Demand Side Management
The energy sector world-wide is going through vast changes through deregulation,
which is opening up a wide new market based on the real time parameters of supply
and demand. This sector no longer remains a business of plants and wires only. The
electrical technology in the deregulated market is entirely different from the traditional
market. It constitutes a number of different generators, suppliers, regulators,
distributors and consumers fed through a vast transmission and distribution network.
The market price of electricity is a fluctuating one, which keeps on varying from
time to time and hour-to-hour depending upon the available supply and the system
demand on real time basis. When the supply shortage is there, the system reliability
is at stake and also it leads to high rising prices due to low supply as compared
to high demand.
Today's market has two main components for its successful operation:
- Technical – related to supply reliability
- Economic – related to affordable
and stable electricity prices.
So to make a successful deregulated market, both factors play an equal and significant
role. Technically, system reliability should be maintained at any cost to avoid
blackouts and economically, the market price should be kept affordable and stable
at all times. So ultimately it is a business of balancing supply and demand on a
real time basis through innovative technologies and economic methods.
A balance between supply and demand is needed at all times to ensure a stable and
reliable market. This can be achieved in two ways, either by Supply-side Management
by adding additional supply when demand is high or by Demand-Side Management (DSM)
by curtailing the system demand when supply availability is less. For short term
measures, supply-side management is not effective as it takes a long time for units
to start up (if these are available) and meet the rising demand, rather it is demand-side
management which can be implemented immediately and in more economic ways to keep
Moreover it is mentioned, “Electricity saved is worth more than the electricity
generated”. One unit saved at the consumer end is worth 1.10 units saved at the
generator end, taking into account the long transmission and distribution losses.
Every technology and program needs a program platform for its performance. A deregulated
market is the major platform to promote such programs like DSM because of the nature
of this market structure, demanding a strong balance between supply and demand on
a real time basis. DSM through it other tools like Demand/Load response Programs
and Real Time Prices/Time-of-Use rates have the capacity to create this balance
more efficiently and timely rather than supply side management. In addition, environmental
concerns like reducing greenhouse gas emissions, saving natural resources and protecting
the environment is a matter of big concern these days as most of our electricity
generation plants are the major sources of environmental pollution. DSM also has
the capacity to meet our environmental protection goals.
Benefits of DSM
The various benefits of DSM to consumers, enterprises, utilities, and society are:
- Reduction in customer energy bills
- Reduction in heavy investments in
new power plants, transmission, and distribution network
- Reduction in grid congestion
- Simulation of economic development
- Creation of long-term jobs due to
new innovations and technologies
- Increase in the competitiveness
of local enterprises
- Reduction in air pollution
- Preservation of our natural resources
- Reduction in dependency on foreign
- * Reduction in high prices of electricity
leading to stable electricity market.