A study to assess different ways in which power markets can promote demand side management
Student name: Ms Vrinda Sarda
Guide: Dr Arabinda Mishra
Year of completion: 2013
Host Organisation: Shakti Sustainable Energy Foundation
Supervisor (Host Organisation): Ms Natasha Bhan
Abstract: The Indian power sector is plagued by a large number of challenges like chronic
power shortages, delays in generation capacity addition, poor financial health of
the utilities, high distribution inefficiencies and shortage of balancing capacity
among many others. While it is important to strengthen and augment the supply
side infrastructure to overcome these barriers, these measures are time incentive
and have longer gestation periods. So there is a need to complement these efforts
with measures that can yield quicker results. Demand Side Actions which are
consumer’s actions beyond the utility meter to alter the use of electricity is one
of the fastest, cleanest and cost effective ways to meet energy service needs.
The project aims to understand how Demand Response programmes can provide
an opportunity to the consumers in India to curtail their demand using a market
platform. As a part of the study, a working model of one of the most developed
wholesale electricity markets, PJM was studied followed by markets in
California and Australia. A comparative analysis was then used to highlight the
critical differences between the power sector levers of a developed market and
an Indian power market based on 14 parameters.
The study advocates for a need of an explicit regulatory measure that mandates
utilities to serve load and followed by the evolution of capacity mechanisms
which can accommodate efficiency and demand reduction as system resources.
Further analysis of the five grid regions of India showed that the Northern
region provides the best scenario where energy needs can be met by first
prioritising investments in energy efficiency and demand response resources,
followed by other resources for electricity supply. The study also concluded that
during the time of peak demand, a Demand Response event can cost effectively
meet the peak requirements of a state as well as provides stability to the grid.
Key Words: Demand Side Management (DSM), Demand Response (DR),
PJM, Capacity Markets, Energy Efficiency
