay.neogi@capgemini.com)
R.N.Lahiri is with Energy & Utilities Group of Tata Consultancy Services
Ltd., Kolkata, India, (e-mail: rn.lahiri@tcs.com).
S.Chowdhury is with Electrical Engineering Department, University of
Cape Town, South Africa (e-mail: sunetra.chowdhury@uct.ac.za).
S.P.Chowdhury is with Electrical Engineering Department, University of
Cape Town, South Africa (e-mail: sp.chowdhury@uct.ac.za).
N.Chakraborty is with Power Engineering Department & Dean (FET) of
Jadavpur University, Kolkata, India(e-mail: dean_fet@admin.jdvu.ac.in)
978-1-4577-1002-5/11/$26.00 ©2011 IEEE
opening up of markets by state regulators. In the backdrop of
the expected growth rate of 9% envisaged for the Indian
economy, power sector requires a capacity addition of 100,000
MW in the 11th Plan with the objective of 'power for all by
2012'. During fiscal year 2009, India's total energy shortage
was 9.3% of its total requirements, and peak shortage was
12.6% of peak demand requirements, indicating the need for
effective energy management.
The major reasons for inadequate, erratic and unreliable power
supply are:
• Inadequate power generation capacity
• Lack of optimum utilization of the existing
generation capacity
• Inadequate inter-regional transmission links
• Inadequate and ageing sub-transmission &
distribution network
• Large scale theft and skewed tariff structure
• Slow pace of power reforms
• Inefficient use of electricity by the end consumer
Enactment of Energy Conservation Act’2001 for enabling
legislative framework on energy conservation gives the
Central and State Governments statutory powers for
promoting and enforcing a regime of energy conservation in
the country. The Energy Conservation Act is a step in this
direction and includes all forms of energy viz. coal, oil,
nuclear, renewable sources etc.
The salient Features of the Energy Conservation Act’2001:
• Setting up of energy conservation standards for any
equipment or appliance consuming, generating,
transmitting or supplying energy.
• Certain industries, establishments and users of energy
to be notified as designated consumers keeping in
view the intensity and quantity of energy consumed.
• Mandatory energy audit for all designated consumers,
as and when required by the designated authority.
• Promotion of mass awareness at both the Central and
the State levels for energy conservation, consumer
education and guidance.
• Government to take steps to encourage preferential
use of energy efficient equipment and appliances.
• Constitution of an Energy Conservation Fund at the
Centre and the States for utilizing any grant or loans
made available for promoting energy conservation.

II. WHAT IS DEMAND SIDE MANAGEMENT (DSM)
DSM encompasses “systematic utility and government
activities designed to change the amount and/or timing of the
customer’s use of electricity” for the collective benefit of the
society, the utility and its customers. Alternatively DSM is
described as the planning, implementation and monitoring of
utility’s activities designed to encourage customers to amend
their electricity consumption patterns, both with respect to
timing and level of electricity demand so as to help the
customers to use electricity more efficiently.
Reductions in energy demand and consumption at the end
user’s premises can free up electricity generation, transmission
and distribution capacity at a fraction of the costs required to
provide new capacity. The cost of saved energy has been
estimated to be as low as 10% of the cost of added capacity for
some DSM measures. In addition to avoided and deferred
capacity costs, support for energy efficiency at its customers’
installations brings a utility into closer contact with its clients,
often resulting in better service, and allowing a more efficient
future planning process.
III. ROLE OF DSM IN INDIA
A1 Importance of DSM in India
Institutionalizing Demand Side Management in India factors
such as increasing economic activity and population growth
are resulting in additional pressure on ever increasing power
demand when the country is already facing power shortage. In
such a scenario, DSM can complement supply-side strategies
to help meet electric service demands by assisting utilities
avoid or delay costly capacity additions by slowing demand
growth. To promote DSM, the Government is continuously
introducing various policies and programmers targeting
different sectors such as appliances, buildings, industries, etc.
Despite these policies, the potential remains largely unrealized
due to various technical, financial, Economic and institutional
barriers.
The historic problems of the Indian power sector can be traced
to three root issues – unacceptably high T&D losses due age-
old electrical equipments, large commercial losses due to poor
billing, metering, collection and energy theft, and, low end-use
efficiency of energy use specifically in agriculture. There is
now widespread agreement that restoration of the financial
health of the sector can be only enabled by demand side
initiatives. To be specific, the electricity distribution area is
where the historic problems converge. This convergence is
most felt in the agricultural sector where the water-energy
nexus is a major root cause for the precarious financial
condition of the power sector in India today. Water
withdrawal is an energy intensive operation throughout the
agricultural sector, with the result that 30-40% of India’s
power consumption is used for irrigation. The irrigation
pumping electricity use is at the heart of the subsidy issue and
along with electricity theft and T&D losses, comprise the root
cause for the sector’s financial dilemma.
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The reasons a power utility in India may undertake DSM
include: a) demand outstripping the capability to provide
supply, particularly peak supply, b) improve the cash flow
revenues of the utility, c) improve the quality and reliability of
power supply, and d) mitigate the impact of rising tariffs to the
subsidized customers. For agricultural sector particularly,
utility DSM is highly beneficial because of the subsidized
prices and high costs of supply resulting from technical and
commercial losses.
A2 Improvement of Power quality by DSM
The link between quality and reliability of power supply and
energy efficiency is self evident. The primary casualty on
account of indifferent power supply is reduced end-use
efficiency. The use of voltage stabilizers, battery powered
inverters and robust yet low efficiency irrigation motor-pump
sets point out to the coping strategy employed by urban and
rural power consumers at the cost of efficiency. Improvement
in quality of power supply is sine qua non to achieving higher
end-use efficiency. Quality improvement also has its own
positive implications. Anecdotal evidence tells us that
consumers are willing to pay higher prices provided there is
commensurate improvement in the quality and reliability of
power supply.
The improvement in power quality and hence energy
efficiency has major socio-political implications. A subject of
considerable political sensitivity is that associated with tariff
increases for power supply to agriculture and the urban poor.
DSM and energy efficiency has the inherent potential to
mitigate the rising impact of such politically sensitive tariffs
through an integrated program of metering, installation of
energy conservation devices and efficient system operation
and maintenance.
A3 Improvement of Financial Cash Flow by DSM
The strategic value of DSM and energy efficiency lies in their
ability to improve the financial cash flow of Indian utilities.
The natural laws of financing requires that revenues from
electricity sales are used to service debt interest payments and
principal due on capital loans. If the flow of revenue is choked
on account of commercial and technical losses in distribution
and poor end-use efficiency, the ability of the utility to attract
private investments towards financing IPPs or other utility
services is severely undermined.
Economies are also realized on the capital account. Studies in
India and elsewhere on the cost-effectiveness of DSM have
reported that it costs between 1/5th to 1/10th to save a
megawatt of power as compared to the capital investment
needs to generate an equivalent megawatt in a power plant.
A4 Reformation of Power Utilities by DSM
Utility-driven DSM applications in India have been limited
largely to non-agricultural sectors. In one of the first DSM
programs in India, the Ahmedabad Electricity Company
(AEC), a DSM cell was set up in 1994 that has worked with

customers to develop load research data, screen alternative
energy efficiency measures and implement some of those
measures through the involvement of ESCO (Energy Service
Company in India. provides integrated energy services to bulk
consumer as well as to Utilities for implementation of Energy
Efficiency improvement projects, on a turnkey basis. Two
ESCOs have worked with AEC (Ahmedabad Electricity
Company) to implement efficient lighting and reactive power
compensation (though capacitor installations) measures at its
HT and LT customers that has led to peak load savings of
about 10% thereby reducing the need for expensive imported
power in peak load hours. The ESCOs have raised finances
from institutions like IREDA (Indian Renewable Energy
Development Agency, a Government of India owned financial
institution for “promoting self-sustaining investment in energy
generation from Renewable Sources, Energy Efficiency and
Environmental Technologies for sustainable development.”),
have installed the efficient equipment at customer premises on
a guaranteed performance basis. The utility, AEC, escrows the
savings which are used for loan repayments and ESCO
charges.
As experience from other countries reveal, in India also, the
future success of DSM would be driven by the support of
regulators. Regulators will have to incorporate provisions that
would provide incentives for utilities to promote DSM.
Experience in India and elsewhere indicates that the
establishment of a dedicated DSM cell is one of the key to its
success. The cell comprises of members who focus on specific
functional areas like marketing, data analysis, One of the very
first activities of the DSM cell is to develop load research
(LR) through metering, consumer surveys, billing data, etc. A
proper LR phase leads to the utility load curves that could be
disaggregated by sectoral end-uses during different times of
the day, month and year. The ultimate objective of the cell is
to become an interface with customers, equipment/appliance
manufacturers, ESCOs, regulators, and the utility top
management.
A5 Application of DSM in Agricultural Sector of India
The agriculture sector in India uses 85% of the available fresh
water. However, on-farm irrigation efficiency is only 20-50%.
The other 50-80% is wasted. Combining these data indicate
that the agricultural sector in India is wasting from about one
half of the country’s total fresh water supply.
On the energy front there are inefficiencies as well. The
agricultural sector, on the average, accounts for about 27% of
the total electricity consumption in India. The figure is
somewhat higher in the agricultural states like AP, Gujarat,
MP, UP, Karnataka, Haryana, etc. where agricultural
electricity use is between 35-45%. However from a revenue
perspective, the sale of this electricity amounts to no more
than 5-10% of the state electricity board’s revenues. The
reason for this perverse state of financial affairs is the
adoption of flat rate pricing for agricultural power. Under this
system, when a farmer pays a fixed price per horse power per
month for electricity, or what is termed as a flat-rate system,
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the marginal cost of pumping water is zero. This leads to
energy wastages, over pumping and inefficient selection of
crops. Moreover flat rate pumping masks the true cost of
power to farmers. When unreliability is factored in, most
farmers incur costs of Rs. 2-3/unit – more than what typical
urban dwellers pay. From a political-economic perspective,
the flat rate structure enables the state to give the impression
of providing subsidized power to the rural voting population
whether or not that population actually receives the intended
subsidy.
Summing up, the tariff structure and the poor combination of
technology and management are responsible for water loss,
unsustainable exploitation of ground water and the high
energy losses associated with the distribution and end-use of
electricity in irrigation water pumping.
A careful examination of the causes for such losses reveals
that a vicious cycle exists that involves two sub-systems
operating in tandem with one another: the electrical
distribution system and the water pumping system. This
vicious cycle comprises of three sub-cycles: the financial sub-
cycle and the socio-economic sub-cycle.
THE TECHNOLOGY SUB CYCLE: A starting point in the vicious
cycle involving the electricity distribution system alone is the
poor design and installation of the main distribution LT feeder
line (11 kV) followed by overloading of the 11 kV/415 V
distribution transformers (DTRs) and long lengths of
undersized secondary lines characterized by high line losses
and large voltage drops. Farmers typically have no control in
power supply decision-making and, thus no control over the
quality of supply and on the timing and duration of supply.
Compounding the problem of poor power quality is the
problem associated with management of load demand by the
local distribution sub-station authorities in their desire to
maintain system stability. The sub-station personnel follow a
prescribed system of power regulation (power curtailment
policy) whereby power is rotated among the farmers in two
blocks of 4-8 hours per day. This system of power rationing,
also known as rostering, causes certain undesirable practices
to creep in that further increases system losses and affects
power quality, and eventually leads to system failure. A
common enough practice is for farmers to keep their motors
switches turned on in the hope that whenever the rostering
schedule is in effect for a particular block of farmers, water is
pumped. Ad-hoc changes in the schedule have altered the
farmer to follow such practices which lead to a number of
pumps coming together at the same time – a load demand
diversity of nearly unity. This in turn causes the 11 kV/415 V
DTR to trip; and, in cases where the transformer fuses have
been tampered with, and, with the absence of this basic
protection, the transformer burns-out. Restoration of power to
the farmers connected to the transformer takes several days
and sometimes weeks further impacting their financial
situation.
FINANCIAL SUB CYCLE: Combined with the poor quality of
power and the resultant impact it has on the performance and
efficiency of the farmer’s pumpsets, is the financial impact of
low crop yields and low incomes, which in turn generates

farmer dissatisfaction with the state electricity board and the
bureaucracy. Under these conditions, electricity tariff
revisions for farmers are politically resisted and payments on
electricity bills are postponed, resulting in low cost recovery
and the ensuing political pressure by farmers not to pay for a
service that is not responsive to their needs.
Low cost recovery, in turn, is linked to underfunding of the
operations and maintenance of the power delivery systems
which, coupled with the poor engineering standards and state
of the LT distribution systems, and compounded by the
inappropriate structure, policies and staff skills of many SEBs,
closes the circle by providing poor quality of supply service.
This in turn, sets off a chain-reaction of events of motor
burnouts/transformer overloading, etc. that give rise to a host
of problems, whose tendency is then to further depress the
cost-recovery levels and the cycle goes on. Sub-optimal
allocation of resources towards the distribution system places
further burden on the already vulnerable system causing
deterioration in the quality and reliability of supply.
SOCIO-ECONOMIC SUB-CYCLE: Exacerbating the low cost
recovery issue are the twin issues of illegal connections and
thefts. The former is a direct result of the long waiting periods
that farmers have to suffer (upwards of 2-3 years) to obtain
sanction for a new pumpset connection and the latter is due to
the ease by which unscrupulous elements can tap into the long
winding secondary distribution lines. These combined with
the near-universal practice of “motor nameplate switching”
whereby higher capacity motors have their labels altered to
indicate lower ratings.
IV. APPROACH AND METHODOLOGY FOR DSM
Demand-side management is described as the actions of the
utility, beyond the customer's meter, with the objective of
altering the end-use of electricity - whether it be to increase
demand, decrease it, shift it between high and low peak
periods, or manage it when there are intermittent load
demands - in the overall interests of reducing utility costs. In
other words DSM is the planning, implementation and
monitoring of utility’s activities designed to encourage
customers to amend their electricity consumption patterns,
both with respect to timing and level of electricity demand so
as to help the customers to use electricity more efficiently.
Various factors such as increasing economic activity and
population growth are resulting in additional pressure on ever
increasing power demand when the country is already facing
power shortage. In such a scenario, DSM can complement
supply side strategies to help meet electric service demands by
assisting utilities avoid or delay costly capacity additions by
slowing demand growth. Over the past few years, DSM has
been identified as a potential option to mitigate power
shortages, reduce capital needs for power sector capacity
expansion as well as to enhance the energy security in India.
A multipronged approach involving preliminary research,
discussions with stakeholders and an in-depth research and
analysis need to adopt for designing an appropriate
4
institutional mechanism for the large scale deployment of
DSM in the country. The approach involves developing
understanding of a model DSM framework and comparing it
with the existing framework to identify deficiencies in the
latter. The needs for additional institutional requirement to
overcome these deficiencies are to be studied and accordingly
options are to be identified. Preliminary research is undertaken
through combination of literature review and analysis of legal
& policy framework. The literature review is aimed at
assessment of current status of DSM in identified States.
The objective of the review was to identify the roles and
responsibilities assigned to various institutions and to identify
the institutional gaps with regard to DSM implementation in
India.
V. DSM INITIATIVES IN INDIA
Government of India enacted the Energy Conservation Act,
2001 to coordinate various activities associated with efficient
use of energy and its conservation. The Bureau of Energy
Efficiency (BEE), a statutory body under Ministry of Power,
as the nodal agency to coordinate this activity with the
assistance of the State Designated Agencies. The aim of this
institutional framework is to stimulate market transformation
and initiate other interventions in favour of DSM and energy
efficiency in the country with the involvement of all
stakeholders.
To promote DSM, BEE is continuously introducing various
policies and programmes targeting different sectors such as
appliances, buildings, industries, etc. These policies include
wide range of instruments such as regulatory directives,
voluntary agreements with appliance manufacturers,
incentives or subsidies, financing options, education and
outreach, etc. Some of the State Electricity Regulatory
Commissions have given regulatory directives to distribution
utilities to undertake DSM activities. BEE has initiated several
initiatives such as Bachat Lamp Yojana, Standards and
Labelling programme for appliances, National level
agricultural & municipal DSM Programmes, National level
certification program for Energy Auditors and Energy
Managers, Energy Conservation Awards and Energy
Conservation Building Code.
These flow from the provisions of the Energy Conservation
Act, 2001. Some of the programmes, which BEE has
undertaken in the area of DSM, are as follows:
B1 Lighting DSM or Bachat Lamp Yojna
In the lighting sector, DSM measures could have a significant
impact. The large contribution of (domestic, commercial and
street) lighting to peak loads makes it attractive for the utility
to offer incentives for the adoption of efficient lighting
practices by consumers. This would result in reduction of
costly peak-load power procurement. This has led some
distribution companies to incentivize purchase of Compact
Fluorescent Lamps (CFLs) by the consumers. BEE has
initiated Bachat Lamp Yojana (BLY) Scheme to promote
energy efficient lighting in India.

B2 Standard & Labeling Program
The Standards and Labeling programme is a key thrust area of
BEE. Under the Energy Conservation Act, 2001 has powers to
direct display of labels on specified appliances or equipment,
Enforce minimum efficiency standards by prohibiting
manufacture, sale, and import of products not meeting the
minimum standards. The objectives of this program is to
provide the consumer an informed choice about the energy
saving, and thereby the cost saving potential of the marketed
household appliances or other equipment.
B3 Energy Conservation Building Code & Energy Efficiency
in Existing Building programme
Energy Conservation Building Codes (ECBC) set minimum
energy performance standards for commercial buildings. the
Energy Conservation Act, 2001, BEE has powers to prescribe
ECBC for commercial buildings (at present having a
connected load of 500 KW) or building complex for efficient
use of energy and its conservation.
B4 Star rating of buildings
In order to further accelerate the energy efficiency activities in
the commercial building sector, BEE developed a Star rating
programme for office buildings which is based on the actual
performance of a building in terms of its specific energy usage
in kwh/sqm/year. The programme rates office buildings on a
1-5 Star scale, with a 5 Star labeled building being the most
efficient. The Star rating Programme provides public
recognition to energy efficient buildings and creates a
‘demand side’ pull for such buildings. Buildings with a
connected load of 100 KW and above are being considered
under the BEE Star rating scheme.
B5 Municipal DSM
The global trend towards increased urbanization requires
municipal bodies to provide services such as streetlights, solid
waste management, sewage treatment & disposal, etc. All
these activities consume significant amount of electricity,
usually in an inefficient manner. The cost of energy
sometimes constitutes more than 50% of the municipality’s
budget and implementing efficiency measures could reduce it
by at least 25%. There is a potential to save around 10 billion
rupees by implementing energy efficiency measures. Almost
all municipal bodies depend on government support to meet
their development and operating expenses. Government of
India, through the Bureau of Energy Efficiency has initiated a
programme to cover 175 municipalities in the country by
conducting investment grade energy audits and preparation of
detailed project reports. Energy Service Companies are being
encouraged to take up the implementation of the programme
with the help of financial institutions. Utilities must encourage
implementation of DSM measures to relieve their network of
such inefficient load.
B6 Agricultural DSM
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Agriculture accounts for about 27% of electricity consumption
in India, which is increasing due to rural electrification efforts
of the Government of India. The electricity is largely used in
agricultural pump sets which generally have very poor
efficiency. Most of the pilot projects as well as other studies
project potential of 45-50% by mere replacement of inefficient
pumps. Since agricultural tariffs are usually the lowest and
also highly subsidized, there is no incentive to the agricultural
consumer to improve efficiency of the pump set. However,
utilities are not able to recover economic price on every unit of
energy sold to these categories of consumers and therefore
need to aggressively target these consumers for DSM
measures. BEE has prepared an Agricultural DSM (Ag. DSM)
programme in which pump set efficiency upgradation could be
carried out by an Energy Service Company (ESCOs) or the
distribution Utility. The Ag-DSM programme for preparation
of DPRs has already been initiated by BEE as pilot projects in
5 states, viz, Maharashtra, Gujarat, Haryana, Punjab &
Rajasthan. One DPR in Solapur dist of Maharashtra is ready
for implementation purpose. The result of the study is
encouraging with the saving potential of 40% by replacement
of inefficient pumps with Star rated pumpsets.
VI. IMPLEMENTATION OF DSM MEASURES IN INDIA
DSM programs are utility and customer specific as described
below:
C1 Load Research (LR):
This stage in the DSM implementation will typically assess
the customer base, tariff, load profile on an hourly basis and
will identify the sectors contributing to the load shape. This
step will also identify peak load contributors.
C2 Define load-shape objectives:
Based on the results of the load research in the utility, DSM
teams define the load shape objectives for the current
situation. Various load-shape objectives - Peak Clipping
(reduction in the peak demand), Valley Filling (increased
demand at off-peak), Load Shifting (demand shifting to non-
peak period), and Load Building (increased demand) is
possible as follows (refer Fig2):
• Peak Clipping - the reduction of utility load primarily
during periods of peak demand
• Valley-Filling - the improvement of system load
factor by building load in off-peak periods
• Load Shifting - the reduction of utility loads during
periods of peak demand, while at the same time
building load in off-peak periods. Load shifting
typically does not substantially alter total electricity
sales
• Conservation - the reduction of utility loads, more or
less equally, during all or most hours of the day

• Load Building - the increase of utility loads, more or
less equally, during all or most hours of the day
• Flexible Utility Load Shape - refers to programs that
set up utility options to alter customer energy
consumption on an as-needed basis, as in
interruptible/ curtailable agreements.
Fig2: Load Shape Objectives
Based on the LR, the DSM team may choose any of the load
shapes objective (Ref. Fig 2) depending on the specific
requirements of the individual power utility to achieve the
various DSM objectives as follows:
• Reduce financial needs to build new power plant
• Improve the efficiency of energy systems.
• Minimize adverse environmental impacts.
• Lower the cost of delivered energy to consumers.
• Reduce power shortages and power cuts.
• Improve the reliability and quality of power supply.
C3: Assess program implementation strategies
This step will identify the end-use applications that can be
potentially targeted to reduce peak demand, specifically in
sectors contributing to system peak. This step will also carry
out a detailed benefit-cost analysis for the end-users and the
utilities, including analysis of societal as well as
environmental benefits.
C4: Implementation
Implementation stage includes program design for specific
end-use applications, promotes the program to the target
audience through marketing approaches such as advertising,
bills and inserts, and focused group meetings (specifically in
case of commercial and industrial sector).
C5: Monitoring and Evaluation
This step tracks the program design and implementation and
compares the same with proposed DSM goal set by the utility.
A detailed benefit-cost analysis in this case includes
identifying the avoided supply cost for the utility vis-à-vis the
total program cost for the utilities and benefits to the
participants including the reduced bills or incentives to the
end-users.
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VII. MONITORING & VERIFICATION METHODOLOGY
AFTER IMPLEMENTATION OF DSM MEASURES
D1 Process of Monitoring & Verification:
Energy Measurement and Verification (M&V) is defined as
the process of measuring and verifying both energy and cost
savings produced as a result of the implementation of DSM
Measures. The need for cost effective M&V has become
critical because of reduced government funding of energy
conservation measures and the increased funding of these
programs by the private sector through energy savings
performance contracting and demand side management
(DSM). Effective M&V is the only means of Implementation
Partner (IP) is performing well, and to check DSM measures
are generating the expected level of cost savings. This process
will determine how much the government has saved, and how
much the government must pay the IP (Refer Fig3.):
Fig3: Monitoring & Verification Process
D2 Principles of Monitoring & Verification:
The fundamental principles of good Monitoring and
Verification of DSM Measures are described below:
• Accurate Monitoring and Verification reports should
be as accurate as the Monitoring and Verification
budget will allow.
• Monitoring and Verification costs should normally be
small relative to the monetary value of the savings
being evaluated.
• Monitoring and Verification expenditures should also
be consistent with the financial implications of over-
or under-reporting of a project’s performance.
• The reporting of energy savings should consider all
effects of a project. M&V activities should use
measurements to quantify the significant effects,
while estimating all others.
• The determination of savings should measure the
performance parameters of concern, or least well
known, while other less critical or predictable
parameters may be estimated.

VIII. CHALLEMGES IMPLEMENTATION OF DSM IN
INDIA
In the current scenario, implementation of DSM measures has
always been ad-hoc and holistic view has been rarely taken in
the country on design, development and implementation of
DSM measures. This is one of the reasons that DSM has not
been able to gain the required momentum in India. Now, given
the issues related to global warming and climate change, there
is a renewed thrust on DSM in the country. Need for
implementation mechanism for large scale sustainable
deployment of DSM programmes is being felt. It has been
appreciated that there may not be capacity within several
existing institutions to undertake specialized tasks required for
DSM implementation.
IX. BENEFITS FOR DSM MEASURES IN INDIA
Demand-side management (DSM) measures are implemented
by utilities to modify end-use electrical energy consumption,
either reducing overall consumption through energy efficiency
or using load management to reduce demand at times when
the cost of reducing demand is less than the cost of serving it.
Cost-effective efficiency and load management measures
could significantly improve the reliability of India’s electric
system and close the gap between supply and demand, while
lowering the economic and environmental costs of Power
utility Service.
Load management programs under DSM measures help for
reducing loads on a utility’s system during periods of peak
power consumption or allowing customers to reduce
electricity use in response to price signals. Such programs use
mechanisms like ABT (Availability Based Tariff) , Time of
Use or Time of the Day (TOD) Rates, Real Time Pricing,
Direct Load control, and voluntary Demand Response (DR)
programs.
Load management programs can be effective in reducing peak
demand, which in turn helps to reduce utility construction
costs as well as lower electric rates. Yet load management
programs are largely short-term responses that alone do not
exhaust the cost-effective demand-side potential. The multiple
long-term benefits that investments in energy efficiency can
bring to the entire electric system are often overlooked.
Combining load management programs with end-use energy
efficiency programs can heighten the effectiveness of both
approaches and lead to the greatest demand reductions.
Energy Efficiency program under DSM measures help end-
users to modify energy use or change end-use for reducing the
need to construct new generation, transmission and
distribution facilities, improving efficiency, and also reduces
maintenance and equipment replacement costs, as many
efficient industrial technologies have longer lifetimes than
their less efficient counterparts.
In addition to the power shortage,, system stability problems
are prominent in India because of weak network
configurations, insufficient peaking power, reactive power
compensation, and voltage regulations.. Much of India’s urban
7
power network equipment is old and overextended, unmatched
to the needs of urban development and the promotion of
electric power consumption.
Energy efficiency measures can help address this situation by
providing a number of reliability benefits, such as
• Reducing load, wear, and maintenance needs on the
entire generation, transmission, and distribution
network
• Reducing demand for generation fuels across both
peak and nonpeak hours, thus improving fuel
availability generally
• Reducing loading in strategic locations, thus reducing
transmission congestion and other system reliability
problems
• Reducing losses at the system, transmission, and
distribution levels; and surplus the capacity to other
state customers
In a competitive electricity market, the benefits of both energy
efficiency and load management are multiplied. The ability to
reduce peak demand reduces the power cost paid to every
generating unit running at the time of the peak.
X. BARRIERS FOR DSM PROGRAMMES IN INDIA
Power Distribution Utilities in India is not keen to implement
DSM measures for following reasons:
• Distribution Utility’s perception of losing revenue by
way of DSM implementation- ‘truing up’ not
considered
• DSM is not directly related to Distribution Utility’s
core business of Electricity supply
• DSM is not mandated in any legal framework
• Cost Plus tariff determination does not necessarily
have adequate inducement for carrying out DSM
measures
• Utilities are not able to visualise the impact of DSM
Programme but at the same time, investment in
generation capacity addition has direct impact in
terms of energy injected in the system
• Due to unavailability of protocols for M&V, the end
result of any of the DSM programme is rarely
available. Therefore, there is always doubt about the
success of such programme
• Direct cost associated with programme
administration, implementation and incentives, if any
paid to program participants’ impacts utilities
earnings.

XI. CONCLUSION
A fundamental problem being faced by the Indian power
sector is high transmission & distribution losses, huge
commercial loss, and acute power shortage, resulted in poor
financial conditions of the State Electricity Boards (SEBs) or
successor entities in most states. There are economic,
environmental and social reasons to promote utility driven
DSM as a precursor to the ongoing power sector reforms in
India. Although limited experience with DSM in India has
proven its importance in the power scenario, there exists an
enormous untapped potential. There has been very little
application of this innovative concept in the agricultural sector
where the benefits are going to be significant.
XII. ACKNOWLEDGEMENT
The authors are grateful to the Energy and Utilities Group of
Capgemini India Private Ltd., Kolkata, India and Electrical
Engineering Department of Jadavpur University, Kolkata,
India and Electrical Engineering Department of The
University of Cape Town, South Africa.
XIII. REFERENCES
Periodicals:
[1] Sarkar, A., Nezhad, H. and Wolter, N., “Ahmedabad Implements Pilot
DSM to Meet Peak Demand”, Modern Power Systems, Vol. 17, No. 6,
June 1997, pp. 65-69.
Books:
[2] Sohal, G.S., “Glimpses of Power Sector”, Ist Edition, Confluence
International, New Delhi, 2004
[3] Shahi, R V, “Indian Power Sector: Challenge & Response”, Excel,
New Delhi, 2006
[4] “Overview of Power Sector in India 2005 (revised edition)”, India Core
Publishing, New Delhi, 2005
Technical Reports:
[5] “Electricity Act’ 2003”, Govt. of India, New Delhi, 2003
[6] “The Energy Conservation Act 2001”, Government of India
[7] “The Electricity Policy”, Ministry of Power, Government of India,
February2005
[8] “The Tariff Policy”, Ministry of Power, Government of India, January
2006
[9] “Integrated Energy Policy”, Report of the Expert Committee, Planning
Commission, Government of India, August 2006
[10] “National Action Plan on Climate Chang”, Government of India,
[11] “Report of the Working Group on DSM & Energy efficiency”, Forum of
Regulators, September2008
[12] “Draft Discussion Paper on Regulatory Framework for DSM”,
Maharashtra
[13] “Draft Cost Effectiveness Assessment Guideline, Demand Side
Management Measures and Programmes”, Maharashtra Electricity
Regulatory Commission, January 2009
[14] “Haryana Energy Conservation Action Plan & Haryana’s Initiatives on
Energy Conservation”, PPT, Department of Renewable Energy,
Haryana, December 2007
[15] S. Padmanaban, C. Govindarajalu “Economic Sector Work on Power
Supply to Agriculture: Sub-Task Report on Cost Minimization Through
Integrated Agricultural DSM”, 2001.
8
Papers from Conference Proceedings (Published):
[16] “DSM Strategy and Programs in India: The World Bank’s Experience”:
Conference on Demand Management, Goa, March 1996
[17] Nezhad, H. G. and Sarkar, A., “Demand-Side Management: A Policy
Model for India” , Proceedings of the Twentieth Annual International
Energy Conference of the International Association for Energy
Economics, Volume II, pp. 448-458, New Delhi, India, January 1997.
XIV. BIOGRAPHIES
Arup Sinha holds Bachelor of Electrical Engineering (BEE) and Master in
Business Administration (MBA). Presently working with Capgemini India
Private Ltd, Kolkata as a Utility Domain Expert and IT Consultant for
implementation of IT application in Energy & Utilities Sector. He has over
eighteen years of experience of which six years in IT consulting &
implementation for utility industries in India & overseas and twelve years in
industrial experience in power generation In addition to above he has good
experience in Energy Auditing & Accounting of Power Utility, and is a
Certified Energy Manager & Auditor by Ministry of Power, Government of
India. He is a member of IEEE (USA), IET (UK)
Email: arup.sinha@capgemini.com
Sanjay Neogi holds Bachelor of Electrical Engineering (BEE) and Master in
Business Administration (MBA). Presently working as a Utility CoE (Centre
of Excellence) lead in Energy &Utilities Practice of Capgemini India Private
Ltd, Kolkata. He has over seventeen years of experience of which nine years
in IT consulting & implementation for utility industries in India & overseas
and eight years in industrial experience in power generation, transmission &
distribution in various power utilities Email:sanjay.neogi@capgemini.com
R. N. Lahiri holds a Bachelor of Science in Mathematics, Bachelor of
Engineering in Electrical Engineering and a PG Diploma in Computer &
Control Engineering. He is presently working in Tata Consultancy Services
Limited, India, as Principal Consultant heading the Energy-Utilities Practice.
He has over Twenty-six years of professional experience in Information
Technology, Energy and Utilities Sector. He is a member of IEEE (USA), IET
(UK), IE (I), IETE (I), CSI (I) Email: rn.lahiri@tcs.com
S.Chowdhury received her BEE and PhD in 1991 and 1998 respectively. She
was connected to M/S M.N.Dastur & Co. Ltd as Electrical Engineer from
1991 to 1996. She served Women’s Polytechnic, Kolkata, India as Senior
Lecturer from 1998 to 2006. She is currently the Senior Lecturer in the
Electrical Engineering Department of The University of Cape Town, South
Africa. She became member of IEEE in 2003. She visited Brunel University,
UK and The University of Manchester, UK several times on collaborative
research programme. She has published two books and over 55 papers mainly
in power systems. She is a Member of the IET (UK) and IE(I) and Member of
IEEE(USA). Email: sunetra.chowdhury@uct.ac.za
S.P. Chowdhury received his BEE, MEE and PhD in 1987, 1989 and 1992
respectively. In 1993, he joined E.E.Deptt. of Jadavpur University, Kolkata,
India as Lecturer and served till 2008 in the capacity of Professor. He is
currently Associate Professor in Electrical Engineering Department of the
University of Cape Town, South Africa. He became IEEE member in 2003.
He visited Brunel University, UK and The University of Manchester, UK
several times on collaborative research programme. He has published two
books and over 110 papers mainly in power systems and renewable energy.
He is a fellow of the IET (UK) with C.Eng. IE (I) and the IETE (I) and
Member of IEEE (USA). He is a member of Knowledge management Board
and Council of the IET (UK).Email: sp.chowdhury@uct.ac.za
N. Chakraborty received his BEE and MEE in 1986 and 1989 respectively
from Jadavpur University, Kolkata. He was awarded with the Diploma of
Imperial College (DIC), London, UK and PhD degree from University of
London in 1999. At present he is a Professor in the Department of Power
Engineering, and Dean Faculty of Engineering and Technology, Jadavpur
University, Kolkata. His fields of research interest include power economics
& deregulation, non- conventional generation & environment, novel materials
and applied superconductivity. Email: dean_fet@admin.jdvu.ac.in