Effective Electrical Energy Policies in terms of DSM Hyunah Song Korea Electric Power Corporation Republic of Korea Abstract This paper investigates how well energy policies are adopted and operated. In terms of DSM or the Demand Side Management, ways of modifying energy demand are introduced. Also their effects are showed. Furthermore future plans of DSM are illustrated shortly. Key words: energy policy, DSM, Load Management, Energy Efficiency 1. Introduction Policies to promote new and renewable energy industry are adopted by lots of countries in these days. Korea government provides long-term and low-interest loans for the customers or manufactures of new and renewable energy systems which have been completely commercialized. Additionally, the government has subsidy programs to create an initial market for new and renewable energy technologies. However production ratio of new and renewable energy to that of all kinds of energy is not exceeding 5% in most of the countries including Korea. That means that governments “still” should consider policies that use traditional energy effectively. Therefore it is worthy to analyze effective policies to energy in other countries. In the paper, Korea Electric Power Corporation or KEPCO’s policies to effective energy consumption are presented in terms of Demand Side Management, or DSM. 2. Demand Side Management Programs A. Definition of DSM The word, “Demand” means energy demand. DSM may seem to be an unrealistic goal because it is difficult to control consumers’ demand by suppliers’ intention. However it is not a forceful act, but really a voluntary one made by the consumers. DSM refers to the various efforts of power companies to effectively meet power demands by modifying customers' usage patterns with the least amount of cost. The figure below is the Daily Load Curve for the highest demand day in 2008 in Korea. (Unexpectedly, the highest demand in 2009 was in winter due to cold weather.) The horizontal line is a time line from 0 to 24 hours. And the vertical line is an overview of the energy amount produced. And these colorful areas show the various energy resources. The bottom zone in pink represents the power generated by nuclear energy, which is the most inexpensive resource in Korea. The yellowish green represents the imported coal energy and the blue represents the domestic coal energy. We call this rectangular shape the “Baseload ”. And the other area is called the “Non-baseload ”. The area is a representation of energy produced by oil, LNG and hydro that are responsible for quickly meeting demands but unfortunately they are costly in Korea. So if the Non-baseload peaks lessen: to nearer: the Baseload peaks then this would cut down the generation costs. In sum, energy production fees depend on when energy is consumed as well as how much energy is spent. That is why the DSM is adopted. [Unit: MW] 60,000 Non-baseload (by Oil, LNG, Hydro ) Baseload (by Nuclear, coal) Fig 1 The Daily Load Curve B. Types of DSM There are two ways of DSM. The first way is through the Load Management Program, which makes the peak load move to an inexpensive load. And it is implemented to level load patterns down by lessening the gap between peak loads and minimum loads. And it is also called the Peak Clipping, the Load Shifting, or the Valley Filling. Load Management Program Energy Efficiency Program KW KW Hr Hr Fig 2 Types of DSM Fig 3 The Peak Clipping Fig 4 The Load Shifting Fig 5 The Valley Filling And the other way is the Energy Efficiency Program. It helps customers demand less energy with the newer appliances than with the older, traditional appliances. It means that the Energy Efficiency Program refers to a program that curtails demands through energy efficient appliances and equipment. And it is called the Strategic Conservation. Fig 6 Strategic Conservation C. Structure of DSM implementation DSM is carried out as Fig 7. One of our government departments, the Ministry of Knowledge Economy sets up the DSM policy. And the Electric Power Industry Technology Evaluation & Planning is in charge of fund management. The DSM funds are raised from all customers’ electric bill. It is 3.7% of the rates. KEPCO, a public company for transmitting and distributing electricity operates the DSM program and it offers incentives to DSM participants. So it might be arguable that rate payers who don’t participate in the DSM program waste their money without any benefits. But, the DSM program makes utility companies cut their operation costs. So electricity rates would be increased: without this program. Therefore DSM is beneficial to all the utility companies, the participants of DSM and the other rate payers. Ministry of Knowledge Economy Plan Policy Electric Power Industry Technology Evaluation & Planning Center (Fund Management) Fund Coordination Participation All Customers KEPCO DSM Customers Fund Incentives Fig 7 Structure of DSM Implementation D. The Load Management Program There are several kinds of Load Management Programs. Below are detailed explanations. i. Adjusting Vacation & Maintenance Schedule With this program, customers who reduce their peak demand during specific days that KEPCO planned in advance are given monetary payments. To be eligible, customers’ peak demand should be more than 100kW. Also there are requirements for payments. The customers should reduce their peak demand by more than 3,000kW or 50% of the previous year’s peak demand. The customers who cut down their peak successfully are paid the amount of money that is reduced peak demand times incentive rates. And this program’s incentive rates are $0.64/kW. Furthermore there are additional benefits to the long-term contracted customers. If the customers contract with KEPCO consecutively for 3 years and reduce the load every year, the 5% extra incentives are given in the second year and the 10% extra in the third year. ii. Voluntary Load Reduction This program is similar to the former, Adjusting Vacation and Maintenance Schedule. For this program, financial incentives are offered for the customers who reduce their demand at 2 PM~4 PM. Like the former, customers’ peak demand should be more than 100kW. And the eligible customers should reduce their average demand between 2 and 4 PM by more than 3,000kW or 20% of their demand between 10 AM to 12 PM in the same day. And average demand is calculated every 30 minute. So if customers failed to cut down their peak demand one time frame among 4 frames, the incentives are calculated with just 3 time frames. And the incentive rates are $0.16/kW per one time frame. There are the same benefits to the long-term contracted customers. It is the 5% extra incentives in the second year and the 10% extra in the third year. iii. Thermal Energy Storage System This system is similar to an air conditioner. It differs in that it turns water into ice at night time when the electricity rates are inexpensive. Then the stored ice is used for the conditioner during the daytime. From the Daily Load Curve we can make sure that the energy at night is made of inexpensive resources such as nuclear and coal. So the electricity rates are not expensive. From 1972 KEPCO started to encourage customers to use more energy at night rather than during the daytime. And KEPCO has promoted the Thermal Energy Storage System since 1991. Fig 8 System Operations (ordinary A/C vs. Thermal Energy Storage Sys.) From Fig 8 above, the traditional A/C is on the left and the thermal energy storage system is on the right. Because the thermal energy storage system can make chilled water or ice at night, it needs a much smaller chiller than the ordinary A/C does. From Fig 9 below, the chilled water or ice are kept in the storage tank. Customers who installed this system can save on the bill for the inexpensive electricity rates at night. And the utility companies can save their generation costs by peak clipping. However building this system needs much more budget than building the traditional ones. So there are a various incentives. Fig 9 System Layout (ordinary A/C vs. Thermal Energy Storage Sys.) First of all, subsidies are provided to customers who installed this system. And the funds are paid in proportion to the reduced energy. The payment rates are in the table above. Table 1 Payment rates for the Thermal Energy Storage System Reduced Energy 0~200kW 201~400kW 401kW~ Subsidy $ 470/kW $ 410/kW $ 343/kW Moreover, KEPCO gives additional subsidies to the designing company that promoted this system. And customers ’ investing money can also be subtracted by 10% through Income Tax Deduction. And they also borrow investing money with low rates. These benefits are for encouraging the thermal energy storage system. iv. Remote Controlled Air-Conditioners Remote controlled air-conditioner refers to an air-conditioner which is installed with the pager that permits KEPCO to periodically turn it off and on during summer. KEPCO operates the control system within the extent of giving little discomfort to the customers. From Fig10, KEPCO makes the A/C compressor stop with 10-minute-cycle and changes temperature-setting of the A/C. Usually KEPCO controls the A/C for 2~3 hours. And the subsidy is $138 per the A/C ’s consuming energy. It is paid just one time. Fig 10 Control Mechanism of the Remote Controlled Air-Conditioner v. Demand Controllers It is a device which can control energy demand so that the installers can save their energy bills. And KEPCO offers financial incentives to the customers since the DC contributes to reduce Energy demand.