DSM Paves the Way for the Smarter Energy

By Hans Nilsson, IDE DSM
Winter 2012

The buzzword of today is "smart". We want smarter energy systems with smarter technologies. The fast development of innovations in the area of ICT, appliances and distributed generation indicates that the future energy systems will be something quite different from what we are used to.

The British researcher Walt Paterson has said that in the future the competition will not be between fuels but between fuel and technology. The smart technology will allow us to be much more energy efficient than today. We can be smart, comfortable and prosperous with smaller footsteps on the earth. We will simply do more with less.

Technology holds the promises to do so, but the technology must get in place. That is what DSM (Demand Side Management) is about. The IEA DSM-Programme deals with all the important institutional issues that are necessary to make the new technologies accepted by customers, by the industry and by the governments.

A technology that is not liked or understood by customers, enabled by industry and proved useful to regulators runs the risk to remain on the shelf. Such technologies often constitutes a potential and quoted in investigations as opportunities, but not accepted by the market. A huge potential multiplied by zero remains zero.

The simplistic models assume that anything that is more profitable for the user is eventually accepted on the market. Practical experience has proven otherwise. The European Union has recently issued an energy efficiency directive aiming at saving 20% of the energy used with profit. The IEA claims equal amounts globally. A recent study from Fraunhofer Institute doubles and triples these numbers.

DSM is about raising the acceptance by among other things working on business-models to distribute and facilitate the uptake on the market, working on behavioural issues to understand what barriers there are to accept new ways to do things and working on integration of renewables into the grid. Some examples:

Competitive Energy Services has been a focus area in which different forms for Energy-Contracting are compared and developed. An Energy Service Company (ESCo) takes over the technical and commercial implementation and operation risks and has to guarantee for its cost and results. Such are well suited to implement innovative energy technologies and also renewable energy systems. The ESCo industry is an expanding business throughout the world contributing to the improvement of energy efficiency, control of energy costs and reduction of greenhouse gas and other emissions.

Integration of Demand Side Management Distributed Generation, Renewable Energy Sources and Energy Storages is a crosscutting activity in which it is in greater detail studied how several new applications may have an impact. There is a complicated interplay between technologies and stakeholders, see figure, to be researched not the least since even if there is an overall gain some important actors may lose from a change and be less prone to work for the new opportunities. In particular use of heat-pumps and electric vehicles have been studied under different scenarios.

The Role of Customers in Delivering Effective Smart Grids. The current pace of change throughout the electricity supply industry is unprecedented. There are many stakeholders in the energy market with different interactions with consumers and different responsibilities. There is a need to map the interactions of different stakeholders with the consumer as the central focus. The way that customers use and relate to technologies such as Smart Meters, electric vehicles, heat pumps and energy storage has a significant impact on their ability to contribute to an effective Smart Grid.

Behaviour change in DSM - from theory to policies and practice. The best ideas, policies and programmes have been shown to fail again and again in achieving their desired outcomes. The current social norm is still NOT to see energy saving behaviour as a major priority in achieving a transition to a sustainable energy system. The complexities influencing human behaviour are so vast and manifold that simplistic approaches almost invariably fail. It is imperative to uncover the context-specific factors (from infrastructure, capital constraints, values, attitudes, norms, culture, tradition, climate, geography, education, political system legislature, etc) that influence human behaviour in specific sectors.