UNIVERISTY OF LAGOS

DEPARTMENT OF ELECTRICAL & ELECTRONICS ENGINEERING

EEG 828 LECTURE NOTE

Energy Resources & Management

Lecture 7c: Supply-side & Demand- Side Management

- Fundamentals of Demand-Side management

-DSM activities in utility
-DSM of energy in residential, commercial, industrial & transportation sectors
- Economic analysis of the DSM investment
Energy Resources & Management
EEG 828 Course Contents
– Global energy assessment
– Electrical storage & utilization
– Storage of conventional & non-conventional energy
– Primary & Secondary energy sources
– National/Local energy needs
– Energy conversion processes
– Energy conservation, management, costing & Auditing
– Integration of non-conventional sources into utility
– Economics of conventional & non-conventional
sources of energy
– Economic use of energy storage
 ENERGY MANAGEMENT
Energy management is the means to
controlling and reducing a
building's energy consumption, which enables
owners and operators to:
– reduce costs of operation. Energy represents
25% of all operating costs in an office building.
– reduce carbon emissions in order to meet
internal sustainability goals and regulatory
requirements.
Purpose of energy management
 To achieve and maintain
optimum energy procurement and
utilization
To minimize energy costs and waste
without affecting production & quality
To minimize environmental effects
 Six key steps of an energy management strategy
•  Step 1 - get commitment and appoint
an energy manager
• Step 2 - understand the issues
• Step 3 - plan and organize
• Step 4 - develop an action plan
• Step 5 - involve your staff
• Step 6 - control, monitor and report
 Supply-Side management
• Supply-side management (SSM) refers to
actions taken to ensure the generation,
transmission and distribution of energy are
conducted efficiently
• SSM is used primarily with reference to
electricity but it can also be applied to actions
concerning the supply of other energy
resources such as fossil fuels and renewables
 Demand-Side management
• Demand side management is a mechanism to influence
customer’s capability and willingness to reduce electricity
consumption
• Demand side management is a utility program aiming to
fine-tune consumer’s energy consumption pattern,
according to the utility’s energy production and
distribution capacity
• Demand side management (DSM) programs are utility’s
initiative which involves planning, implementing and
monitoring activities designed to encourage consumers
electricity consumption pattern
 Demand-Side management
• DSM provides enhanced reliability to the energy
system by reducing overall demand through energy
efficiency and by reducing peak demand through
dispatchable programs
 Types of Demand-Side management programs
• Energy Efficiency – emphasis is on reducing overall
energy consumption and also peak demand over
several years
• Peak Load Management – emphasis is on reducing
peak demand consistently over a season.
• Demand Response – emphasis is on reducing peak
demand for short periods of time for a few days
during the year.
 Types of Demand-Side management programs
• Energy Efficiency – emphasis is on reducing overall
energy consumption and also peak demand over
several years
• Peak Load Management – emphasis is on reducing
peak demand consistently over a season.
• Demand Response – emphasis is on reducing peak
demand for short periods of time for a few days
during the year.
Fundamental of DSM & SSM
 Fundamental of DSM
• Energy conservation
• As one of the types of DSM has found great
deployment in the energy management
without reducing the comfort of the energy
consumers while at same time there is the
reduction in the quantum of energy
consumed.
 Fundamental of DSM
• Energy conservation protocol results in saving energy
and/or reducing demand by reducing the level of energy
services, such as:
– setting thermostats lower in rainy season & higher in dry season,
– turning off lights, and
– taking shorter showers
• It involves behavioral changes more than technological
improvements
• It is not as lasting or reliable as implementing energy-
efficiency measures.
 Fundamental of DSM
• Energy efficiency
• This is technology measures that use less energy while
producing the same or better levels of energy services
(such as light, space conditioning, and motor drive power).
• Technologies tend to be long-lasting and save energy
across all times when the end-use equipment is in
operation.
• Depending on the time of use, energy-efficiency measures
can lead to substantial reduction in energy consumed
 Fundamental of DSM
• Demand response
 Fundamental of DSM
• The energy saving potentials can be
evaluated by the following steps:
 Fundamental of DSM:
techniques
 Night-time heating with load switching.
 Direct load control: remotely controllable switch
that can turn power to a load or appliance on or off.
 Load limiters: limit the power that can be taken by
individual consumers.
 Commercial/industrial programs: i.e. load-
interruptible programs.
 Fundamental of DSM:
techniques (contd)
 Frequency regulation: dealing with fluctuation in frequency.
 Time-of-use pricing: reflect the production and investment
cost structure where rates are higher (lower) during peak
(off-peak) periods.
 Demand bidding: customer reduces the consumption of
electricity at a certain predetermined price.
 Smart metering: tracking amount of electricity using to
manage costs and consumption.
 Fundamental of DSM:
Load shape objectives

Flexible load shape

Load shifting
 Fundamental of DSM:
BENEFITS
• Environmental benefits
• Load controls
• Cost effectiveness
 Fundamental of DSM: cost
effectiveness

• Measures the relative performance or

economic attractiveness of an energy-
efficiency investment compared to not
making the investment (baseline).
• Compares present value of costs and
benefits of efficient equipment with those
of baseline (non-efficient) equipment.
 Fundamental of DSM:
avoided cost

• Represents estimates of current and future

costs for energy on the margin – If
considering DSM as an alternative, may
consider the new supply cost in lieu of
avoided costs
• Avoided cost components typically include:
– Generation/Fuel
– Peak capacity
– Transmission and Delivery capacity
 Fundamental of DSM: Time
of value
• Interest: The cost of using capital; the price
of money or the compensation to be paid to
its owner for its use over time

• Time Preference: Assigning different values

to essentially the same item according to
when it takes place (take possession of the
item) 1 $ Today ≠ $ Tomorrow (Even in an
inflation-free world)
 Fundamental of DSM:
• Net Present Value (NPV):

• Benefit Cost Ratio (BCR):

BCR
 Fundamental of DSM:
Levelized cost of energy
 Fundamental of DSM:
Capital cost of project
• This is derived a weighted average from composition of
capital pool
• The weighted cost is often set as the minimum boundary
for minimum rate of return
• The actual rate of return expected from new investment is
normally greater than cost of capital with:
– Rate of return depends on the risk involved
– Riskier projects are subject to higher rate so as to compensate
for the chances that they will not meet the net return
expectations
 Fundamental of DSM:
Capital cost of DSM project
• This is derived a weighted average from composition of
capital pool
• The weighted cost is often set as the minimum boundary
for minimum rate of return
• The actual rate of return expected from new investment is
normally greater than cost of capital with:
– Rate of return depends on the risk involved
– Riskier projects are subject to higher rate so as to compensate
for the chances that they will not meet the net return
expectations
Supply-side & Demand-
Side Management
 DSM activities in electricity
utility: Load management
• Load management is the process of balancing the supply
of electricity on the network with the electrical load by
adjusting or controlling the load rather than the power
station output.
• This can be achieved:
– by direct intervention of the utility in real time
– by the use of frequency sensitive relays triggering circuit
breakers (ripple control)
– by time clocks, or
– by using special tariffs to influence consumer behavior
 DSM activities in electricity
utility: Load management
• Load management allows utilities to reduce
demand for electricity during peak usage times
• Load management can also help reduce harmful
emission
 DSM activities in electricity utility:
Load priority technique
• Load Priority Technique works on individual loads
priority for operation (in service and out of service)
• The load priority could also be connected directly
with the rate communication system (i.e., differential
tariff system)
• In developing load priority technique, non-
interruptible loads are classified as high priority loads
• interruptible loads are classified as low priority loads.
DSM activities in residential, commercial,
industrial & transportation sector
DSM activities in residential, commercial,
industrial & transportation sector
DSM activities in residential, commercial,
industrial & transportation sector
 DSM activities in residential,
commercial, industrial & transportation
sector
DSM activities in residential,
commercial, industrial &
transportation sector
Any Queries / Questions