PARTICIPATINGCOUNTRIES

dSmSpotlightThe Newsletter of the International Energy Agency Demand-Side Management Programme December 2012

Note From the ChairmanThe Year in ReviewLooking back at 2012, I'm filled with mixed feelings. The IEA DSM Programme produced a number of excellent reports. Among them are:

• Integration of Demand Side Management, Energy Efficiency, Distributed Generation and Renewable Energy Sources

• Competitive Energy Services • Best Practices in Designing and Implementing Energy

Efficiency Obligation Schemes

These reports are not only relevant to their specific topic, but also in a broader sense as they underline and support the work of the energy efficiency thoughts of all of the IEA, as embedded in the latest IEA World Energy Outlook.

Even more important then the reports, is the networking and information exchange that occurs in a Task and because of a Task. These exchanges inspire and often forces one to think out of the box.

On a national level, I dare say that organising energy services in the Netherlands has gotten a real boost from the IEA DSM work on Competitive Energy Services.

Austria

Belgium

Finland

France

India

Italy

South Korea

Netherlands

New Zealand

Norway

Spain

Sweden

Switzerland

United Kingdom

United States

SPONSORS RAP

continued on page 7

Last September the European Parliament accepted a new Energy Efficiency Directive that holds an annual energy savings target of 1.5% until 2020. Starting in 2014 countries must report every three years on their progress towards this target and the impact of implemented policies and measures. It is expected that the European standard on energy savings calculation will be used in the new reporting system. To illustrate the use of default values and deemed savings as well as metered ones, DSM Task 21: Standardisation of Energy Savings Calculations prepared country reports detailing the key elements for energy savings that are applied in case applications in France, Norway, Netherlands, South Korea, Spain and the USA.

Although an increasing number of countries and states seem to be interested in improving cost efficient reporting by using default values and deemed savings, the selection of values is not easy. Even a simple default value as burning hours of a lamp in a house shows a range in the case applications. To help with this, a new work topic for DSM Task 21 is on collecting default values and deemed savings in combination with discussing the selection of a set of internationally acceptable defaults. An outcome of this work could be a calculation toolbox based on the key elements for savings that holds a selection of algorithms and tables with default values. Such a toolbox would help to visualize the range of savings, depending on the selected preferences as baseline values, unit of savings and normalizations.

If you would like to participate in these discussions please contact the Task 21 Operating Agent, Harry Vreuls of NL Agency in The Netherlands, email harry.vreuls@agentschapnl.nl

InsIde Task 21 1 | Chairman's Note 1 | Task 23 2 | Smart is the Word 3 | New Zealand 5

Task 21Are International Default Values for Energy Savings Calculations Feasible?

DSM Spotlight December 2012 | 2

continued on page 3

The IEA DSM Programme started new work on DSM and Smart Grids in June. Participants are collaborating to explore the potential risks and rewards associated with Smart Grids from the perspective of consumers. By drawing together international experiences and identifying best practices, participants will work to ensure that the demand side becomes an integral component of a successful Smart Grid.

DSM Task 23 focuses on the interaction of policies, technologies and tools with consumers, and examines the impact of these interactions on the effectiveness of Smart Grids, as illustrated in Figure 1.

To begin the work, participants have been exploring the impact of electricity markets on the customer’s ability and willingness to participate in Smart Grid initiatives.

The market interactions with consumers are complex and influenced by a wide range of factors including the electricity market structure. For example, a market that is not fully unbundled makes it difficult to enter the market and offer innovative new products and services to consumers, thus limiting choice to consumers. Similarly, a retail monopoly may have little incentive to provide increased choices to consumers, for example, due to concerns over ensuring they can maintain their allowed level of regulatory return. They may also have little or no flexibility over the way tariffs are structured, and changing tariff structures can be difficult.

However, while the lack of competition is generally regarded to be a barrier to the introduction of new innovative products, including those relating to Demand Side Management and Integrated Resource Planning, there are specific aspects of a fully unbundled market that make it more difficult for consumers to become active participants in the

implementation of Smart Grids. Some of these are highlighted below.

▶ Broken Value ChainIn an unbundled electricity market, the value chain for demand side management products and services is ‘broken’, that is the benefits of particular actions are distributed amongst a number of disparate stakeholders. A market mapping exercise conducted by each of the Task’s participating countries demonstrates unbundled electricity markets do not provide for a co-ordinated approach for the supply of and demand for demand side management services and products.

▶ Consumer Understanding of Market Stakeholder Roles

There are many stakeholders in the energy market, each having specific roles and responsibilities. These differing roles and responsibilities are not necessarily well understood by consumers, and thus it may not be a straightforward process for consumers to be able to define the impact of their energy end use on the different stakeholders. For example, consumers may not understand the significance of the pattern of their electricity consumption on the local network company (or indeed have an awareness of their local network company and its responsibilities).

Task 23The Role of the Demand Side in Delivering Effective Smart Grids

Figure 2. Impact of markets on customers

Figure 1. Overview of IEA DSM Task 23: The Role of Customers in Delivering Effective Smart Grids.

Participating Countries• Netherlands

• Norway

• Republic of Korea

• Sweden

• United Kingdom

DSM Spotlight December 2012 | 3

smartSmart is the Word – DSM is the Grammar

Delivering Effective Smart Grids from page 2

continued on page 4

▶ Too Much Consumer ChoiceThe increasing move towards competition in electricity supply means more choice for consumers who can (in theory at least) choose when to purchase, how much to purchase and from whom. The need for Electricity Companies to retain existing consumers and attract new business ensures that they focus on providing cost effectiveness and consumer service. This leads to the introduction of innovative and new products and services. However, while this is important, it does not always help consumers become active participants. For example, too much choice can make it very difficult for consumers to compare offerings and select the one that is best for them.

The next stepsThese findings, together with a more detailed understanding of the interaction between customers and Smart Grid interventions, will be used to ensure that offers and programmes are designed to deliver tangible benefits to consumers. This could include direct benefits associated with Smart Grid deployment, or additional functionality or services that represent “added value” to the consumer.

To learn more about the IEA DSM work’s on Smart Grids visit the DSM Task 23 web page or contact Linda Hull, Task Operating Agent, Linda.Hull@eatechnology.com

smart is the word of the day - Smart meters, smart appliances, smart grids. But what does it mean? What is the difference between smart and ordinary? Smart yes, but in what sense – for what purpose? And not the least, smart for whom? Smart is just an adjective that should be put in a context, and I think we need a syntax - grammar - to give the word “smart” a distinction that can be used, understood and transmitted. I also think that DSM is the grammar! How?

Let us begin with the observation that technology today is creating marvelous new opportunities. These opportunities will make our lives easier, but also more complicated! The additional choices and thus the combinations of them complicate things. That is why we have to be smart(er)!

Technology for energy use is developing on three frontiers 1) Information and Communication Technologies (ICT), 2) Appliances and 3) Distributed Generation.

▶ ICT enables the operation of systems and their parts in a manner that may be much more tailored to local circumstances and needs of the customer/user and less dependent on the conditions in the overlaying infrastructure. The dog may wag the tail rather than the other way around.

▶ Appliances are becoming more sophisticated through the use of communication, but also by using the infrastructure opportunities. Plug-in hybrid cars can be an appliance!

▶ Distributed generation is getting smaller and more readily available on the household scale—both for heating (heat-pumps) and electricity (PV, wind, small-scale CHP).

The developments in the first two of this list, ICT and Appliances, are probably what have given birth to the use of the world smart in the context of energy. The political use of the word partly reveals a hope that the energy problems we perceive can handle themselves because the technology will take care of them. Why should humans have to be smart when the technologies can be!?

But the real smartness kicks in with the third area—Distributed Generation—which allows us to generate our energy with locally available resources and in amounts that correspond more to our needs. We are able to harvest far more renewable energy and create a much more reliable supply with this technology. This is where the grids get smart!

But a distributed supply also changes the game of

'We have to admit that there is a risk in the word smart—the risk of self-deception. Many

politicians who support smart solutions also seem to confuse

smart with automatic'.

DSM Spotlight December 2012 | 4

DSM. As long as energy is provided in a stream from a distant source and is gradually lost in the “utility range”, it is clear that reducing the demand by using more efficient technologies to provide the services (heat, cool, motor power, light) is the only way to reduce the impact ,“upstream”. In this scenario, Demand Side Management is the only tool in the box.

Local generation however changes the perspective. The “upstream” impact can be reduced by using local resources. Where does this leave DSM in the future? Does DSM become obsolete when everybody can generate a supply of their own?

The British researcher Walt Paterson states in an article1, ”We hear a lot about competition as a way to get the best energy services. What we need to understand is that the key competition is not between different suppliers of fuel or electricity. The key competition is between fuel and technology. The better the user-technology, the less fuel we need to get the service we want. We need to shift the balance away from fuel, toward technology.”

He adds that to cover the new supply technologies, “Traditional centralised electricity needs radial one-way networks. ….. Innovative electricity will be much more decentralised. It will have meshed two-way networks linking many more much smaller generators with applications of broadly similar sizes. All parts of the system will be heavily instrumented, communicating with each other continuously in real time.”

We have to admit that there is a risk in the word smart –the risk of self-deception. Many politicians who support smart

solutions also seem to confuse smart with automatic. The smart meters shall provide their hosts with economic information that they readily use to change equipment and behaviour. The problem is, however, when the user is not “the economic man” such information will hardly be understood and used and thus only provide more confusion and frustration.

But this can also be turned the other way, as projected in the US Green Buttondata project where the data is transformed and then used by professionals to provide the meter-host with a solution.2 That’s smart!

There is yet another risk when navigating this new technology landscape and that is to be bewitched by the fanciness of the supply side. It happens all the time. We are more easily attracted to the shining PV on the roof than to the pump in the dark basement. But still energy efficiency is where to find the big money. The cheap saved kilowatt-hours are still the cheapest. And by chasing them first, that is old-fashioned DSM work, we can size the renewable additions more accurately and really boost their use.

Going for the sustainable system that makes the cleverest use of all resources requires that we are able to do both things. Energy efficiency comes first and renewable energy the consequence.

So to be truly smart and to give “smart” a meaning, we have to put it in context by using the correct grammar. Demand Side Management, DSM!

This article was contributed by Hans Nilsson of FourFact AB and Advisor to the DSM Programme, www.fourfact.se

Local resources changes the view

1 ”Everything you know about electricity is wrong”. http://www.abc.net.au/environment/articles/2011/06/10/3239321.htm

2 http://www.greenbuttondata.org/

"Smart is the Word"? from page 3

DSM Spotlight December 2012 | 5

New ZealandDSM Programme Welcomes New Member

continued on page 6

Paul Atkins, CEO of the National Energy Research Institute (NERI), is delighted to be representing the New Zealand Government as the New Zealand Executive Committee member in this important Programme.

NERI is an independent organisation established to bring together energy researchers, government officials, and all facets of the New Zealand energy industry and related businesses, to exchange ideas and work together on New Zealand’s energy issues. NERI’s mission is to stimulate, inform and facilitate New Zealand's transition to a sustainable energy future.

With members drawn widely from research, industry and government, NERI is now establishing a collaborative governance model as its principal modus operandi. Making sense of the increasingly complex inter-dependencies between energy (supply and demand), and almost all walks of life, requires a much more joined-up approach than has hitherto been evident. This consensus-building approach offers a far more robust process for tackling these complex issues. NERI's independence and not-for-profit status enables it to act as a trusted facilitator in establishing opportunities for dialogue.

In some ways New Zealand is in an enviable position, with an abundance of hydro, wind, wave, tidal, solar, biomass and geothermal energy, as well as large (potential) oil and gas deposits. Currently, over 75% of its electricity is already generated from

renewable sources. Beyond this, the Government has set a target of 90% renewables-generated electricity by 2025. This alone is an ambitious target, but after adding into the mix the country's high current dependency on imported oil and increasing consumption of fossil transport fuels, the total (sustainable) energy picture looks a lot more complex. In addition, due to our high dependency on hydro-electricity, and the fact that our hydro generation is centered in the less-populated South Island while the majority of demand is in the North Island, the country occasionally runs into serious supply issues, especially during dry years. This phenomenon has been discussed in the IEA’s Saving Electricity in a Hurry (2005) and its 2010 update. With the likelihood of an increasingly variable electricity supply from renewables, government and industry are recognizing that demand-side management will be of critical importance in the future.

Membership in the IEA DSM Programme affords New Zealand a huge opportunity to benefit from the shared learning and experiences of such a significant pool of expertise, as well as contribute to future learning. DSM is not only important for managing electricity supply – more and more governments and the IEA have realised that without understanding the complexities of human behaviour, we will not achieve the high level of energy efficiency improvements needed to reach the 450 (ppm CO2 in the atmosphere) scenario proposed by the IEA (World Energy Outlook 2012).

Makara wind farm near Wellington, New Zealand. (photo by Sean Gillespie)

DSM Spotlight December 2012 | 6

New Zealand from page 5

New Zealand’s Energy Futures NERI will hold a two-day conference on New Zealand’s energy futures in Wellington from February 12-14, 2013.

DSM Task 24 will hold a workshop on the following day (February 15). If you would like to attend the conference and DSM Task 24 workshop, please register here.

For all these reasons, NERI is delighted to be closely involved in Task 24 under this programme, looking at Closing the Loop on Behaviour Change and Turning Theory into Practice. New Zealand's Energy Efficiency and Conservation Authority (EECA) is very keen to draw actionable learnings from existing research findings in behaviour change as applied to energy in practices, policies and programmes. This Task provides the perfect vehicle to achieve some actionable outcomes for New Zealand.

Dr. Sea Rotmann, a former board member of NERI and former Principal Scientist of EECA, is one of the researchers leading this Task, together with Dr. Ruth Mourik from the Netherlands. Her intimate knowledge of the difficulties practitioners and policymakers face ‘in the real world’ makes her the perfect counterpart to the strong theoretical social science expertise brought by Dr. Mourik and other participating experts around the world.

This Task will significantly contribute to helping those designing, implementing and evaluating DSM programmes, policies and projects to best utilise different theoretical perspectives and disciplinary approaches to behaviour change. We are very

encouraged by the great interest and in-kind contributions this Task receives from behavioural experts from many sectors and disciplines around the world. We know that NERI’s stakeholders will profit from the New Zealand specific case studies (Subtask 2) and recommendations (Subtask 4) of this Task, and also the overview of the complexity of the landscape (Subtask I), better evaluation tools for successful behaviour change outcomes (Subtask 3) and the combined knowledge and experience sharing as gathered in the expert platform (Subtask 5).

Our New Zealand national expert, Dr. Janet Stephenson from Otago University, is co-leading the highly successful interdisciplinary Energy Cultures research programme, which has just been awarded additional funding for another 4 years. The new programme extends the research from understanding household ‘energy cultures’ to also examining energy behaviour change in SMEs and transport. This of course fits very well with the main topics of DSM Task 24, namely building retrofits, smart metering, transport and SMEs. Dr. Stephenson draws from this work and her wider links with energy researchers in New Zealand to contribute to the many workshops, webinars and online interactions associated with this Task. DSM Task 24 is also generating international exchanges of knowledge, case studies and current research findings between those involved, which is of huge benefit to all of the countries involved.

We look forward to a fruitful and enjoyable cooperation with the international DSM community.

This article was contributed by Paul Atkins, Chief Executive of NERI, paul@neri.org.nz; Janet Stephenson, Director of Centre for Sustainability, University of Otago, janet.stephenson@otago.ac.nz; and Dr. Sea Rotmann, DSM Task 24 Co-operating Agent, drsea@orcon.net.nz.

‘Membership in the IeA dsM

Programme affords new

Zealand a huge opportunity

to benefit from the shared

learning and experiences of

such a significant pool of

expertise, as well as contribute

to future learning’.

DSM Spotlight December 2012 | 7

No. 47, December 2012Editor: Pamela Murphy

KMGroup, USA

The DSM Spotlight is published several times a year to keep readers abreast of recent results of the IEA Demand-Side Management Programme and of related DSM issues. IEA DSM, also known as the IEA Implementing Agreement on Demand Side Management, functions within a framework created by the International Energy Agency (IEA). Views, findings and publications produced by IEA DSM do not necessarily represent the views or policies of the IEA Secretariat or of the IEA's individual member countries.

For information on the Programme, its work and contact addresses, visit our website at www.ieadsm.org

www.ieadsm.orgVisit the DSM Programme's website for easy access to reports, news and contact information.

Chairman's Note from page 1

This year, the DSM Programme was also successful in continuing its work by starting two new Tasks: Task 23: The Role of Customers in Delivering Effective Smart Grids and Task 24: Closing the Loop - Behaviour Change in DSM, from Theory to Policies and Practice. In 2013, a number of Tasks coming to an end will most likely be extended, among them is Task 17: Integration of DSM, Energy Efficiency, Distributed Generation and Renewable Energy Sources.

On the downside, DSM is not doing very well in the popularity polls on Energy Efficiency as it experiences a drop in popularity.

In economic hard times, policymakers look for hardware and certified jobs. DSM work is concentrated on models and methods. Models to combine energy options with possibilities of end-users shifting their time of use and load and methods to become more energy efficient. Energy efficiency has the potential to be a job creator, as a number of studies have shown (e.g., Wei et all. Energy Policy Volume 38, Issue 2, February 2010,

pages 919–931). But in the end, “hard” measures like carbon capture and storage (CCS) are more appealing to policymakers.

This attitude makes it increasingly harder to find financing for our work in the national budgets. Fortunately, the professionals in the DSM field are creative so we are noticing increased enthusiasm by industry. Not only did we see this in the DSM Programme membership with the European Copper Institute joining our ranks, but within the Tasks as the number of industrial participants keeps growing.

As we close out 2012, DSM Programme members look forward to contributing to a more sustainable society in 2013. Not only in our own right, but also in collaboration with our members and others in the Energy Technology Network.

Rob KoolChair, IEA DSM Programme

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