Electric Power Generation: Supply Side Economics or Demand Side Management

Prayas Energy Group1

Electric Power Generation: Supply Side Economics

or Demand Side Management

Sreekumar N

Prayas, Energy Groupwww.prayaspune.org

[email protected]

DCIS, Mysore

September 18, 2006


About Prayas Energy Group

Based at Pune, India Research based, policy advocacy NGO Focused on protection of “Public Interest”

– Especially in policy decisions and actions – With a long term sectoral perspective

Activities– Research and intervention (regulatory, policy)– NGO training, awareness, and support


Interaction Plan

Context: Economy to Energy to Electricity Planning and Integrated Resource Planning Demand Side Management Energy Audit The win - win - win option


Power Sector

Economy to Energy to Electricity– India is a land of contrasts– Half the population depends on ‘non commercial’

energy– 86% of rural households use firewood/dung cake for

cooking (NSS survey, 2000)– Half the total supply of commercial energy is used for

electricity generation– Per-capita consumption is low, but High Consumption

model will not work– Electricity is a versatile, clean, cost effective energy

Context


Half the population depends on ‘non commercial’ energy

Half the mankind (3 b) live on < $2/day

One-third have no access to commercial energy

Sub-Saharan Africa, <20% have access to electricity

Poor spend one-third income on energy

Context


Commercial Energy

Commercial Energy Supply

51%36%

9%

4%

Coal

Oil

Gas

Hydro + Nuclear

Coal

Oil

Gas

Hydro + Nuclear

Context


Electrical Energy

Electrical Energy Consumption

24%

42%

3%

25%

6%

Agriculture

Industry

Transport

Domestic

Others

Industry

AgricultureDomestic

Others

Transport

Context


Power System

Context


Planning

Preparation for tomorrow Based on

– Experiences of Yesterday– Aspirations for Tomorrow

Power sector planning– Generation– Transmission & Distribution– Utilisation– Support systems

IRP


Planning – Conventional approach

Development

Economic Growth

Energy GDP correlation

Energy as an end

Demand projection

Supply planning

IRP


Integrated Resource Planning (IRP)

Developed in 1980s Also called Least Cost Planning (LCP) Practised by only few utilities

“ IRP: A planning approach that considers both supply and demand side options to meet the requirement for a resource, while minimising the costs to the utility and society”

IRP


IRP

Demand projection– Energy service is important, not Energy

Water for irrigation, NOT just electric pumpsets Hot water, NOT just electric heaters Light at work place, NOT just electric lights

– End use efficiency is part of planning Lighting, Motors etc for energy reduction Peak load reduction by Load management

– Development orientation Not just based on growth trends Promotion of agriculture, small industry, rural households

– South Africa household electrification: 40% (1993) to 70% (2003)

IRP


IRP - Continued

Supply options– Conventional, large centralised– Non-conventional

Small hydro, co-generation

– Environmental sustainability addressed Proper costing of relief & rehabilitation

– DSM as a supply option

Minimise cost to Society, not just to Utility

IRP


Conventional Planning Vs IRP

Conventional IRP

Supply Side orientation End-use orientation

Demand taken as ‘given’ Policy / DSM to modify demand

Minimises cost to utilityMinimises cost to utility,

consumer and society

Only Centralised, conventional

supply options considered

Decentralised, non-conventional options ALSO considered

IRP


IRP Case studies from India (Karnataka 1990) – HT End use

12%1%

72%

15%

Electrolysis

Lighting & Cooling

Motors

Process Heating

IRP


IRP Case studies from India (Karnataka 1990) – Rich Domestic (AV= 200 Units/Month) End use

Lights

Iron

TVRadio

Fan

Refrigerator,

Grinder

Water heater

Other

Cooking

IRP


IRP Case studies from India (Karnataka 1990) – Poor Domestic (AV= 33 Units/Month) End use

Lights

Iron

TVRadio

Fan

Other

IRP


IRP Case studies from India - Karnataka

End use efficiency savings– Industry modernisation–efficient drives etc: 15-25%– CFL for lighting : 14-58%– Solar Water heaters: 28%– LPG instead of electric stoves: 18%– Frictionless foot-valves and HDPE piping for

agriculture pumps: 30%

IRP


IRP Case studies from India

Karnataka 1990– Energy Requirement : 66%– Power Requirement: 50%– Total Cost: 40%

Maharashtra 1994– Energy Requirement : 60%– Power Requirement: 50%– Total Cost: 60%

IRP


Demand Side Management (DSM)

Planning, Implementation and Evaluation of programs to influence the Amount or Timing of energy usage by consumers

DSM


DSM Vs SSM

Demand Side Management

Supply Side Management

After the consumer meter Before the consumer meter

- Reduce Power- Reduce Energy- Shift time of use

No reduction in service quality

- Increase generation capacity- Improve generation efficiency- Reduce T&D loss

DSM


Why DSM?

Peak Shortage (11.7%), Energy Shortage (7.3%)

T&D Loss is proportional to the Square of Current

Incremental generation cost highest during peak load period

Nega Watts cheaper than Mega Watts

DSM


What is DSM?

Load Management– Reduce Peak Load

– Shift loads from Peak to Off-peak hours

– Increase load during Off-peak hours

Energy Conservation– Energy Audit

– End-use Efficiency improvement

– Energy Management at Consumer location

DSM


DSM Techniques

Involves Utility, Consumer and Equipment manufacturers

Energy service is the key, not energy itself Ensure same energy service to consumers Direct & Indirect techniques

DSM


DSM – Energy Conservation: Energy Audit

Analysis of energy input,output and energy usage by different sub-systems over a period of time and giving recommendations to reduce energy use or alter the electric demand profile.

Energy Audit


Energy Audit

Promoting efficient devices Enforcing energy efficient standards - BEE Distribution Loss reduction (Some include this) Energy Management Awareness Campaigns

Energy Audit


DSM - Thailand Case

World Bank/UNDP Project 1993 - 2000, US $ 189 Million Residential, Commercial and Industry Sectors

Target ActualMW GWh CO2 -

mTonnesMW GWh CO2 - m

TonnesLighting 139 759 399 1973Refrigerator 27 186 84 849Airconditioner 22 117 84 318Others 50 365 0 0Total 238 1427 1.16 566 3140 2.32


An SEB Case

DSM Potential: Peak demand reduction of 1543 MW, Energy reduction of 6090 MU in 2001

Cost of DSM for Utility = 3465 Cr Cost of DSM to participants = 1388 Cr

(Jyoti Parikh & Others on MSEB, IGIDR, Mumbai 1994)


An SEB Case (Cont’d)

DSM Options– Energy Efficient Motors– Variable Speed Drives– House Keeping measures– Use of Waste heat – Improvement of Electric Arc furnaces– TOD Tariff– Sodium Vapour Lamps, CFLs, Electronic Ballasts– Efficient Pumps and Fans– Power Factor Improvement– Industrial Co-generation


CFL Example

Watts Light -Lumens

Cost Rs Life-Hours

No ofhours/day

Units/Year

Bulb 60 700 10 1000 4 88CFL 15 700 200 7000 4 22

CFL is costly by 3 (not 20) times

Energy bill of CFL is one-fourth

CFL option is 2-3 times economical


The win-win - win option

Consumer– Lower energy bill– Better power quality

Utility– Saving in Generation, T&D investment– Loss reduction

Society– Better Energy service, faster– Eco friendly


Barriers for IRP/DSM - Actors

Energy Consumers Equipment manufacturers Energy Producers Energy Distributors Government – policy, standardisation Funding agencies


Barriers for IRP/DSM

Low awareness– Need more groups like Energy Conservation

Mission (www.save-energy-survive-tomorrow.com)

Bias towards big projects– 100 MW generation plant

Rs. 400 Cr, 1 Project, 1 Site, Few hundred people

– 100 MW saving thru DSM Rs 100 Cr, Few hundred projects, Thousands of locations,

Thousands of people


Barriers for IRP/DSM

Poor system data availability– Metering for accountability

Lack of focus (planners, utility, manufacturers, consumers, researchers)– High emphasis on load shedding– Absence of Life Cycle Costing approach– Tackling one time cost (eg CFL, efficient pumpsets)– Low correlation of demand to tariff


Closing word

What can We do?What will they do?

Supply Side or DSM?

Neither, IRP!!

Electric Power Generation: Supply Side Economics or Demand Side Management

Documents

Transcript of Electric Power Generation: Supply Side Economics or Demand Side Management