MERC Proposes 7 Percent Flexible Demand After 5 Years in Draft Regulations 2024
The draft regulation proposed that after year five, the distribution licensees shall follow the process of seven percent flexible demand being made available to the grid compared to the previous year’s reported peak demand, or any variation proposed by the Commission.
August 31, 2024. By EI News Network
In the newer context with variations in generation capacity specifically coming from renewable energy, it is now important for the load to follow the generation as well, in order to meet the renewal portfolio obligations of distribution licensees in Maharashtra.
Regulations on Demand Flexibility and Demand-Side Management
MERC in the memorandum has mentioned that the utilities are moving forward with newer contracts for solar photovoltaic systems as well as wind projects. In certain cases, some new bids in Maharashtra and at the Central Government level include renewables and energy storage, including battery energy storage and pumped hydro storage.
One of the key aspects of the new proposed regulations is setting out certain targets for the distribution licensees to create portfolios of demand flexibility and demand response. “Based on the initial assessments by the distribution licensee and discussions with experts in the field, in order to embed 500 GW of renewable energy into the Indian power system, approximately 10% of the current peak demand should be met using flexible demand, which is expected to offer certain resources at costs that are much lesser than the lowest renewable energy bids as well,” read the draft.
Citing an example of consumer category-wise number of consumers and connected loads for one of the licensees, the explanatory memorandum explained, “This means that the total connected load of the distribution licensee is approx. 67,000 MW. Out of which 3% of the past year’s peak demand of 22,000 MW (approx.660 MW) can be a demand flexibility prospect. Such a flexible demand can be met through multiple end-uses such as water pumping, HVAC in C&I consumers and other bulk loads.”
The draft regulation also proposed that after year five, the distribution licensees shall follow the process of seven percent flexible demand being made available to the grid compared to the previous year’s reported peak demand, or any variation proposed by the Commission.
Eligibility for Incentives
A distribution licensee shall be eligible for an incentive of INR 0.20 Crores for every MW achieved in excess of DFPO. Similarly, a distribution licensee shall be subjected to a disincentive of INR 0.20 Crores for every MW underachievement of DFPO.
Proposed regulations also suggest setting up a DF/DSM consultation committee comprising a group of experts working under the direction of the Commission, to provide reviews, suggestions and objections on the DF/DSM programme portfolio submitted by the distribution licensees and providing recommendations based on its findings to the Commission for approval.
Other Proposed Interventions
In order to bring all the reporting of demand flexibility and demand side management projects implemented by the distribution licensees into the new proposed regulations also into the section on evaluation measurement and verification, three types of evaluations, namely Process evaluation, Impact evaluation and Market effective evaluation, are proposed under these regulations.
Given the nature of changing loads and newer loads coming online, such as electric vehicles, the proposed regulations now also include electric vehicles as one of the key technologies at the end-use level that can be used for demand flexibility by the distribution licensees.
Other technologies that are proposed as examples in the regulations include thermal energy storage and heat pumps for residential, public sector, hospitals, hotels and commercial sectors. “Based on recent experiments related to water pumping systems, the regulations also suggest including newer flexible loads such as water pumping systems for urban local bodies, Municipal corporations and Nagar parishads and bulk loads such as lift irrigation schemes that are operated by Water Resources Department and the Command Area Development structures in the agricultural sector,” noted the memorandum.
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