Ther e are several unique features of power sector DSM which make bothits evaluation and implementation very different from power supply options.These unique features present a challenge to power sector planners. Demand side programme implementation is action oriented. It requires a utility to intervene in the marketplace in order to help realize the DSM programme objectives.
There may be obvious country benefits from DSM (investment deferred, and environmental and social benefits, etc.) but there may not be enoughincentives for utilities to invest in DSM programmes or consumers to invest in more efficient technology.
Some of the barriers to DSM and energy efficiency are:
• lack of awareness about saving potential;
• lack of widespread education and training;
• economic and market distortions;
• lack of standardization and labelling on equipment/devices; and
• lack of financing.
The core of DSM implementation is the provision of DSM services. This can be a costly ongoing utility responsibility. Estimates of these costs are necessary in the evaluation stage.DSM involves actions and investments by energy consumers as well as government and electrical utilities. DSM therefore has two main cost components – the cost of the new end-use technologies and practices themselves, plus the administrative and transaction costs of the programme or policy to encourage (leverage) their use. The benefits of DSM depend mostly on energy saved, and therefore they are strongly related to the costs and environmental and social impacts of the displaced energy supply source.Thus, funding of DSM programmes is a major issue.
Another central issue in DSM programme implementation is the acquisition of participants. There are many methods and “channels” for gaining this participation. Some examples are bill inserts, direct customer contact, web-based enrolment, and advertising via television, newspapers, radio, and brochures. Incentive payments and rebates are often offered to participants.Coalitions are formed with end-use technology dealers and manufacturers.Special rate designs may be made available to programme participants to induce desired changes in customer behaviour, equipment choices and load profiles. These methods can be used in any combination. Arriving at the most cost-effective mix of implementation techniques is indeed a challenge for the power utilities.
The size of the electricity and demand savings from a DSM programme depend on the response of the end users of energy. This in turn depends on the regulatory or other measures used to overcome market barriers that might limit users’ participation. The sustainability of savings after a DSM programme has been completed also depends on both the life of the end-use technology and the degree of market transformation achieved during the programme.Certain suggestions are outlined here to meet the challenges in implementing DSM programmes.
An appropriate policy, regulatory and pricing environment must be put in place to make investments by energy consumers and powe rutilities cost effective in a market context.There is a basic need to define respective roles of private sector, utility, regulators and government, and to have them all working in a complementary manner. Prior to this it is necessary to understand the capabilities of each. When utilities and industries act as partners, they can work to develop win-win programmes that meet everyone'
s needs.Replicating successful utility/industry partnerships that result in part in energy savings could contribute to the competitiveness and strength of both industries and utilities in the future.
The Regulator should ideally avoid providing disincentives for utilities to pursue DSM. At a minimum the utilities should be ‘held harmless’ (i.e.revenue neutral) from reductions in energy throughput attributable to DSM. Ideally the Regulator can develop a reward system to provide a profit motive for utilities to pursue DSM. Regulators must consider balancing the aspirations of people with the structure of the market. DSM policies that do not have public support are not likely to succeed.The residential sector is often the major source of system load factor problems and may require innovative solutions. Utilities should improve data tracking methods, load research and programme evaluation techniques.
More sizeable, discrete opportunities for load management exist in the commercial and industrial markets. These require intelligent metering and modelling to provide the capability to monitor and respond. The quality and quantity of data on energy use patterns should be improved. Utilities should improve industrial DSM programme design by addressing customer concerns, improving marketing techniques, focusing on programme flexibility, and offering financial incentives. Implementation of any DSM programme requires a core DSM staff or “cell”within a power utility to develop a plan for the programme and manage its implementation, even if consultants are hired for both aspects of the programme. Utility DSM staff should receive education and training on industrial process materials and energy flows, the budgeting cycles of different industries/other sectors, the general perspective of all categories of customers, and the links between improved energy efficiency, increased productivity and reduced environmental emissions.
There may be obvious country benefits from DSM (investment deferred, and environmental and social benefits, etc.) but there may not be enoughincentives for utilities to invest in DSM programmes or consumers to invest in more efficient technology.
Some of the barriers to DSM and energy efficiency are:
• lack of awareness about saving potential;
• lack of widespread education and training;
• economic and market distortions;
• lack of standardization and labelling on equipment/devices; and
• lack of financing.
The core of DSM implementation is the provision of DSM services. This can be a costly ongoing utility responsibility. Estimates of these costs are necessary in the evaluation stage.DSM involves actions and investments by energy consumers as well as government and electrical utilities. DSM therefore has two main cost components – the cost of the new end-use technologies and practices themselves, plus the administrative and transaction costs of the programme or policy to encourage (leverage) their use. The benefits of DSM depend mostly on energy saved, and therefore they are strongly related to the costs and environmental and social impacts of the displaced energy supply source.Thus, funding of DSM programmes is a major issue.
Another central issue in DSM programme implementation is the acquisition of participants. There are many methods and “channels” for gaining this participation. Some examples are bill inserts, direct customer contact, web-based enrolment, and advertising via television, newspapers, radio, and brochures. Incentive payments and rebates are often offered to participants.Coalitions are formed with end-use technology dealers and manufacturers.Special rate designs may be made available to programme participants to induce desired changes in customer behaviour, equipment choices and load profiles. These methods can be used in any combination. Arriving at the most cost-effective mix of implementation techniques is indeed a challenge for the power utilities.
The size of the electricity and demand savings from a DSM programme depend on the response of the end users of energy. This in turn depends on the regulatory or other measures used to overcome market barriers that might limit users’ participation. The sustainability of savings after a DSM programme has been completed also depends on both the life of the end-use technology and the degree of market transformation achieved during the programme.Certain suggestions are outlined here to meet the challenges in implementing DSM programmes.
An appropriate policy, regulatory and pricing environment must be put in place to make investments by energy consumers and powe rutilities cost effective in a market context.There is a basic need to define respective roles of private sector, utility, regulators and government, and to have them all working in a complementary manner. Prior to this it is necessary to understand the capabilities of each. When utilities and industries act as partners, they can work to develop win-win programmes that meet everyone'
s needs.Replicating successful utility/industry partnerships that result in part in energy savings could contribute to the competitiveness and strength of both industries and utilities in the future.
The Regulator should ideally avoid providing disincentives for utilities to pursue DSM. At a minimum the utilities should be ‘held harmless’ (i.e.revenue neutral) from reductions in energy throughput attributable to DSM. Ideally the Regulator can develop a reward system to provide a profit motive for utilities to pursue DSM. Regulators must consider balancing the aspirations of people with the structure of the market. DSM policies that do not have public support are not likely to succeed.The residential sector is often the major source of system load factor problems and may require innovative solutions. Utilities should improve data tracking methods, load research and programme evaluation techniques.
More sizeable, discrete opportunities for load management exist in the commercial and industrial markets. These require intelligent metering and modelling to provide the capability to monitor and respond. The quality and quantity of data on energy use patterns should be improved. Utilities should improve industrial DSM programme design by addressing customer concerns, improving marketing techniques, focusing on programme flexibility, and offering financial incentives. Implementation of any DSM programme requires a core DSM staff or “cell”within a power utility to develop a plan for the programme and manage its implementation, even if consultants are hired for both aspects of the programme. Utility DSM staff should receive education and training on industrial process materials and energy flows, the budgeting cycles of different industries/other sectors, the general perspective of all categories of customers, and the links between improved energy efficiency, increased productivity and reduced environmental emissions.
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