E N The Policy Framework for Energy SectorNeed for Demand Side Management

E N E R G Y E C O N O M I C S

98 T H E I I P M T H I N K T A N K

G BhalachandranDepartment of Economics, Sri Sathya Sai University, Prasanthinilayam

Ram P. AnejaFormer Managing Director, NDDB, Anand, Gujrat, Visiting Professor, Department of Economics, Sri Sathya Sai University,Prasanthinilayam

S. SubramanianResearch Scholar, Department of Economics,Sri Sathya Sai University, Prasanthinilayam

D Y N A M I C D E M A N D

99T H E I N D I A E C O N O M Y R E V I E W

Policy Framework For Energy Sector:

The Need for Demand Side Management

1. Introduction:Energy economics studies about the production, distribution exchange and consumption of energy resources and energy commodities and their subsequent economic effects in an economy. In the parlance of physical science, energy refers to the capacity for doing work, where as in economics, energy includes all energy commodities, energy resources and com-modities or resources that embody signifi cant amounts of physical energy providing the ability to perform work1. Energy is classifi ed as an essential good because in economics, an essential good is one for which the demand remains positive, no matter how high its price soars2.

In modern times, economic growth the world over, is driven by energy, obtained either from fi nite resources such as coal, oil and gas or in renewable forms such as hydroelectric, wind, solar and biomass, or their converted form, electricity. This energy generation and consumption supports agricultural sector, power a nation’s industries, vehicles, homes and offi ces. This process has signifi cant impact on the quality of the air, water, land and forest resources around. That being the case, for future growth of an economy, to be both rapid and sustainable, it needs to be as resource-effi cient and environmentally benign as possible. In this paper, an attempt is made to think aloud how by tuning the Demand Side Management (DSM) of Indian energy sector, the desired goals can be realised.

2. Indian Energy Sector: An Overview:With a humble beginning in 1880s, the Indian Energy Sector has come a long way. India is the fi fth largest consumer of energy in the world, accounting for 3.7 per cent of the world’s energy consumption. Its total primary energy demand is

expected to get doubled by 2030. It hardly requires any empha-sis to say that poverty reduction and economic growth are the prime objectives of the national policy of a less developed country (LDC). With a GDP growth rate of 7.9 per cent during the second quarter of fi scal year 2009-103, India has risen as one of the leading economies of the world even during the current phase of recession the world over. At this juncture, the future levels and patterns of energy use in India, is bound to have important implications, which must be viewed at the national level, more in terms of environmental impacts of energy use, issues of access and equity and at the global level in

terms of geopolitics of energy supply and Green House Gases (GHG) emissions related to the combustion of fossil fuels.

However, India’s dream rate of economic growth, 10 per cent per annum, would certainly require a major provision of infrastructure and enhanced supply of inputs, including energy in the economy on the whole. In other words, the high rate of economic growth would create much larger demand for energy and this would pressurise the country to

have a variety of choices in terms of supply possibilities.World oil production peaked in July 2008 at 74.82 million

barrels/day (MBD)4. India’s share in it was about one per cent whereas in consumption, its share was 3.3 per cent of the total world oil consumption of 3,953 million tonnes (MT). In the case of production and consumption of natural gas, India’s share was to the tune of one per cent and 1.4 per cent respec-tively5. India’s projected production of crude oil during the Eleventh Five-Year Plan (2007-2012) is expected to be 206.76 MMT, while that of natural gas is estimated at 255.27 BCM. India’s domestic demand for oil and gas is continuously on the rise. As per the estimates of Ministry of Petroleum, the demand

India’s projected production of

crude oil during the 11th Five-Year Plan (2007-2012) is expected to be

206.76 MMT



for oil and gas is likely to increase from 186.54 million tonnes of oil equivalent (MMTOE) in 2009-10 to 233.58 MMTOE in 2011-126.

India’s primary commercial energy consumption in 2008 stood at 433.3 MTOE and it comprised coal, oil, gas, and electricity generated from nuclear, hydroelectric, and renew-able sources7. At least three-quarter of rural households in India (668 million people) use traditional biomass fuels, fuel wood, animal dung or agricultural residues, for cooking and heating8. This use is expected to grow to the level of 215 MTOE by 2030, though its share in the total primary energy consump-tion is expected to drop from the current share of 34 per cent to 21 per cent9.

In recent years, India’s energy consumption has been growing at a faster rate like the trend found in the other growing economies of the world, due to its population growth and the stimulus packages provided by the government. Over the years, the Indian energy sector has been regulated and it is largely owned by government agencies and to a limited extent by the corporates. Of late, Government of India has recognized the need for energy

security for the nation and top priority is assigned in the plan targets to achieve energy independence in future.

3. The Area of Concern:The energy policies that have been adopted in India ever since Independence to serve the socio-economic priority of her development have encouraged and sustained much ineffi ciency in the use and production of energy. India has been paying the highest prices for energy in purchasing power parity terms10. This has resulted in the erosion of the competitiveness of many sectors of the economy. The challenge before the country is to ensure adequate supply of energy at the least possible cost. Another important challenge that India has is to provide clean and convenient lifeline energy to the poor, which is critical to their well-being, even though they cannot fully pay for it. This calls for an effective and comprehensive energy policy.

The power supply position prevailing at present in the country is characterized by persistent shortages, unwarranted power cuts and high-cost energy for the industrial consumers, especially. Moreover, India depends on imported oil to the

extent of 70 per cent11 and this naturally causes anxiety about energy security. These concerns were exacerbated when there was volatility in the international oil prices during the mid-200812. Though most electricity is domestically produced, its supply depends upon several external factors like availability of coal, exploitation of hydro power sources, the scope for expanding nuclear power, etc. and there are many constraints affecting each one of these sources.

Achieving an effi cient confi guration of the various forms of energy requires consistency in the policies that govern each segment of the energy sector and supported by a productive pricing system with regard to different types of energy sources. The policy initiative must ensure energy security, the line on which research and development is expected to be carried out, environmental safety, energy conservation processes, etc. It will be more effective if these issues are addressed in an integrated

manner. This, of course, is a broad overarching framework for guiding the policies governing the production and the use of different forms of energy from various sources optimally.

4. Current Shortages of Power in India:Currently, India produces 147,000MW13 of power and it needs to add an addi-tional capacity to produce 78,000 MW14 to meet the demand of the population

projected for 2012. This will certainly incur an additional investment to the tune of US$ 100b over a period of time. The average energy and peak shortage in the country are of the order of 9.3 per cent and 12.6 per cent respectively15.

The frequent power cuts across the country have led to an additional investment on the standby generators by the industries and power-inverters by the households. This is nothing but the duplication of investments at the societal level, amounting to an increase in the capital cost and operational cost of power production in the economy on the whole. Moreover this process adds to air pollution too, and results in an ineffi cient production of electricity in general. This can be streamlined if the peak hour pressure is reduced. One has to remember here that an uninterrupted, low cost power supply would not only improve the competitiveness of the industrial sector but also ensure a steady employment growth of the

The T&D losses in power sector is to the tune of 40%, while the admissible loss

could be no more than 20%



economy.Some of these problems of shortages can be rectifi ed by the

supply side management usually. The ultimate solution to this problem is, of course, to increase the capacity of the power sector and accentuate the supply of electricity. But, this is a time consuming process and will not give a helping hand to mitigate the problem in short-period. It has been estimated that the transmission and distribution (T&D) losses in power sector is to the tune of 40 per cent16 while the admissible loss could be no more than 20 per cent17. This problem can be tackled through the privatization process of T&D of electricity. But no progress could be seen in this line on account of the infl uence of the vested interest.

Generally, the shortage of power experienced during day time is compensated by free and subsidized power during the off-peak hours like late night. The Indian experience is different since there is an overall shortage of power supply in the country. When the free or subsidized power is provided to agricultural sector, the framers draw water more than their required quantity and this leads to over exploitation of the national resource.

Most of the advanced countries manage the peak hour demand for power by generating more power from different sources during that time. Their techno-logical advancement and management skills do support them to manage the fl uctuation in demand at ease, of course, with enormous effort and cost. Moreover, they have excess capacity in their power plants. But, India has to go a long way to think of managing its shortage of power on the line in which advanced countries have planned and executed their activities.

But, the short-term remedy one can suggest here is the DSM, which is simple to administer and effective in response.

5. Demand Side Management, Defi ned: The streamlining process of electricity markets in developing and the developed countries has to face several challenges, largely due to the uncertainties in the load growth, lumpy investments required in capacity addition, declining non-re-newable fuel sources, coupled with their high environmental costs. Tariff changes, due to the changing regulatory stands,

also affect the ability of utilities to service their customer base. At this juncture, DSM is recommended with a view to address-ing the impinching problems of global warming, the need for sustainable development and to improve the level of energy

effi ciency18. DSM entails actions that infl uence the quantity or patterns of use of energy consumed by end users, such as actions targeting reduction of peak demand during periods when energy-supply systems are constrained19. Peak demand connotes a period of strong consumer demand20. Peak demand

management does not necessarily decrease the total energy consumption, but could be expected to minimize the need for additional investments21 in the generation of electricity.

Load management is defi ned as the sets of objectives de-signed to control and modify the patterns of demand of various consumers of a power utility. This control and modifi cation enables the supply system to meet the demand at all times in

the most economical manner. Load management can be applied to all the loads experienced by a power utility which varies by day, month and seasons. This means that load on the system is always changing with the time and is never constant. Thus, power utilities always keep an eye on the average load and maximum load of their system22.

5.1 Techniques of Peak Load Management:

The following three techniques are suggested under the Peak

Load Management Strategy.• Peak Clipping (reduction in the peak demand): It means

reduction of load during peak periods to get the load profi le as desired by the utility. When the usage of electric appli-ances by the consumers is at its maximum, this direct control can be used to reduce the capacity requirements, operating costs, and dependence on the critical fuel. Peak clipping becomes essential, especially for those utilities that do not possess enough generating capabilities during the peak hours.

• Valley Filling (increased demand at off-peak): It is the second classic form of load profi le-shape change technique. Valley-fi lling is the improvement of the system load factor by building load in off-peak periods23.

• The third technique of load-shape change is load shifting

When the free or subsidized power

is provided to agricultural sector, the framers draw water more thanrequired quantity



(demand shifting to non-peak period), which moves peak loads to off-peak time periods without necessarily changing the overall consumption. Load shifting combines the benefi ts of peak clipping and valley fi lling, by moving the existing loads from the on-peak hours to off-peak hours. Load shifting typically does not substantially alter the total electricity sales24. These three techniques of load management are diagram-

matically presented in Fig 1.Conservation and demand management can go hand in hand

to make the best use of the existing electricity resources and it would certainly contain the pressure on demand. Moreover, there are tremendous opportunities to reduce the supply-de-

mand gap through the wise use of electricity too. Conservation is the reduction of utility loads, more or less equally, during all or most hours of the day25. This process is expected to produce

the following internal and external economies of scale.• Better usage of existing generation and distribution infra-

structure.• Less effi cient/ environmentally unfriendly generation

process can be de-commissioned. • Minimizing the generation, transmission and distribution

losses. • Reducing the intrusive load shedding. • It facilitates better maintenance. • Spill-over effect of the local economic development.• It ensures less black-out. • The overall effi ciency in energy system improves.

The impact/effect of DSM can be better understood through the following case studies.

5.2 Smart Meter: A smart meter is an intelligent energy meter that identifi es the consumption of electricity in a more detailed manner. It provides details about the regular consumption of electricity, along with the processing and feed back of consumption data to the customer26. A smart meter is also referred to as interval or time-of-use meters. It uses a sophisticated technology-mix, such as real-time or near real-time sensors, power outage notifi ca-tion, invariably cutting the power connection if misused or bypassed, and power quality monitoring27. The utilities compa-nies elsewhere charge a fee of around US$ 5328 per customer to install this meter.

There are many factors that infl uence the pricing of electric-ity. One of these is the season in which electricity is used. In western countries, electricity charges are generally higher in winter and summer than they are in the spring and fall. Another factor is the time of the day. Electricity charges tend to be higher in late afternoons and early evenings when the demand

Peak

Cli

pp

ing

Val

ley

Filli

ng

Load

Sh

ifti

ng

Fig. 1: Load Management Techniques.

Source: Zahir J. Paracha and Parviz Doulai (1998), pp. 215-216.

Pric

e

SAMPLE ENERGY COSTS (In cents per kilowatt-hour)

Cost Savings

Without Interval Meter

With Interval Meter

Fig 2. Difference in Energy Cost Due to Smart Meter

24 hours

Source: Ontario’s Independent Electricity System Operator (IESO) The bottom line of energymanagement, p 5.



is in peak. The third factor is the source of electricity: some being much more expensive to run than others. When the demand for electricity is high, more expensive generation is needed to meet that demand, and it naturally pushes up the cost of power. In the wholesale electricity market, interval meter

devices measure and record electricity use, over a given period of time.

A smart meter is equipped with the ability to control energy costs by moving some of electricity uses to off-peak periods or by lowering energy use during peak-periods. The purpose of this mechanism is to rationalize the consumption behaviour and to support the consumers to get the best from the utilities (See, Fig 2). The consumers who are successful in altering their consumption behaviour in an intelligent way will be rewarded with lower energy costs. With smart meters and a smart price

plan, consumers can be empowered to have surplus budgets at home.

Several utilities across the world have been benefi ted through DSM initiatives like one that of fi xing smart-meters in households and there are now, numerous supportive devices under DSM. Some utilities have undertaken many pilot DSM programs but they are yet to be implemented in full measure.

5.3. Puget Sound Energy (PSE)’s Experiment:When power prices are volatile or supplies are short of de-mand, reducing the peak- loads becomes a top priority for utilities. Billing customers for energy, based on the time of the

day, has proven to be a viable means for reducing the peak

loads. Puget Sound Energy’s pilot study at the Washington state is one of the fi rst fi eld trials of time-of-use tariffs and automated meter reading technologies which can be cited here for a better understanding. Puget Sound Energy (PSE) generates its base load with a combination of hydroelectric, natural gas, and coal power plants. The demand for power is not constant; there are certain hours of each day when demand peaks at levels considerably higher (see, Fig 3). To meet peak power demands, PSE buys additional energy through wholesale contracts and in the spot market. When the market rate for electricity rises above the approved retail rate, which is a fl at rate in general, utilities are caught in the middle, and this situation is unviable for them.

PSE executives were aware that shifting a portion of demand from peak morning and evening periods into the mid-day and night time hours would reduce the peak power demands and alleviate the problem. For this purpose, consumers had to be motivated and their preference-schedule had to be rearranged. To motivate the consumers to change their choice, PSE would need to set lower electric rates for off-peak energy use and higher rates for peak consumption period. The time-of-use

electric tariff, approved for PSE, charged customers more for energy during the peak periods, and less during periods of lower cost and demand. The objective was to encourage customers to shift certain loads by a few hours.

The PSE customers, covered under the Time of Use price

Fig 3. PSE’s Peak Load on the Twenty-Four Hours Scale:

Source: Energy Priorities Magazine (2006), http://energypriorities.com/entries/2006/02/pse_tou_amr_case.php.

Dem

and

fo

r En

erg

y

6A 10A 5P 9P

Peak Capacity

Energy Priorities

Fig 4: Changes in Prices after Peak-Shifting.

Source: Energy Priorities Magazine (2006),http://energypriorities.com/entries/2006/02/pse_tou_amr_case.php.

Dem

and

fo

r En

erg

y

6A 10A 5P 9P

Peak Capacity

Energy Priorities



structure, responded well by shifting about four percent of their loads out of peak and into economy hours. This could be equated to about a 25,000 KWH peak reduction for PSE and signifi cant savings on the last-minute wholesale energy pur-chases (see, Fig 4). As PSE desired, customers shifted their loads according to the price incentives. It was recorded that an average residential customer shifted 13 kilowatt hours out of

peak periods and into off-peak periods. That four per cent shift might not seem like much, but amazingly, it translated to about 25,000 kilowatts of reduced peak demand.

5.4. The Ontario Energy Board’s (OEB) Experience:The key challenge for utilities and policy makers comes in deciding which pricing and communication structures will most actively engage their customers and drive the desired conserva-tion behaviours. Experimental studies show that a good customer feedback on energy usage can reduce total consump-tion by 5 to 10 per cent. The Ontario Energy Board (OEB) has suggested the smart metering functions and some minimal technical standards29.

The smart metering program undertaken in the province of Ontario, Canada, serves as a useful example for the utility companies contemplating on the similar kind of deployments. Way back in 2004, anticipating a serious energy generation shortfall in the forthcoming years, the Government of On-tario’s plan to have smart electricity meters installed in 8,00,000 households. As the regulator of Ontario’s electricity industry, the OEB was made responsible to prepare the smart price chart that would go with smart meters.

Smart Meter provides the clues about how and when to use electricity. When lot of electricity is used at the same time, it creates a peak demand period and supplying electricity at these peak times has a range of negative impacts: They add to the electricity costs; because higher demand often means, higher market prices. They add to the amount required to invest in the system because, meeting the peaks requires even more new generation, and more transmission and distribution infrastruc-ture. Smart Meter makes time-of-use (TOU) prices possible. With the ability to measure when electricity is used, different prices can apply at different times of the day. With time-of-use pricing, one can manage electricity use and bills. With TOU pricing, electricity prices will vary, based on when it is used. That includes by time of day, by day of week (weekdays versus weekends), and by season (winter or summer). This is a

Midnight

7

11

10

P.M. A.M.

5

Noon

Midnight

7

11

10

P.M. A.M.

5

Noon

Midnight

Noon

7

11

10

P.M. A.M.5

8

On-peakdemand wasthe highest

$$$(pay thricethe amount)

Mid-peakdemand was

moderate$$(pay twice the amount)

Off-peakdemand was the lowest

$ (less than the normal amount)

signifi cant departure from the way electricity charges were charged earlier. TOU pricing will encourage the shifting of some of the electricity use to off-peak hours.

The summary version of the experi-ence can be presented here under:

(a) Variation in Period

The summer weekdays

The highest energy charges occurred over the afternoon, largely due to greater air-conditioning use. That was why the on-peak rate was from 11 a.m. to 5 p.m.

Weekends and Holidays (All year)

Demand and electricity charges were lower on weekends and holidays - as well as overnight.

The winter weekdays

Energy charges peaked twice - in the early morning and in the evening - mainly due to space heating, plus increased lighting and appliance use.

(b) Variation in Charges

The results from the Ontario pilot study have clearly demon-strated that the customers wanted their expenditure to gain economic value. Over the period of the pilot study, on average, participants shifted their consumption and paid three per cent less on their monthly bills with the TOU pilot prices. In other words, 75 per cent of the customers saved money on TOU prices. In summary, the participants in the Ontario Energy Board’s pilot program approved of these smarter pricing structures, used less energy overall, shifted consumption from peak periods in the summertime and, as a result, most paid less



on their utility bills.

5.5 Day Light Saving:Daylight Saving Time (DST) is a way of getting more light out of the day by advancing clocks by one hour. During the Day-light Saving Time, the sun appears to rise one hour later in the morning, when people are usually asleep anyway, and sets one hour later in the evening, seeming to stretch the day longer. The DST technique works well because its saves energy consumption due to less artifi cial light needed during the evening hours. The clocks are set one hour ahead during the spring, and one hour back to standard time in the autumn. The famous Congressional debates on the introduction of DST argued for the potential energy savings. It was forecasted that each additional day of DST would save the energy equivalent to 1, 00,000 barrels of oil per day [Congressional Record (2005a), (2005b)] or an average load reduction to the tune of 0.5 to 1 per cent30 .This strategy is in vogue in more than 76 countries at present including in Pakistan and Bangladesh. India can certainly try out this strategy without hesitation since it involves no cost what so ever.

5.6 DSM Through Energy Effi cient Appliances: The experience in demand side management (DSM) has clearly demonstrated that demand can indeed be affected by the shifting and pricing. The two primary types of DSM pro-grams - energy effi ciency and peak load management - have different core objectives. Today, energy effi ciency assumes even greater importance because, it is the most cost-effective and reliable means of mitigating global climate change. Energy

effi ciency means using less energy to perform the same func-tion. It provides additional economic value by preserving the resource base and reducing pollution. Peak load management focuses on either curtailing or shifting demand away from high cost, peak demand periods. The relative costs and benefi ts of these programs also vary considerably. Energy effi ciency and peak load management share certain benefi ts. Reducing peak demands may also yield energy savings, and most energy effi cient technologies yield some peak demand savings. While energy effi ciency programs can, and often do, produce reduc-tions in peak demand, such results have not historically been a priority of these programs. This was brought well in the experience of Sri Sathya Sai Senior Boys’ Hostel, Prashanthi Nilayam (A.P) when it switched over to the effi cient, energy

saving lighting system. Realizing the need to save energy, Sri Sathya Sai Hostel, a community with 500 senior students, replaced its 563 conventional tube lights that consumed about 53W/H per unit on an average, with an effi cient energy saving electrical fi ttings that cut the consumption almost by half i.e., 28 W/H per unit. This move had almost saved up to 20 to 25 per cent of energy during the peak hour which helped in slicing the peak load.

Lighting with proper energy labeling usually offers the easiest and the most visible gains in addition to being cost-effective. Moreover, it leads to saving on energy bills and produces less heat. Usually, no one is aware of the fact that the cost of the energy used by an appliance over its lifetime often adds up to more than the original purchase price31, known as Life Time Cost. So, the more energy effi cient a product is, the more the user saves in the long run in terms of money. Suppose there are three kinds of appliance used for lighting purpose. Their Actual and Life Time Costs could be as presented in Table 1.

One can infer here that CFL (Compact Fluorescent Light) is the most cost-effective electrical appliance under the given conditions. If one assumes that the cost of an 800 lumen LED (Light Emitting Diode) comes down, say to US $75, it makes some sense. The CFL cost is relatively less than the cost of LED lamps (Table 1). But, if the initial investment cost could be brought down, the LED lamps would certainly yield better results in terms of cost and energy saving32.

The world is switching over to LED (Light Emitting Diode) lighting gradually now for its high energy saving capacity, pollution-free attitude and handsome payback period. Moreo-ver, it reduces the carbon footprints, making it viable to earn carbon credits. Leading electrical companies are pioneering out on this venture at present. Right now the excise duties levied on LED appliances are relatively higher in India33. If it is reduced, it would certainly be used in large scale to mitigate the

Serial Number

Types of Bulbs Actual Cost

Life Time Cost

160W/800 Lumen Incandescent Bulb

1.00 8.75/megalumen-hour.

2 15W/800 Lumen CFL 5.00 3.43/megalumen-hour.

3 7.5W/800 Lumen LED 100.00 4.04/megalumen-hour.

Table 1: Actual and Lifetime Cost of Bulbs

Source: http://www.ecohuddle.com/wiki/lifetime-costs-of-light-bulbs.

Cost in US $



peak load demand. Until the LED become cheaper or subsi-dized, one has to go for the T5 or CFL, though it has high mercury content in it. Even if these practices are initiated, the expected peak-load saving will be to the tune of 10,000MW by 201634.

6. DSM and Industrial Sector:As time passes, it has become increasingly clear that the power shortage in India is unlikely to disappear in near future. The shortage has been mounting on, as the demand for electricity has been on the rise. Moreover, the capacity expansion has fallen short of the targets both in the Ninth and Tenth plans35. The capacity additions that have taken place in the power sector were just about half the targets, despite 7.3 per cent rise in electricity generation. The estimates have indicated that on account of the extreme erratic power situation, industrial production has fallen by 25 per cent36. Moreover, a recent study has indicated that the motors used in industrial sector in India consume as large as 70 per cent of electricity37. It is revealed that the designers often provide a large factor of safety in motors and make them so over sized that they run at 30 per cent to 40 per cent load38. These are the areas in which signifi -cant energy saving could be thought of. It has been shown that energy saving to the tune of 10 to 20 per cent39 is possible by the industrial sector, provided Government of India makes it mandatory for all the industrial units consuming over 500 KW of power, to adopt measures recommended by the energy

auditors. In addition, the government could provide some tax

incentives to the sector for carrying out the energy audits regularly and enforce conservation measures recommended by their energy auditors40.

7. Summary and Conclusion:In the energy sector, there are many opportunities to reduce the supply-demand gap through the wise use of electricity and smart meters, coupled with the time-of-use rates. There are many ways to approach conservation like shifting some electric-ity use to off-peak periods, use of effi cient end-use products, which would lessen down the intensity of the load during the peak hours, etc. This aspect has been well demonstrated by the experiment conducted by the Ontario Energy and Puget Sound Energy in Washington State. Smart meter which measures power consumption by time of the day can be installed by the utilities companies by charging a specifi c fee per customer. A

small community like Sri Sathya Sai Hostel, Prasanthinilayam, A.P. after having realised the need to save energy, switched over to the effi cient lighting systems and derived immense benefi t.

The DSM would be a better option in the short period to tackle the present pressing problem in the energy sector. The supply side management, is one of the options, would certainly take a long time to have even a grip of the situation. Hence, under the DSM, measures like conservation of energy, peak load shifting through the time of the day tariffs, would not only mitigate the problems in energy sector but also give necessary confi dence to people and government to take up long term measures in future.

End Notes1 James L. Sweeney, Economics of Energy, Vol 4.9, article 48, p .1. 2 ibid. p.8. 3 See, The Hindu-Business Line, dated Dec 1st, 2009, p.1. 4 http://www.theoildrum.com/node/5395. 5 www.mospi.gov.in/highlights_es08.pdf. 6 http://www.ibef.org/industry/oilandgas.aspx. 7 BP, BP Statistical Review of World Energy (June 2009), p. 40. 8 International Energy Agency, World Energy Outlook 2007,

p. 520. 9 Expert Committee on Energy Policy, Draft Report of the

Expert Committee on Integrated Energy Policy, p. 73. 10 Darryl D'Monte, Need to strengthen climate diplomacy. India

Together, dated, December 9th, 2009.11 http://news.indiamart.com/news-analysis/energy-dependence-

on-19070.html. 12 The historic highest price of crude oil was US$ 145 on July

14th, 2008. See, www.oil-price.net/index.php 13 http://www.livemint.com/2009/03/04222335/5-years-on-plans-

fail-to-add.html 14 http://www.kwrintl.com/library/2007/indianelectricity.htm. 15 http://in.reuters.com/article/domesticNews/idIN-

DEL44867220090710 16 http://cleantechindia.wordpress.com/2008/07/16/indias-elec-

tricity-transmission-and-distribution-losses/ 17 http://www.thehindubusinessline.com/2005/12/03/

stories/2005120303300900.htm 18 DSM Best Practices Guidebook, (2006). 19 http://en.wikipedia.org/wiki/Energy_demand_management



20 http://en.wikipedia.org/wiki/Peak_demand 21 http://en.wikipedia.org/wiki/Energy_demand_management 22 Zahir J. Paracha and Parviz Doulai (1998) 23 DSM Best Practices Guidebook, (2006). 24 Ibid. 25 Ibid. 26 Rob van Gerwen, (2006). 27 http://en.wikipedia.org/wiki/Smart_meter. 28 http://www.switchwise.com.au/blogs/index.php/2009/09/10/

smart-meters-are-they-worth-the-cost/ 29 Rob van Gerwen, (2006). 30 Matthew J. Kotchen and Laura E. Grant (2008). 31 http://www.investopedia.com/terms/l/lifetime_cost.asp 32 http://www.ecohuddle.com/wiki/lifetime-costs-of-light-bulbs 33 http://www.indiaenvironmentportal.org.in/node/288971. 34 Krith Parik (2008). 35 http://planningcommission.gov.in/plans/mta/midch6.htm 36 http://www.thaindian.com/newsportal/business/energy-defi cit-

to-hit-industrial-production-in-may-june_100180972.html 37 Shivan Giani (2008) 38 Ibid. 39 Ibid. 40 Krith Parik (2008).

References and Additional Thinking • BP (2009), BP Statistical Review of World Energy www.

bp.com/staticalreview.• Denis Du Bois, (2006), Time of Use Electricity Billing: How

Puget Sound Energy Reduced Peak Power Demands, Energy Priorities Magazine, http://energypriorities.com/

entries/2006/02/pse_tou_amr_case.php.• International Energy Agency, (2007), World Energy

Outlook. • J Y Boivin, (1994), Demand Side Management-The role of

the power utility, Elsevier Science Ltd, Vol. 28, No. 10, pp.1493- 1497.

• James L. Sweeney, Economics of Energy, Stanford Univer-sity, Vol: 4.9, Art: 48.

• James Strapp and Chris King, Smarter Prices for Smarter Consumers in Ontario, www.UtilitiesProject.com/10812.

• Kirith S Parikh (2008), Energy and Economic Growth: The

Emerging Prospects and Policies, paper presented at the All India Economic Conference at Sri Sathya Sai University.

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Daylight Saving Time Save Energy? Evidence from A Natural

Experiment In Indiana, National Bureau Of Economic Research.

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• Ontario’s Independent Electricity System Operator (IESO), The Bottom Line on Energy Management, www.

ieso.ca. • Peter Love, (2007), Energy Effi ciency Barriers in Ontario

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• Planning Commission, (2006), Report On The Working Group On R&D For The Energy Sector For The Formula-tion Of The Five Year Plan (2007-2012), GOI.

• Planning Commission, (2006), Towards Faster and More Inclusive Growth, GOI.

• Rangan Banerjee, Electricity Pricing, Policies and DSM in

India, Energy Strategies and Greenhouse Gas Mitigation, Chapter-7, pp. 108-122.

• Rob van Gerwen, (2006), Smart Metering, KEMA. • Shivan Giani (2008), Starting an Energy Conservation

Programme, paper presented at the All India Economic Conference at Sri Sathya Sai University.

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brookings.edu.• The Energy and Resources Institute (TERI), (2006),

National Energy Map for India Technology Vision 2030. • The International Institute for Energy Conservation

(IIEC), (2006), DSM Best Practices Guidebook for pacifi c island power utilities.

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ment Techniques and Methods in Electric Power system, IEEE, pp. 213-217.

(The views expressed in the write-up are personal and do not

reflect the offi cial policy or position of the organization.)

E N The Policy Framework for Energy SectorNeed for Demand Side Management

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