EE 466:

POWER SYSTEMS PLANNING &

OPTIMIZATION

Section 4:
LOAD MANAGEMENT

Dr. E. K. ANTO
 OUTLINE
• Importance of load management
• Goals of load management
• Objectives of load management
• Broad types of load management (supply-side management, SSM and demand-
side management, DSM)
• DSM techniques / strategies
• DSM methods / practices
• Demand Response Program (DRP)
• Benefits of load management
• Barriers to load management
2
• IMPORTANCE OF LOAD MANAGEMENT
 4.1: Importance of Load Management
• The demand for electricity has increased with new developments in the world.
•
• This has put pressure on the power utilities to meet the increasing demand of
the customers.

• In such a situation, the best solution is to practice load management and make
the best use of the available generating capabilities of a power utility.

• A number of additional FACTORS HIGHLIGHT THE IMPORTANCE OF

LOAD MANAGEMENT.

4
 4.1.1: Additional Factors That Highlight The
Importance of Load Management
1) Soaring prices of oil – this leads to increase in fuel cost to utilities and thus
customers suffer directly as energy charges are increased by utilities
2) Dwindling energy resources
3) Increase of capital cost and licensing requirements for utilities in the
construction of new power plants. In some cases, construction times could
increase from 5-8 years to 15 years or more
4) Global environmental concerns over atmospheric pollution and the attendant
green house gas (GHG) effects.

• NOTES: These issues forced utilities to consider load management techniques to

improve their system resources utilization and to control peak load growth.
5
• GOALS OF LOAD MANAGEMENT
 4.2: Goals of Load Management (1/1)
• There are TWO (2) GENERAL GOALS of load management activities:
1. Reducing the peak demand (MW) for electricity and
2. Reducing the overall amount of energy (MWh), that is, electricity used over
time

• REDUCING PEAK DEMAND achieves the following:

i. reduces the need for additional power plants / reserve margin;
ii. reduction in cost

• REDUCING THE OVERALL AMOUNT OF ENERGY achieves the following

i. conserves fuel resources,
ii. reduces consumers’ energy bills and 7
iii. reduces harmful emissions into the atmosphere
• OBJECTIVES OF LOAD MANAGEMENT
 4.3: Objectives of Load Management (1/1)
• These goals can be achieved by breaking them down into THREE (3) BROAD
OBJECTIVES, namely

1. Energy Efficiency
2. Energy Conservation
3. Effective Load Management Activities

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 4.3.1: Energy Efficiency (1/1)
• Energy efficiency programs PROMOTE THE USE of
i. More effective building insulation
ii. High efficiency industrial equipment
iii. High efficiency appliances and air-conditioning equipment and
iv. High efficiency lighting.

• INVESTING IN ENERGY EFFICIENCY is often cheaper, cleaner, safer, faster,

more reliable and more secure than investing in new supply.

• IMPROVING EFFICIENCY also reduces maintenance and equipment

replacement cost, as many efficient industrial technologies have longer lifetimes
than their less efficient counterparts.
10
 4.3.2: Energy Conservation (1/1)
• Conservation programs are designed to encourage consumers to use less
electricity through changes in work and living habits, thereby reducing their
need for electricity;

• Some of the CONSERVATION PROGRAMS include:

1) Public education and awareness programs that promote energy-reducing
methods such as (i) conservative thermostat settings, (ii) turning off
appliances when not in use, (iii) adding insulation to a building to help reduce
the need for heating in winter and cooling in summer and
2) Implementation of tariffs.

11
 4.3.3: Effective Load Management Activities
(1/1)
• To manage load effectively, energy demand should be redistributed to spread it
more evenly throughout the day.
• There should be a reduction in the instantaneous demand for electricity (MW)
by limiting or discouraging use during peak times, i.e., periods of high
demand.
• Typical EFFECTIVE LOAD MANAGEMENT ACTIVITIES include
1. Allowing direct, remote control of air conditioners and water heaters
2. Time-of-use (TOU) rates/tariffs
3. Load shifting programs and
4. Interruptible rates (providing rate discounts in exchange for the right to
reduce customers' electricity allocation during the few hours each year with
the highest electricity demand).
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• BROAD TYPES OF LOAD MANAGEMENT
 4.4: Broad Types of
Load Management (1/1)
• There are TWO (2) BROAD WAYS to accomplish load management.
• These are
i. Supply-Side Management (SSM) options, and
ii. Demand-Side Management (DSM) options

• The SUPPLY-SIDE OPTIONS are concerned with the methods of generation

(thermal, hydro, wind etc.), transmission and distribution of electrical energy;

• The DEMAND-SIDE OPTIONS are directed at the consumers with their large
variety of end-use equipment.

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• SUPPLY-SIDE MANAGEMENT (SSM)
 4.4.1: Supply-Side Management (SSM)
• Supply-Side Management (SSM) involves all those activities required to
monitor options for the generation, transmission and distribution of electricity to
meet the forecast customer demand in the future in an economical way.

• The OPTIONS OPEN TO SUPPLY-SIDE MANAGEMENT include:

1) Building of new generating stations
2) Purchasing / importing electricity from other utilities
3) Increasing service life of existing units (retrofitting)

• Supply-side management encompasses generation, transmission and

distribution system planning, and will be treated in much detail in Section 5
16
• DEMAND-SIDE MANAGEMENT (DSM)
 4.4.2: Demand-Side Management (DSM) (1/4)
• Demand-Side Management (DSM) is the process of managing the
consumption of energy, generally to optimize available and planned generation
resources
• The goal of DSM is to CHANGE THE OVERALL SYSTEM LOAD
PROFILE
• This change is made by modifying, influencing or adding to OR deleting from
the demand profiles of individual customers.
• 12 % reduction

• Residential 11 % increase

• (a) Uncontrolled system (b) With load management control 18

 4.4.2: Demand-Side Management (2/4)
• In applying DSM options, utilities can affect the AMOUNT and TIMING of
customer electricity use.

• The REDUCTION OF THE AMOUNT of electricity use is achieved by

improving the technical and operational efficiency with which customers use
electricity.

• The TIMING OF ELECTRICITY USE can be influenced by

i. Direct-load control programs in which the utility controls equipment at the customer site
and
ii. Electricity-pricing options that vary the price of electricity with TIME OF USE.

19
 4.4.2: Demand-Side Management (3/4)
• The DSM approach may be recognized as a “resource”, analogous to power
plants.

• This recognition led to a new way of planning for electric utilities, called
integrated resource planning (IRP).

• The IRP involves utilities consideration of a BROAD ARRAY OF WAYS TO

MEET CUSTOMER ENERGY-SERVICE NEEDS, RATHER THAN ONLY
BUILDING AND OPERATING POWER PLANTS

• Let us see overleaf for the ALTERNATIVE WAYS OF MEETING DEMAND

20
 4.4.2: Demand-Side Management (4/4)
• To meet the growing demand for energy services, utilities now consider the
following ALTERNATIVE WAYS

1) Purchasing electricity from other utilities and non-utility entities

2) Retrofitting, i.e., repowering and extending the life of existing plants
3) Promotion of DSM programs
4) Improvements in transmission and distribution networks
5) Use of electricity pricing options, etc.

21
• DSM TECHNIQUES/STRATEGIES
 4.5: DSM Techniques/Strategies
• Utilities have been noted to be applying a number of BASIC DSM
STRATEGIES/TECHNIQUES.
• These are:
1. Peak Clipping
2. Valley Filling
3. Load Shifting
4. Strategic Conservation
5. Strategic Load Growth
6. Flexible Load Shape
• Fig 2: Basic DSM Techniques/Strategies
• We shall take some detailed look at Peak Clipping, Valley Filling and Load
Shifting: 23
• PEAK CLIPPING
 4.5.1: DSM Techniques –
Peak Clipping (1/2)
• Peak clipping means reduction of load during peak periods to get the load
profile as desired by the utility.
• It seeks to reduce energy consumption at the time of the daily peak
• This load reduction on the part consumers is directly controlled by the utility,
and is usually enforced at peak times, i.e., when usage of electric appliances by
consumers is at its maximum.

Fig 3: Peak Clipping 25

 4.5.1: DSM Techniques –
Peak Clipping (2/2)
• Peak clipping becomes essential, especially for those utilities that do not
possess enough generating capabilities during peak hours.

• During PEAK PERIODS, AVOID USING LARGE EQUIPMENT

SIMULTANEOUSLY.

For instance, if run at the same time, two 25-kW pumps that run only two
hours each day can contribute 2x25 kW, that is, 50 kW to the demand
(relatively high).
However, when run at separate/different times, the contribution to
demand will be 25 kW (relatively low).
And so during peak periods, avoid using large equipment simultaneously.
26
• VALLEY FILLING
 4.5.2: DSM Techniques –
Valley Filling (1/1)
• Valley filling is the second classic form of load profile shape change
techniques.
• It RATHER ENCOURAGES LOADS USAGE DURING THE OFF-PEAK
PERIOD.
• The goal is to build up off-peak loads in order to smooth out the load profile
and improve the economic efficiency of the utility.

28
• Fig 4: Valley Filling
• LOAD SHIFTING
 4.5.3: DSM Techniques –
Load Shifting (1/1)
• Load shifting combines the benefits of peak clipping and valley filling by SHIFTING LOAD
FROM PEAK TO OFF-PEAK PERIODS, allowing the most efficient use of capacity.

Fig 5: Load Shifting

• This could be ACCOMPLISHED THROUGH MEASURES such as thermal storage.
• Thermal energy storage enables a customer to use electricity to make ice or chilled water late
at night when overall electricity consumption is low.
• The ice or chilled water is then used during the day when overall electricity consumption
is high. 30
• DSM METHODS/PRACTICES
 4.6: DSM Methods/Practices &
Implementation (1/4)
• There are many DSM technologies and measures, which are used by utilities to
implement the strategies.

• These STRATEGIES/METHODS include:

1) Direct-load control (DLC)

2) Rate schedules
3) Voltage reduction
4) Strategic energy conservation
5) Loss reduction in distribution system.
6) Load shedding (LAST RESORT)
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 4.6.1: DSM Methods (2/4) –
Direct Load Control &
Rate Schedules
• (1) Direct Load Control (DLC)
• Here, the utility transmits a radio signal to the customer’s site and the signal turns
off a customer’s appliance

• (2) Rate Schedules

• Utilities can structure their rates to encourage customers to modify their pattern of
energy use.
• The RATE SCHEDULES can be carried using any of the following:
a) Time-of-Use (TOU) tariff
b) Interruptible/Curtailable (I/C) tariffs
c) Power Factor Surcharges
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 4.6.2: DSM Methods (3/4) –
Voltage Reduction &
Strategic Energy Conservation
• (3) Voltage Reduction
 Voltage reduction programs reduce the supplied voltage of electricity to all
customers, usually between 2 % and 5 %.
 Lowering the supply voltage has the overall effect of reducing the demand for
electricity

• (4) Strategic Energy Conservation

This has been identified as the best-known strategy and it involves reducing
the entire energy load
There are various opportunities and techniques for reducing energy
consumption such as efficient lighting, using efficient motors in industries
etc.
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 4.6.3: DSM Methods (4/4) –
Loss Reduction &
Load Shedding
• (5) Loss Reduction
Some of the METHODS FOR REDUCING LOSSES at DISTRIBUTION
LEVEL are:
i. Capacitor installment (for power factor correction)
ii. Reconductoring
iii. Voltage upgrading
iv. Transformer load monitoring
v. Feeder configuration

• (6) Load Shedding (LAST RESORT)

In situations when demand cannot be met by available supply, some of the
load has to be taken off. 35
• DEMAND RESPONSE PROGRAM
 4.7:Demand Response Program (1/4) –
DEFINITION
• The demand response program is basically a sort of demand-side management
tool.

• According to the Federal Energy Regulatory Commission (FERC), demand

response (DR) is defined as:
“changes in electric usage by end-use customers from their normal
consumption patterns, IN RESPONSE TO:
i. changes in the price of electricity over time, OR
ii. incentive payments/packages designed to induce lower electricity use at
times of high wholesale market prices, OR
iii. when system reliability is likely to be jeopardized” .

37
 4.7:-Demand Response Program (2/4) –
USES (1/1)
• Demand response is therefore a wide range of actions which can be taken at
the customer side of the electricity meter, in response to particular
conditions within the electricity system such as:
i. Peak period network congestion or
ii. High prices.
1) The demand response program (DRP) plays a vital role in a smart grid
environment, as it is an economical and flexible attempt towards the
maintenance of system security and reliability.
2) The DRP also creates the opportunities for customers also to be players in
the market
3) Demand response is able to change the AMOUNT and DURATION of
electric energy usage, so that the best efficiency of consumption takes place
in the peak period. 38
 4.7:-Demand Response Program (3/4) –
CATEGORIZATION (1/2)
• Demand response programs are CATEGORIZED as:
i. INCENTIVE-BASED (IB) or
ii. TIME-BASED (TB) – [also called Price-based, i.e., pricing schemes based on the time
period].
• The IB-PROGRAMS (IBPs) are further divided into:
i. Direct load control (DLC),
ii. Interruptible/Curtailable (I/C) service,
iii. Demand bidding/buy back,
iv. Emergency demand response program (EDRP),
v. Capacity market program (CMP) and
vi. Ancillary service (A/S) markets.
• The TB-PROGRAMS (TBPs), on the other hand, are further grouped as:
i. Time-of-use (TOU) tariff,
ii. Real-time pricing (RTP) and
iii. Critical peak pricing (CPP). 39
 4.7:-Demand Response Program (4/4) –
CATEGORIZATION (2/2)
• The two (2) types of DR programs: Incentive-based and Time-based programs –
IBP and TBP

• Fig 6: Incentive-Based and Time-Based DR Programs 40

• TIME-OF-USE PROGRAM
 4.7.1: Time-of-Use Program (1/5)

• According to the TIME-OF-USE (T.O.U.) program, a daily load profile may be

grouped into THREE (3) PERIODS. These are:
i. Valley Period,
ii. Flat Period, and
iii. Peak Period
• Also, the DEMAND is one or both of the following:
i. Fixed Loads
ii. Flexible Loads

• In the ensuing slides, we shall give a much more detailed treatment of the
T.O.U.-PERIODS, and then follow them with TYPES OF DEMAND/LOAD
42
• TIME-OF-USE PERIODS
 4.7.1: Time-of-Use Program (2/5) –
TIME-OF-USE PERIODS (1/4)
• Table 1 summarize the TOU periods
• Table 1: Time-of-Use Periods

44
 4.7.1: Time-of-Use Program (3/5) –
TIME-OF-USE PERIODS (2/4) –
Typical Load Profile
• Fig 7 shows the load profile with various TOU periods

• Fig 7: Load Profile With Various TOU Periods 45

 4.7.1: Time-of-Use Program (4/5) –
TIME-OF-USE PERIODS (3/4)
• Valley Period:
i. The Valley Period has comparatively the lowest power (energy demand).
ii. System congestion does not occur in this period
iii. Also, locational marginal prices (LMPs) are at their lowest.
iv. Consequently, the utilities set the energy prices/tariff at the lowest
• Flat Period:
i. The Flat Period is the longest period by duration
ii. A chunk of the power (energy) demand in this period is a combination of industrial,
commercial and residential
iii. For most of the time, bulk customers install static capacitors and other FACTS
devices to help boost their voltage and power factor.
iv. As a result, the energy demand during this period is NOT AS HIGH AS THE PEAK
PERIOD, and NOT AS LOW AS THE VALLEY PERIOD with its matching tariff set
by the utilities 46
 4.7.1: Time-of-Use Program (5/5) –
TIME-OF-USE PERIODS (4/4)
• Peak Period:
i. The Peak Period is the period during which the energy demand is the highest
ii. The demand in this period is mostly residential, when most of the consumers
have closed from work, preparing for the next day activities
iii. HOWEVER, some of the demand here could also be from the commercial
and industrial customers who do shift operations
iv. Consequently, the lines become heavily loaded, leading to congestion.
v. The locational marginal prices (LMPs) increase
vi. And so utilities set their tariffs at the highest

47
• TYPES OF DEMAND/LOAD
 4.7.2: Types of Demand/Load (1/2)
• FIXED LOADS:
i. Fixed loads are the loads that are NOT able to move or be shifted from
one period to another.
ii. Examples are illuminating loads (lights), television sets, and so on.
iii. The fixed loads could only be either ‘On’ or ‘Off’,
iv. Therefore, such loads have a SENSITIVITY JUST IN A SINGLE
PERIOD, called SELF-ELASTICITY defined as:
v. Eii = ratio of change in demand in i-th hour in a period (say valley period)
to change in price in the i-th hour of the same (valley) period,
vi. And the self-elasticity always has a negative value.

49
 4.7.2: Types of Demand/Load (2/2)
• FLEXIBLE LOADS:
i. These are the loads that could be shifted or transferred from
one period to the other, say, from the peak period to the off-
peak or to the flat period.
ii. Examples of flexible loads are heating, ventilation and air-
conditioning (HVAC) equipment, electric vehicles (EV) and so on.
iii. Such loads have SENSITIVITY IN MULTI PERIODS and evaluation
is done by CROSS-ELASTICITY defined as:
iv. Eij = ratio of change in demand in the i-th hour of a period (say
valley period) to change in price in the j-th hour of another period
(say flat period).
v. The cross-elasticity always has a positive value. 50
• EFFECTS OF TOU-DEMAND RESPONSE
PROGRAM ON
(I) PEAK DEMAND, FUEL COST, & LOSSES
(II) LINE FLOWS/CONGESTION MANAGEMENT
 • EFFECTS OF TOU-DRP ON
PEAK DEMAND, FUEL COST & LOSSES
 4.7.3: Effects of TOU-DRP on
Overall Peak Demand, Fuel Cost & Losses
• Consider the application of the TOU-DRP on
IEEE 30-Bus Test System

• The effects on Overall Peak Demand, Fuel

Cost and Losses BEFORE (blue colour) and
AFTER (brown colour) TOU-DRP are shown
in Fig 8.

• Clearly, the application of the TOU-DRP

leads to reduction in those parameters.

• We can thus see the effectiveness of the TOU-

DRP as a demand-side management tool
• Fig 8: Effects of TOU-DRP on Overall Peak Demand, Fuel Cost &
Losses
(specifically, reduction of peak demand)
53
• EFFECTS OF TOU-DRP ON
LINE FLOWS/CONGESTION
 4.7.4: Effects of TOU-DRP on
Line Flows/Congestions
• Consider again the application of the TOU-
DRP on IEEE 30-Bus Test System

• The effects of the TOU-DRP on Line

Flows/Congestion BEFORE (blue colour)
and AFTER (brown colour) TOU-DRP are
shown in Fig 9.

• Clearly, the application of the TOU-DRP

leads to reduction in the line
flows/congestion.

• Again, one can thus see the effectiveness of the

• Fig 9: Effects of TOU-DRP on Line TOU-DRP as a DSM tool (specifically
Flows/Congestion Management congestion relief) 55
• BENEFITS OF LOAD MANAGEMENT

56
 4.8: Benefits of Load Management
• Load management brings in its wake a number of benefits.

• The accrued benefits got to both:

1) the Utility and
2) the Customer.

57
 4.8.1: Benefits of Load Management –
For UTILITY (1/2)
1) Reduction of peak demand thereby producing savings in new investment on
transmission and distribution capacity.
2) Improved load factor on existing plant by making better use of capacity
3) Reduction of losses at system, transmission and distribution levels.
4) Reduction in demand for generation fuels, thus improving fuel availability.
5) Better load forecasting, if elasticity of demand is monitored.
6) Easing of dependence on foreign energy sources, hence enhance national
security.
7) Reduction of load wear and maintenance on entire generation, transmission
and distribution chain.

58
 4.8.1: Benefits of Load Management –
For UTILITY (2/2)
8. Reduction of loading in strategic locations, thus reducing transmission
congestions and other system reliability.
9. Release of generated capacity to serve other customers.
10. Improvement of the electricity system reliability.
11. Lower supply costs to customers, including improved cash flow with
improved billing and metering facilities.
12. Reduction in the need for new power plant, transmission, and distribution
network
13. Reduction in air pollution and other environmentally unfriendly gases.

59
 4.8.2: Benefits of Load Management –
For CUSTOMER (1/1)
1) Reduction in customer energy bills.

2) Prolongs useful life of customer equipment.

3) Saves money since equipment function adequately and bills also reduce.

4) Minimization of inconvenience to the customer.

60
• BARRIERS TO LOAD MANAGEMENT

61
 4.9: Barriers to Load Management (1/1)
1) Energy audits of the various customers not being accessible

2) Inadequate data bank. This causes a difficulty in realizing the load management
practices necessary.

3) Inadequate resources for such projects

4) Inadequate customer education about purpose and benefits of SSM and DSM in
order to solicit the co-operation of the customers.
5) High cost of energy efficient equipment

6) Lack of funding to support load management activities 62

• EXERCISES

63
 4.10: EXERCISES (1/2)
1) State any three demand management practices you know of.
2) Load management is a vital aspect of power system planning. Explain why it is
necessary to undertake load management.
3) Explain the terms demand-side management (DSM) and supply-side
management (SSM).
4) State FOUR (4) EACH of DSM and SSM practices employed by the utilities,
and comment briefly on them.
5) What do you broadly understand by the term “demand response”?
6) Demand response programs may be categorized as incentive-based
programs(IBPs) or Time-based programs (TBPs). Give TWO (2) examples
EACH of the IBPs and TBPs.

64
 4.10: EXERCISES (2/2)
7) In the DR-program, demands may be categorized as fixed or flexible. State
TWO (2) examples EACH of the fixed and flexible loads.
8) Explain the terms “self-elasticity” and “cross-elasticity”, as applied to the type
of load. Comment on the nature of their values
9) State the THREE (3) time-of-use periods adopted in load profiling, and mention
any TWO (2) characteristics EACH of the particular TOU-period.

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 END OF SECTION 4

Jan 2014