Dr. Rahul Walawalkar CEM, CDSM,,CSDP & Dr. Mahesh Patankar CMVP

Transcription

1 Market based Demand Response Programs in India Presented by Dr. Rahul Walawalkar CEM, CDSM,,CSDP & Dr. Mahesh Patankar CMVP Customized Energy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: ltd.com Presented for AEEE Webinar Series th December th Customized Energy Solutions India Pvt. Ltd. C 101/6 Pune IT Park, 34 Aundh Rd, Bopodi, Pune, Maharashtra India Phone Fax: info@ces ltd.com

2 Today s Speakers Dr. Rahul Walawalkar CEM, CDSM, CSDP Vice President, Emerging Technologies & Markets, Customized Energy Solutions [email protected] Dr. Mahesh Patankar CMVP Director, Market Innovations, Asia Customized Energy Solutions [email protected]

3 Introduction to Customized Energy Solutions Analyze. We maximize value of existing and emerging electric infrastructure through active resource management. Philadelphia, Pennsylvania. Folsom, California. Carmel, Indiana. Endicott, New York. Richardson, Texas. Midlothian, Virginia. Pune & Mumbai, India 3

4 Experience in North America & India Electricity it Markets Helps over 200 clients across all 7 competitive electricity markets in USA Manages over 1500 MW of generation and Demand Response Resources In 2010, joined the Indian Energy Exchange (IEX) as a Professional Member 4

5 Insights from US DR experience: Partnership of Performance Contracting companies and Demand Response Providers Presented by Dr. Rahul Walawalkar lk CEM, CDSM, CSDP Vice President, Emerging Technologies & Markets ltd.com Customized Energy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: ltd.com Presented for AEEE Webinar Series th December th Customized Energy Solutions India Pvt. Ltd. C 101/6 Pune IT Park, 34 Aundh Rd, Bopodi, Pune, Maharashtra India Phone Fax: info@ces ltd.com

6 Outline Overviewof Competitive Electricity Markets Need for Demand Response in Competitive Markets Overviewof currentdemand Response Programs and opportunities for Energy Efficiency Projects Value of DR with Energy Efficiency Projects for ESCO Projects Win Win Win Financial i l Benefits to ESCO, Host, and DRPs 6

7 Overview of Electricity Markets Source: Walawalkar et. al

8 Electric Grid Operators need to deal with changing load NYISO - Net Load - Yr MW Jan 13-Jan 25-Jan 6-Feb 18-Feb 1-Mar 13-Mar 25-Mar 6-Apr 18 8-Apr 12-M May 24-Ma ay Days in Year 5-Jun 17-Jun 29-Jun 11-Jul 23-Jul 4-Aug 16-Aug 28-Aug 9-Sep 21-Sep 3-Oct 15-Oct 27-Oct 8-Nov 30- -Apr 20- -Nov 2-D Dec 14-De ec 26-De ec S17 S21 S1 S5S9S13 Hrs in Day 8

9 Short Run Marginal Cost Curve & Price Duration Curve * This price duration curve shows only the wholesale energy prices corresponding to the generation component of customer s electricity bill. T&D costs are added onto these wholesale energy costs. 9

10 Cost of providing electricity varies based on time Energy Price Capacity Price Ancillary Services Regulation Synchronous Reserve Non Synchronous Reserves Reactive Power Blackstart 10

11 Evolution of Demand Response Programs Energy Efficiency 11

12 DR Options Available From ESCOs Thermal Ice Storage Building Automation Emergency Generators Lighting Controls Energy Efficient Motors Variable Speed Drives Air Compressor System 12

13 Opportunities for DR Program Participation Customer Type Residential Commercial Industrial Equipment / Building Component Control Strategy Emergency (Capacity) DR Programs Economic (Energy) Ancillary Regulation & Reserve Air Conditioners Cycling/Forced Demand Shedding Water Heaters Cycling Pool Pumps Cycling Chillers Demand limiting during on peak period Chillers Pre-cool bldg over night- storage HVAC DX Forced Demand Scheduling Refrigerator/ Prioritized Demand Shedding Lighting Scheduled dimming of selected circuits Chillers Demand Limiting on time Schedule Electric Furnace Demand Limiting through Heat Stages Electric Furnace Curtail (during peak period) VSDs Limit Output on Scheduled basis Production Eqpt Prioritized demand on selected units 13

14 Why Demand Response With Energy Efficiency?? For Customer: DR can result in an appreciable reduction in system marginal costs of production during peak time, which result in long term cost reduction for consumers. DR also presents a way to earn added revenues for implementing EE measures and having flexible controls incorporated din operations; Simultaneously helps to improve grid reliability DRparticipation is very effective in Emergency DR programs that provide capacity payment for peak load reduction Significant ifi t opportunities still exist itin integrating ti energy efficiency and flexible control capabilities for maximizing economic & ancillary service DRparticipation 14

15 Benefits of DR For ESCOs and EE Projects: Additionalrevenue for energy efficiency with little incremental capital costs to enhance DR capabilities DRPs can aggregate/automatically handle dispatching, planning, and market settlements Additional incremental revenue stream at low risk Added revenue can either allow more infrastructure hardware, or greater profits Provides more options for customer in terms of control, generation, curtailment as Owner wishes DRP adds a level of risk protection for ESCO who is more focused on energy efficiency, and not DR or electricity markets 15

16 DR Programs for Energy Efficiency Work ESCO can participate in multiple programs by partnering with DRPs Receive Capacity payments for Emergency Program Guaranteed Load Drop during up to 10 events Energy Efficiency considered as permanent load reductions Receive Energy Payments for Emergency and / or Economic Program Requires M&V procedures for customer baselines DRPs bid DR on behalf of customers, control process, renewals and facilitate payments Additional payment for providing Ancillary Services Need capability to respond to system emergencies or supply demand imbalance Typically requires real time communication and control capabilities 16

17 ESCO Project & DR Program Participation Market based DR programs do not interfere with the energy efficiency and cost savings plans of normal ESCO project plan Some programs can begin to pay for energy reductions and ancillary services from day one, even though Capacity payments are delayed for years after registration approval in some markets Risk of non performance penalties can be minimized i i ddue to ESCO expertise & DRPs can help compliance with market requirements. DRPS can also help ESCOs to prepare for any fluctuations in potential market revenues by keeping track of supply / demand variations, fuel prices transmission upgrades market rule changes 17

18 Benefits of Using DRPs in ISO DR Process by ESCOs DRPs are registered market participants in the electricity markets Involves paying annual membership fees, Employing and training staff to know market rules and regulations Fulfilling credit requirements for market participation Verify that projects meet the program criteria to ensure payment DR programs rules are still undergoing changes Need to be an active market participant to maximize value & minimize risk DRPs can provide in depth market knowledge and domain expertise to maximize the revenue potential from DR participationp Certain DRPs can also provide 24*7 operational support and control capabilities that could be vital in optimizing revenues from economic and ancillary service programs It is important to choose the right partner to compliment the skills available within ESCOs and ensure that the goals of all partners are aligned to maximize benefits for all 18

19 It s A Team Effort: Win- Win- Win Customer / Energy Manager Analyze. Main beneficiary and determines the operating parameters Facilitates execution for both EE and DR projects Can communicate new opportunities with management to determine ways to maximize participation ESCO / Performance Contracting Company Provides technical, engineering and financing expertise Can use additional DR revenue to expand scope Evaluate investments based on incremental costs, that can add significant capabilities for DR participation Provide a technical bridge between customer goals and market opportunities identified by DRPs Demand dresponse Provider Provides functional & market expertise as well as interface to wholesale electricity markets 19

20 Hospital ESCO Case Study ESCO offered a variety of Energy Efficiency and Cost Reduction Measures, integrated on a bundled basis Included non revenue, Infrastructure Enhancement measures deemed important by the Hospital Allows integration of standard energy efficiency + other ECMs, as well as specific DR program measures. They can co exist. Location affects both utility rates, as well as the DR program revenues Neither Host nor the ESCO had interfaced with electricity markets in past Source: Walawalkar, Colburn & Gilkey

21 Contribution of DR revenues on Project Economics Gross Revenue Breakdown M 10 yr revenue w/o ISO 10 yr revenue of KW ISO 10 yr revenue of KWH ISO % increase in gross revenues with ISO payments 13.6% % Increase in Net Revenues to ESCO/Host with ISO Payments 71.1% 1% Source: Walawalkar, Colburn & Gilkey

22 Summary Competitive Electricity markets provide new opportunities for monetizing DR capabilities of traditional EE projects Additional revenues can be shared between ESCO and Host With help of DRP, this could be further enhanced through monitoring day ahead energy marketsandand forecasting to avoid Demand Hit due to failure to perform Conclusion: By partnering with DRPs, ESCOs can add meaningful economic value for customers through DR program participation. 22

23 EPS Capital Acknowledgements Dr. Bruce Colburn, Chief Operating Officer Thomas K. Dreessen, President Customized denergy Solutions Rick Gilkey, Vice President, DR and Fuels Rick Mancini, Director Regulatory Affairs NY Stephen Fernands, President Netra Thakur, Sr. Analyst 23

24 Indian DSM & DR: Policies and Implementation Dr. Mahesh Patankar CMVP Director Market Innovations (Asia) ltd.com Customized Energy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: ltd.com Customized Energy Solutions Mumbai office details: Level 1, Trade Center Bandra Kurla Complex Bandra (East), Mumbai Tel: Customized Energy Solutions India Pvt. Ltd. C 101/6 Pune IT Park, 34 Aundh Rd, Bopodi, Pune, Maharashtra India Phone Fax: info@ces ltd.com

25 Outline Institutional structure of Indian power sector Tariff setting process Demand side Management Role of Demand side Management in Indian electricity sector Demand side Management Regulations DSM Implementation Framework and Cost effectiveness Assessment Examples of HVAC programs Demand Response Programs Unlocked captive capacity in India Regulatory framework Utility offerings About Customized Energy Solutions 25

26 Institutional tional structure re of Indian energy sector..a glimpse Planning Commission Government of India Ministry of Power Ministry of New & Renewable Energy Ministry of Petroleum & Natural Gas Ministry of Coal Electricity i Act 2003 Energy gyconservation o Act 2001 Utilities (electricity G-T-D) Central Electricity Regulatory Commission State Electricity Regulatory Commissions Bureau of Energy Efficiency State Development Agencies End-use standards, labeling, industry benchmark 26

27 Snapshot of energy transactions: May 2010 Electricity Production in India Generation GWhs 6394 GWh(9.41%) transacted through short term (4.70% through bilateral and Term Ahead on power exchanges; 3.72% in the UI market; 0.99% on power exchanges) September 2010 Generation GWhs 6885 GWH (10.71%) transacted through hshort term (5.19% through hbl bilateral land Term Ahead on power exchanges; 3.58% in UI market; 1.94% on power exchanges) 27

28 Regulated tariff- setting process in India Spreading of all costs incurred by the utility on all consumer categories Costs include: Power purchase costs (typically 60%) Administration costs including employee cost (typically 20%) Return on equity and profit (typically 16% for distribution business) Other (5%) Power purchase costs Long term power purchase (typically 90+%) ~ Rs. 2 to 5/kWh ($ 0.04/kWh to $ 0.10/kWh) Short term term power through bilateral (typically 7%) ~ ($ 0.10/kWh to $ 0.25/kWh) Short term power purchase on exchanges (yp (typically y < 2%) ($ 0.10/kWh to $ 0.25/kWh) 28

29 Role of Demand- side Management Meet load shape objectives Conservation Efficient appliances (refrigerators, aircons, pumping) Load shifting Thermal storage in large HVAC (>500 TR systems) Water pumping Reducing outages ~ provide for agricultural consumption Definite hours of use System reliability commercial and urban centers Improve power quality, frequency regulations 20, MW DSM potential ti lin 160, MW system (NMEEE target) t) Immense potential in improving new stock Over 50% of stock in 2020 to be new..role of efficient appliances 29

30 DSM Implementation Steps Source: Mumbai utilities data presented at MERC workshop in

31 DSM regulatory framework has evolved ed over the years Forum of Regulators issued a Draft Model DSM Regulations document Maharashtra Electricity Regulatory Commission issued 2 regulations DSM Implementation Framework Regulation Cost effectiveness Assessment Regulation Electricity is a concurrent subject in India 31

32 MERC (DSM Implementation Framework) Regulations 2010 Basic principles Licensees to make DSM a part of day to day operations Licensees allowed to recover costs in Aggregated Revenue Requirements Program investments to be cost effective to licensee (avoided cost); consumer (reduced bills) Reduction in overall tariff Guiding principles Quick gain; long term savings; Stakeholder consultation Align programs with BEE s EE/EC efforts Create a separate DSM Consultation Committee Development and submission of DSM portfolios and plans Evolve DSM plans based on Load Research activity Multi year planning aligned with multi year tariff process 32

33 MERC (DSM Cost- effectiveness Assessment) Regulation tests proposed around the Net Present Value (NPV) of Benefits Costs: Total Resources Cost (TRC) Test (Hurdle Test) Compares total cost of technology and benefits over its life cycle (B C >0) NPV of Benefits = [(B (1+r) t 1 t )/ ] (equation 1) NPV of Cost = [(C t )/ (1+r) t 1 ] (equation 2) Benefits = Avoided power purchase cost Ratepayer Impact Measure (RIM) Compares utility expenditure and avoided costs Cost includes Loss of Revenue for the utility; cost socializes for non participants as well Life cycle revenue impact (LRIIRM) (B C/total MWh sales) Should be less than INR 0.01/kWh 01/kWhor less than 1% ofexisting tariff Other two supporting tests for structuring incentives Participants Cost Test (PCT) and Societal Cost Test (SCT) 33

34 Benefit- cost tests hurdle and sufficiency tests 34

35 Mumbai system - at 2927 MW in April 2009 (summer peak) MUMBAI AREA LOAD CURVE FOR 2 nd April MW WH Hour Source: Mumbai utilities data presented at MERC workshop in

36 Cost of Conserved Energy (CCE) 14 Rs./kWh Average cost-to-serve Generation costs

37 Demand Response Customized Energy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: ltd.com Customized Energy Solutions Mumbai office details: Level 1, Trade Center Bandra Kurla Complex Bandra (East), Mumbai Tel: Customized Energy Solutions India Pvt. Ltd. C 101/6 Pune IT Park, 34 Aundh Rd, Bopodi, Pune, Maharashtra India Phone Fax: info@ces ltd.com 37

38 Captive power capacity in India Electricity Act 2003 definition of Captive Power.. Analyze. a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any co operative society or associationof of personsfor generatingelectricity electricity primarily for use of members of such cooperative society or association India had an aggregate connected load of 162,000 MW and 19,500 MW grid connected Captive Plants (CEA June 2010 data) 3% of large plants contribute 40% capacity Generator sets of 500 kva and above would also qualify for market participation 38

39 Current regulatory framework Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 Defines Demand Response as reduction in electricity usage by end customers from their normal consumption pattern, manually or automatically, in response to high UI charges being incurred by the State due to overdrawal by the State at low frequency, or in response to congestion charges being incurred by the State for creating transmission congestion, or for alleviating a system contingency, for which such consumers could be given a financial incentive or lower tariff Central Electricity Regulatory Commission (UI Amendments Regulations), 2010 Provides for a 100% penalty for frequencies below 49.2 total charge of Rs /kWh) 39

40 Business Opportunities through Conservation & Captive Capacity I. EnergyConservation & LoadCurtailment Programs II. Peak Shaving & effective use of thermal storage systems Curtailing non essential loads in C&I segment Benefit from Arbitrage between UI penalties and Cost of Captive III. Participation in the Day Ahead (DA) market Use idle or exess capacity to trade on exchanges 40

41 Features of utility driven Demand Response Services 1. Utility launches front and back end of Customer Enrollment 2. Subscription of small and large Captive Power Plants in: Emergency services (tagged to price of short term power costs) Load curtailment contracts in the commercial sector (including Natural Gas based DG sets) UI market in islanded systems (Mumbai, Bangalore) 3. Utility trigger to provide above services 4. Monthly settlements t Analyze. Based on the energy throughput or reduced drawl compared to pre determined baseline 41

42 Conclusions India now has enabling policy on DSM & DR programs Utilities understand the implementation path for energy conservation & DR Programs New regulations offer business opportunities to : Integrate demand response & grid management (smart grids) Integration of emerging technologies such as energy storage for C&I customers 42

43 Sample Publications of CES Team on DR & DSM DSM Implementation Options for Utilities in Delhi ; DSM Strategy setting Workshop Delhi Electricity Regulatory Commission; 2010; M. Patankar; Dr. Sathaye, R. Bharvirkar Evolution and current status of demand response in electricity markets: Case study of PJM and NYISO ; Energy Journal; Special Demand Response Issue; 2010; R. Walawalkar, S. Fernands, N. Thakur and K. Reddy Energy Efficiency & Demand Response in Competitive Electricity markets at World Energy Engineering Congress in Washington, DC; 2009; R. Walawalkar, B. Colburn & R. Gilkey An economic welfare analysis of Demand Response in PJM electricity market ; The Energy Policy; Volume 36, Issue 10, October 2008; R. Walawalkar, S. Blumsack, J. Apt and S. Fernands. Web enabled Metering and Controls for Demand Response ; Web Based Enterprise Energy and Building Automation Systems, edited by Dr. Barney Capehart; 2007; R. Walawalkar, Dr. Tongia, Dr. Colburn "Financing Demand Side Management Initiatives"; a report developed for American Public Power Association through Demonstration of Energy Efficiency Developments Scholarship; 2004; R. Walawalkar 43

44 More information i about Customized Energy Solutions available at: Customized Energy Solutions Ltd Walnut Street, 22 nd Floor Philadelphia, PA USA Phone: Fax: info@ces ltd.com Customized Energy Solutions Level 1, Trade Center Bandra Kurla Complex Bandra (East), Mumbai Tel: Customized Energy Solutions India Pvt. Ltd. C 101/6 Pune IT Park, 34 Aundh Rd, Bopodi, Pune, Maharashtra India Phone Fax: info@ces ltd.com 44