Beyond Load Shedding
By Ahmad Faruqui, PhD
Dansville, CA
The Pakistan Electric Power Company (PepCo) plans to impose a four-hour load shedding program in order to deal with an imminent shortfall in capacity that is estimated to be about 2,000 MW or some 20 percent of the total demand.
The shortfall is blamed on two factors. The first one is the low release of water from the dams, which will affect the amount of hydroelectric power that can be generated in the country. The second one is the suspension of gas supplies, which will affect the amount of power that can be generated from thermal power plants.
PepCo’s load shedding program is projected to persist for several weeks. This has the potential for causing significant economic harm. As shown by the experience of many other developing countries, it can easily knock off a few percentage points of the nation’s Gross Domestic Product.
PepCo and others involved in planning the future evolution of the power system need to get out of this habit of “fighting fires” and putting out emergencies and focus instead on developing a systematic program for managing customer demand. Such a “demand-side management (DSM)” program should include near-term, medium-term and long-term measures.
In the near term, informational programs can be used to induce behavioral change among customers. In the medium term, financial incentives and cash rebates can be used to improve the energy efficiency of appliances, industrial processes and buildings. And, over the long term, economically-rational price signals can be used to balance demand and supply.
A comprehensive DSM portfolio would include several elements: a mass media campaign, broadly-defined financial incentives, targeted financial incentives, quotas on energy use, financial incentives for curtailing peak loads and time-based pricing programs.
A mass media campaign. Information can be the most effective way to convey the scarcity of power resources to all customers, broadcast through a variety of media channels, including radio, TV and newspapers, and further emphasized by the involvement of leading celebrities. During its power crisis in the years 2000-01, California introduced a “Flex Your Power campaign” to create customer awareness about the shortage and to create a culture of energy conservation. Surveys indicated that customers took a number of behavioral actions such as turning off lights, not using their air conditioner or raising the thermostat set-point, unplugging computers and appliances and watching less TV. The hydro-dependent power system of New Zealand was faced with a power shortage in the year 2001. It introduced a “10 for 10” campaign designed to reduce power consumption by 10 percent over a 10 week period. It worked. When a hydro-based crisis reappeared two years later, the campaign was re-activated. Celebrities were recruited to remind the people of the drought, the need to conserve energy and to list specific actions that customers could take in that regard.
Broad-based financial incentives. During its energy crisis, California introduced a program called Energy 20/20 that gave customers an extra 20 percent reduction in their energy bill if they reduced their energy usage by 20 percent compared to a baseline period. This program reduced power demand by 14 percent.
Targeted financial incentives. The Ceylon Electricity Board bulk-purchased compact fluorescent lamps and made them available to customers at below-market prices. In Victoria, Australia, incentives were used to promote high efficiency chillers in office buildings and other commercial facilities.
Quotas on energy consumption. Faced with a power shortage brought about by a drought, Brazil established mandatory targets for saving energy. Most households had to reduce usage by 20 percent. Industries and government buildings had targets of 15-25 percent while public lighting had a target of 35 percent. Customers who did not meet the targets were subject to interruption of supply. In addition, consumption in excess of the quota was subject to price increases ranging from 50-200 percent. To assist poor customers, the government purchased 5.6 million compact fluorescent lamps and gave them as a grant. The program reduced energy consumption by 20 percent. Later on, when faced with a power shortage, Argentina successfully implemented a similar program.
Financial incentives for curtailing peak loads. The utility provides incentives to customers who are willing to reduce load on short notice. They require the installation of new digital, interval meters and are most often implemented for larger commercial and industrial customers. In Western Australia, a resource shortfall was triggered in February 2004 by extremely hot temperatures and restrictions of gas pipeline capacity. The utility, after holding discussions with its 250 largest customers, introduced a program that target customers with peak summer demands greater than 500 kW and load reduction potential of at least 200 kW per site. One-on-one meetings were held with customers and they were provided information packets to identify savings opportunities. In addition, customers were offered an incentive payment based on the amount of load curtailed during the top 50 hours. The program was very successful in meeting it goals and achieved high levels of customer satisfaction.
Time-based pricing programs to reduce peak loads. These include time-of-use, critical-peak pricing and real-time pricing rates. Such programs can achieve load reductions in the range of 10 to 20 percent of peak demand. Since these often involve the change-out of existing electricity meters with digital, interval meters, they take more time to implement than the previous program options and are best viewed as an important but long-term option.
The precise mix of DSM programs that PepCo should consider offering its customers will depend on the magnitude and duration of the shortfall. A mass media campaign can be very effective at reducing demand in a very short amount of time. It does not take much time to develop a sophisticated media strategy. In the messaging, it is vitally important not to blame consumers for using too much energy and equally important to convince them that their individual actions will make a difference. If the shortage occurs during peak hours, consumers must also be informed when to conserve. And, of course, consumers need to be educated in how they can conserve. Humor is an important asset to use in such communications, as demonstrated in New Zealand where one of the ads featured the line, “If you sing in the shower, choose shorter songs.”
In the near term, the best strategy for PepCo may be to focus on the large commercial and industrial customers who account for about half of power consumption and who may be best able to respond to programmatic incentives and information. However, over the long haul, it would be useful to involve all customer classes and to develop a Long-Term DSM Plan.
It is important to set realistic expectations and recognize that saving electricity in a hurry is always going to be a somewhat chaotic activity, with many people and groups scrambling over each other and trying to take the credit for what works and to shift the blame on to others for what does not work. Strong, credible leadership can increase the probability of success by making sufficient resources available to the project team charged with implementing the program. Even if the process is somewhat messy, the outcome will be vastly superior to load shedding
