Issues In Dsm Implementation

There are various unique features of power sector DSM that make both its evaluation and implementation extremely various from power supply options. These unique features present a challenge to power sector planners. Demand side programme implementation is action oriented. It needs a utility to intervene in the marketplace in order to help realize the DSM programme goals.

There may be obvious country advantages from DSM (investment deferred, and environmental and social benefits and etc.) but there might not be sufficient incentives 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 could be a costly ongoing utility responsibility. Estimates of these costs are essential in the evaluation stage. 

DSM includes actions and investments through energy consumers as well as government and electrical utilities. DSM thus has two major 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 advantages of DSM depend mostly on energy saved, and thus they are strongly associated to the costs and environmental and social impacts of the displaced energy supply source.

Therefore, funding of DSM programmes is a main issue.

Another central issue in DSM programme implementation is the acquisition of participants. There are several methods and "channels" for gaining this participation. A few examples are bill inserts, direct customer contact, web-based enrolment, newspapers, and advertising via television, radio, and brochures. Incentive payments and rebates are frequent offered to participants. Coalitions are created along with end-use technology dealers and manufacturers. Special rate designs might be made available to programme participants to induce desired modification in customer behaviour, equipment choices and load profiles. These techniques can be used in any combination. Arriving at the most cost-effective mix of implementation methods is indeed a challenge for the power utilities.

The size of the demand savings and electricity 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 which might limit users' participation. The sustainability of savings after a DSM programme has been done 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 within implementing DSM programmes.

1. An appropriate policy, regulatory and pricing environment must be put in place to make investments through energy consumers and power utilities cost effective in a market context.

There is a basic requirement to describe respective roles of private sector, utility, regulators and government, and to have them all working in a complementary manner. Prior to this it is essential to understand the capabilities of each. While utilities and industries act as partners, they could work to develop win-win programmes which meet everyone's requires. Replicating successful utility/industry partnerships which output in part in energy savings could contribute to the competitiveness and strength of both industries and utilities in the future.

2. The Regulator should ideally prevent providing disincentives for utilities to pursue DSM. At a minimum the utilities should be 'held harmless' (that is revenue neutral) from reductions in energy throughput attributable to DSM. Ideally the Regulator could develop a reward system to give a profit motive for utilities to pursue DSM. Regulators must consider balancing the aspirations of people along with the structure of the market. DSM policies which do not have public support are not likely to succeed.

3. The residential sector is frequent the main source of system load factor problems and might require innovative solutions. Utilities should improve data tracking methods, load research and programme evaluation methods.

4. More sizeable, discrete opportunities for load management exist in the commercial and industrial markets. These need intelligent metering and modelling to give 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 through addressing customer concerns, improving marketing techniques, focusing on programme offering financial incentives, and flexibility.

5. Implementation of any DSM programme needs a core DSM staff or "cell" inside 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 procedure materials and energy flows, the budgeting cycles of various industries/other sectors, the common perspective of all categories of customers, and the links among improved energy efficiency, increased productivity and decreased environmental emissions.