demand side management (dsm) a renewed tool for sustainable development a survey of the concept,...
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Demand Side Management (DSM)
A renewed tool for sustainable development
A survey of the concept, development and application
Hans NilssonChairman of the IEA DSM-Programme
DSM is universal and does not only apply to utilities, electricity or monopolies!!
“The planning and implementation of those (utility) activities designed to influence the customer use of electricity /energy in ways that will produce desired changes in the (utilitiy´s) load shape - i.e. changes in the pattern and magnitude of a (utility´s) load.”
The problem is not one but several!
• LOAD LEVEL (Too much supply for a wasteful demand)
• LOAD SHAPE (high peaks, little reserve capacity, bottlenecks in transmission and distribution)
• MARKET RESPONSIBILITIES (who is the owner of the problem?)
Cumulative Energy Investment 2003-2030
Sixteen (16) Trillions USD!!
Power sector absorbs 62% of global energy investment in the period 2003-2030
0 500 1 000 1 500 2 000 2 500 3 000 3 500
OECD North AmericaOECD EuropeOECD Pacific
Transition economiesChina
Other AsiaMiddle East
AfricaLatin America
billion $ (2000)
Coal Oil Gas Electricity
Source WEO 2004
Difference in Electricity Investment in the Alternative vs. Reference
Scenario 2003-2030
Additional investments on the demand side are more than offset by lower investment on the supply side
-2 000
-1 500
-1 000
- 500
0
500
1 000
billi
on d
olla
rs (2
000)
Difference
Additional demand-sideinvestment
Efficiencymeasures Avoided supply-side
investmentGeneration
Transmis-sion
Distribu-tion
Source WEO 2004
Energy-use in the IEA-11
Source: 30 years of energy use in IEA countries
Actual energy use20
40
60
80
100
120
140
160
1973
1980
1985
1990
1995
1998
Exaj
oule
s
49%49%
Hypothetical energyuse without savings
1975
AUSDEKFINFRAGERITAJAPNORSWEUKUS
20%
Additional energy use with1973 intensity = Energy saving
The rise in welfare depends more on energy efficiency improvements than
on growth in energy use!
Energy Efficiency has multiple dividends
• Employment• Industrial development• Poverty alleviation• Holds back prices in
supply• Reduces pressure on
supply reserves
• Cost• Environment/Climate
DSM is a tool to make large scale energy efficiency possible
LARGE-SCALE ENERGY EFFICIENCY
“Mandating” Market Acceptance
StandardsAgreedactions
Delegated
Actions Commitments
Price-responsivecustomers
“Commoditise”for Non Price-responsive
e.g. VoluntaryAgreements;TechnologyProcurements e.g. Muni-
cipalitiesplanning
e.g. Certificates
e.g. ESCO;Labels e.g. Taxes;
DR (elasticity)
e.g. MEPS;Top-runner
Energy Efficiency is the cheapest resource
Negative Costs!
DSM nowadays
• Is more complex and more comprehensive
• Involves more stakeholders
• Gives more opportunities with new technologies
The Mechanics of DSM
PEAK
SHIFT
VA
LL
EY
DSM can Change the LOAD SHAPE
Adapts the load to the capacity of the system
Winter Summer WinterDay Night Day
Before
After
DR and price volatilityP
rice
Load
Supply
InelasticDemand
Price without demandresponse
Demand withEnabling programmes
Price with enablingprogrammes
Load with enabling programs
Load Shape Technology
• Meters ……….BUT ALSO…• Communications ………..AND• Software for calculation, billing,
verification, settlement ………AND• Pricing structure…………AND• Institutional models……..AND• End use capacity to accommodate (e.g.
Storages)
New paradigms – Distributed Generation
Source: Distributed Generation In Liberalised Electricity Markets. OECD/IEA 2002
Bypass congestion
Reduce losses
Enables use
Stimulatescompetition
Strategicgrowth
From this StrategicSaving
To ThisTo This
Or toOr tothisthis
DSM can change the LOAD LEVEL
Adapts the system to the environmental requirements
Shift from “carbon-fat” to “carbon-lean”systems (e.g. fuel to electricity)
The value chain used to be vertical..
RetailerNetwork
Regulated monopolyGenerators
Transmission
DistributionSupply
End-use
kWh-
VALU
E
…but with liberalisation the value chain is fragmented
RetailerNetwork
Unbundled full competitionWholesale market
Indepen-dentRetailers
Broker
Generators
Transmission
DistributionSupply
End-use
Source: An EPRI Initiative to Advance the Efficient and Effective Use of Energy
New Technologies
Business interest in DSMActor Peak Load Load Level Remark
Generation company
No (prices are set on the margin)
No (loss of sales) Windfall profit may be regarded to be too high by authorities
Systems responsible (regulator)
Yes (to avoid systems break-down)
Possibly regional and in special situations (to avoid bottlenecks and to maintain systems to develop as planned)
Very different organisation between countries.
Transmission and Distribution
Yes (to maintain systems and avoid bottlenecks)
See above
Energy supplier
Yes (as a business opportunity to shift loads and operate in pools)
Yes ? (primarily as a marketing instrument)
Where “white certificates” and commitments are introduced they concern the load level operations from these actors.
IEA DSM-Programme tasks pertaining to utilities
Task II, VIII, XI, XIII, XV and XVII
Task I, VI, VII, XIV and XVI
-
Density in supply
Intensity inenergy use
Low -intensity•LED •Low -temp. heat
Medium•CFL•Heat Pump
High•Incand . lamp•El. heating
ConcentratedFossil, Nuclear
DecentralisedLocal e.g.Biofuel
Scatterred•PV, •Solar heating
OK
Hardly justified
OK OK
Very difficultMay work
OK
May work
OK
More
flexible
A sustainable system combines energy efficiency and renewable energy
Is sustainable growth possible…
..without DSMand without global co-operation?
The IEA DSM-Programme can assist you with, e.g.
1. ASSESSMENTS and EVALUATION of the DSM-situation (opportunities, organisation, potentials, technologies, training,incentive structures, etc.)
2. TRAINING of staff (for planning, programme-design, evaluation etc.)
3. TROUBLE-SHOOTING (and suggestion for programme development)
4. PROGRAMMES (target technologies, impact analysis)
5. PROJECTS (Technology Procurements, ESCO-development, DR-implementation)
www.ieadsm.org