Essay: Analysis Of Demand Side Management Strategies And Barriers To Implementation.

Learning outcomes 

1. Identify and explain the factors affecting energy resources availability and management and the impact of the rising energy demand.
2. Critically analyse the influence of current and new policies and regulation on energy availability and management.
3. Appraise the impact of technological advancement on the energy sector

The application of Demand Side Management (DSM) strategies by Energy Utility companies have recently been championed as a measure to bring about desired energy efficiency measures in the United Kingdom. 

However, there have been limited incentives for energy utility companies to invest in DSM in a market based on the quantity of electricity sold if there are no clear financial returns. 

This lack of incentives has affected the anticipated projections for the growth of DSM strategies.

Write a report that critically analyse the following DSM strategies and describe the drivers and barriers to their implementation:

1. Demand Side Response
2. Distributed Generation
3. Demand Reduction

The drivers and barriers should be with respect to the technological, financial and institutional trends of the policy driving DSM. 

Factors affecting availability and management of energy resources

The study focuses on the aspects of demand side management strategies undertaken by different energy utility companies of the United Kingdom. The energy utility companies are focusing on strategies that will measure the efficiency measures in the country. The implementation of demand side management strategies by different energy utility companies across United Kingdom are not same. The shift or reduction of the energy demands of customers by energy utility companies is meant the delay or avoid additional generating capacity. In terms of customers, demand side management offers the opportunity while reducing the energy bill in the field of measures of conservation and efficiency. It can be said that the utilities are considered as the important driving forces that leads to implementation of the DSM. On the other hand, it can be said that the energy customers must be motivated to use energy in residential and commercial sector efficiently and in an economical way. The study focuses on the drivers and barriers of the various demand side management like demand reduction, distributed generation and demand side response. Apart from that, the influences of strategies on the availability of the energy resources are described in a detailed manner with the factors of availability of the energy and its management.

Energy resources are divided into two categories such as renewable sources and non-renewable sources of energy. Wind energy, solar energy, hydroelectric power and geothermal energy falls under renewable sources of energy. On the other hand, natural gas, fossil fuels and oil are considered as the primary sources of non-renewable forms of energy. The factors that affect the availability of the energy resources in a nation are government regulations, supply and demand, infrastructure and environmental concerns (Adika and Wang 2014).

The world’s leading producer and suppliers of energy Chevron has estimated that the world population will rise by 20% by 2031. However, the substantial increase of the world population will result to more demand and supply of energy in the countries like China and India. The energy utility companies are indulged in constant research regarding development of new fossil fuels and other sources of energy (Arteconi et al. 2017).

Governmental regulations are pertinent regarding the fuel sources that affects the energy industry. Taxes, market derivatives, emission standards, various specific fuel guidelines are considered as some mandates which directly influence the fuel sources.

Infrastructure on the other hand is responsible for creating an impact on the fuel sources. However, without a network of solid fuel in the particular place it will be very difficult for supplying the energy needs of the nation. Pipelines also play a critical role in the while supplying forms of raw energy and natural gas to different distributors (Arteconi et al. 2017).

Impact of rising energy demand

Environmental concerns affect the sources of fuels, as they are responsible for the contribution of radioactive wastes, greenhouse gas emissions, contamination of land. Apart from that, disruptions of natural environment like endangering of plant life and natural habitat. The energy utility companies are responsible for implementation of practices and systems of integrated management during the time of production of fuel while protecting them from the environment (Atzeni et al. 2013).

Rise of demand of energy is directly proportional to the fight of climate change. The rise of global demand of energy is the contributor of the rise of world economy by 20%. It is to be assumed that the economy of the world will be increased by double in the coming next years. However, the demand of energy will rise by 40%. It is to be predicted that the demand of energy will be fulfilled mostly from fossil fuels such as coal, oil and natural gas. The increased demand of energy will result in 25% increase in the emission of carbon (Baharlouei et al. 2014). The rising utilization of energy will be responsible for emission of 1% of carbon emission every year. The current policies of government are not sustainable enough while reducing the rate of carbon emissions.

It is to be pointed out that with the use of renewable forms of energy in the two decades, 8% of the energy demands counts the utility of these forms of energy. However, the percentage of use of fossil fuels has been decreased from 86% to 81%. The mix of the usage of both renewable and non-renewable sources of energy will be taking a greater share along with the natural gas that is said to be the cleanest, fastest growing fuel (Behrangrad 2015). The slowest growing fuel due to industrialization related to environmental policies and slowdown of Asian economies. It can be said that the rise of energy demand in 2035 compared to the year 2000 has been decreased from 3.8% in a year to 0.8% in a year (Finn and Fitzpatrick 2014).

The energy policy of United Kingdom is enlisted in Low Carbon Transition Plan in July 2009 and Energy White Paper of 2007 May. The current policies of the company focus on the reforming the Electricity market, improvement of the efficiency of energy, rolling of smart meters, etc. The White paper of 2007 while meeting the energy challenge illustrates the domestic and international strategy while addressing the challenges of long-term energy facing by United Kingdom. They focus on four policy goals such as:

• Putting United Kingdom on a path that will cut the carbon dioxide emissions to 60% in the year of 2050 by considering the real progress of the legislation by 2020
• Maintaining a reliable energy supplies
• Promoting competitive markets in United Kingdom and beyond it (Gelazanskas and Gamage 2014)
• Raising the rate of a sustainable economic growth to improve the productivity
• Ensuring ever home of United Kingdom is affordably and adequately heated

Influence of new policies on energy availability

The impact of the policy is related to the factor of shaping the energy mix of United Kingdom that includes Energy Act 2013 and Climate Change Act 2008. The regulations focused on the reduction of usage of non-renewable sources of energy such as coal and natural gas. It supports the usage of both offshore and onshore power such as bio-fuels, wind power, solar power and nuclear energy. Renewable sources of energy however considered as the attractive and flexible sources of energy (Goulden et al. 2014). However, the recent development of technology has helped on the production and distribution of these forms if energy in a cost-efficient manner.

Demand management strategies are also termed as energy demand management. It is defined as the modification of the demand of energy for the consumers while implementing different methods of behavioral change and financial incentives through education. The goal of the demand management strategies is formulating programs that will encourage the consumers of the country for less consumption of energy during the number of peak hours in a day. It also motivates them while moving the time of energy usage to the off-peak times such as in the weekends or in night times (Goulden et al. 2014). Several benefits of demand-side management strategies that are the cause of benefits to enterprises, consumers, utilities, and societies are described below:

• Stimulation in the sphere of economic development
• Reductions in the sphere of customer energy bills
• Creation of the long term jobs as the result of new technologies and innovations
• Reducing dependency in various foreign energy resources
• Reduction in the distribution, transmission of networks and the need of different new power plants
• Diminishing in the prices of electricity in peak hours
• Reduced air pollution (Harish and Kumar 2014)
• Increase in the competition between local enterprises of energy supply

In the perspective of environmental aspects, decrease of demand of energy because of the improved efficiency helps in reduction of environmental impact in the sphere of energy consumption that is associated with the particular level of production. The promotion of demand side management (DSM) strategies by energy utility companies usually addresses some issues. They are:

• Social and environmental improvement
• Network and reliability issues
• Improved markets (focuses on demand response)
• Cost reduction (Kinhekar, Padhy and Gupta 2014)

Demand Side Response (DSR) is the strategies that are utilized by energy utility companies where consumers are incentivized financially in order to shift or lower their consumption of electricity at the peak hours. The main aim is to help the voltage profiles and manage loads in the electricity network. The energy utility companies while implementing the demand-side response strategies are witnessing various drivers and barriers regarding financial, institutional and technological trends (Liu et al. 2014). The drivers and barriers of the strategies of demand side response are described below.

Lack of knowledge: It is seen that the energy utility companies are not having proper knowledge on the implementation of the strategies of demand side response in order to convince the consumers while consuming less electricity during the peak hours. The most difficult thing is maintaining communication with the target consumers.

Demand side management strategies

Minimal financial incentives: The financial incentives that are provided to the consumers by the energy utility companies sometimes are not sufficient in order to convince the customers to make a shift or reduce the electricity consumption in the peak hours. They have limited resources that lead to less effective strategy implementation in the main field of work (López et al. 2014).

Lack of specialist technology: Many of the energy utility companies in United Kingdom are not using updated technologies in order to keep in track of the energy consumed by the consumers of UK as well as distribution of energy in a cost effective way.

Time consuming: Large energy utility companies have dedicated the energy teams while understanding the response of the strategies with prior knowledge. On the other hand, the smaller companies take a lot of time in understanding the response of the DSM strategies (Ma, Deng Song and Han 2014).

The drivers of demand-side response strategies are:

Low carbon London: Many companies are trialing commercial and industrial customers that support the network of supply of electricity. The companies are focused on using local generation, reducing demand for shorter times. The mission of the strategies is to make a low carbon London in terms of sustainability.

Smarter Network Storage: Smarter network storage will provide the alternative source of electricity that is flexible for the different electricity network operators while supplying electricity to the commercial and residential demand side. It will absorb the excess electricity from the network during the peak hours (Sheikhi et al. 2015).

Energy efficiency: Distribution network operators in UK are focused in forecasting uncertain demands and increasing on the electricity networks. The energy efficient methods will communicate with vulnerable consumers regarding lower consumption of electricity by providing financial incentives.

Distributed generation of energy is defined as the energy stored or generated by grid-connected devices or small devices that are known as distributed energy resources. The greater number of plants generating electricity is connected to both distribution systems and transmission systems.

The drivers of distributed generation are as follows:

Environmental concerns: The increasing concerns of the emission of greenhouse gas and its impact are a global issue. The example of gas, coal, fired power stations while making a significant contribution in the field of emission. The power stations are seen to pollute the environment. Hence, they are focused in driving the mix of technology generation that has low carbon emissions (Shivaharinathan et al. 2016).

Technological innovation: The other drivers like government policy, and environmental concerns, technologies are available in a higher concentration that can innovate solutions using renewable sources of energy.

New government policy: Department of Energy and Climate Change oversee the climate change and energy policy while ensuring the UK energy supplies. They ate security of supply, fuel diversity & low carbon and competitively priced (Soliman and Leon-Garcia 2014).

Barriers of distributed generation can be categorized into the following aspects:

Power Quality concerns: It includes issues in harmonics and Ferro-resonance. Harmonics issues are caused sue to loads, change of magnitude, damage of equipments, etc.

System coordination issues: Issues in system coordination includes fault current considerations, proper coordination, alarm settings, re-closer coordination, defect in the relay settings, breaker trip units, improper size of the equipments, positive & negative sequence, reverse power, etc (Vandael et al. 2013).

System issues in Present day UIT: It includes issues in traditional systems, lesser functionality, complexity, lack of indirect & direct customer education, lack of knowledge in terms of utility programs, personnel of customer service are not tech savvy, lack of higher level startup engineer, etc.

Regulating / Utility body paradigm Shift: These issues include almost no incentives for the energy utilities that are using distributed generation. The issues are transmission problems in utilities, generation process of utilities, distribution issues of utilities (Warren 2014).

Demand reduction is the process of reducing the consumption of the electricity of both residential and commercial sectors of United Kingdom especially in the peak hours. Supply of electricity in the peak hours sometimes become a difficulty in the residential sectors and commercial sectors. The drivers of demand reduction strategies are:

• Reduction of consumption of energy
• Production of renewable source of energy in order to collect more revenue from the market
• Different types of energy utility companies are finding different ways of attaining sustainability (Wu et al.2015)

The barriers of demand reduction strategies are:

• It is almost impossible to convince the consumers in order to lower their consumption or shift in the electricity consumption in the peak hours
• Energy utility companies are facing difficulties in providing financial incentives to the consumers while convincing them in lower or shifting energy consumption (Soliman and Leon-Garcia 2014)

Conclusion

The study is focused on the different aspects of drivers and barriers faced by energy utility companies of United Kingdom in a detailed manner. Various strategies are formulated by these utility companies are following in order to accomplish the goals set by them while convincing the consumers to reduce the usage of electricity in the peak hours. It can be said that the companies especially the small medium enterprises are facing issues in terms of convincing the customers while giving financial incentives to them. The demand management strategies are categorized into three stages demand reduction, distributed generation and demand side response. These three aspects are discussed in details regarding the barriers and drivers of implementation of the strategies by the energy utility companies. However, it can be said that there are many remedial and recommended policies and strategies that are formulated for the company in order to convince the customers in many other ways except financial incentives. Research about the energy consumption has said about the fact that the increase of usage of renewable sources of energy is more than that of the non-renewable sources of energy in many spheres of commercial sectors. The energy utility companies along with other companies are formulating strategies of demand reduction of energy among the residential sectors mainly.

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