Maharashtra Introduces Draft Demand Flexibility Regulations Framework 2024 To Enhance Grid Efficiency And Support Renewable Energy

Introduction

The Maharashtra Electricity Regulatory Commission (MERC) has proposed a new set of regulations titled “Draft MERC (Demand Flexibility and Demand Side Management – Implementation Framework, Cost-effectiveness Assessment; and Evaluation, Measurement and Verification) Regulations, 2024”.[1] These regulations aim to improve grid efficiency and support the growing integration of renewable energy sources in the state.  

Explanation (key points)

• Background
  • MERC’s previous regulations: The MERC previously issued Demand Side Management (DSM) Regulations in 2010, focusing on energy conservation and load management.
  • Maharashtra’s leadership in renewable energy: Maharashtra has been a leader in promoting renewable energy through feed-in tariffs and portfolio obligations.
  • Need for a more flexible grid: The increasing use of renewable energy sources like solar requires a more flexible grid that can adapt to fluctuating generation patterns.
• Need for New Regulations
  • Changing energy landscape: The changing energy landscape with distributed generation and emphasis on solarization necessitates a shift from DSM to Demand Flexibility (DF) programs.
  • DF supports the integration of renewables: DF allows loads to adjust based on real-time generation, supporting the integration of renewables.
  • Comprehensive framework: The new regulations propose a single, comprehensive framework encompassing DF, DSM, and evaluation aspects.
• Key Features
  • Demand Flexibility Portfolio Obligation (DFPO): Distribution licensees will have a cascaded target to achieve a specific percentage of flexible demand compared to the peak demand (3% in year 1, increasing to 7% by year 5).
  • Incentives and Disincentives:
    • Distribution companies will receive incentives for exceeding DFPO targets and face disincentives for underachievement.
  • DF/DSM Consultation Committee:
    • A committee of experts will review DF/DSM program proposals from licensees and make recommendations to the Commission.
  • Technological Interventions:
    • The regulations recognize Electric Vehicles (EVs) and other technologies like thermal energy storage and heat pumps as potential sources of demand flexibility.
  • Cost-effectiveness Assessment:
    • Existing cost-effectiveness tests from the 2010 regulations are retained.
    • The framework considers potential revenue streams from ancillary services offered by flexible demand resources.
• Evaluation, Measurement and Verification (EM&V)
  • Three types of evaluations: The regulations introduce three types of evaluations for DF/DSM programs: process, impact, and market effectiveness.
  • Independent verification agencies: Independent verification agencies with relevant expertise can be appointed by licensees to conduct these evaluations.

Conclusion

The Maharashtra Draft Demand Flexibility Regulations Framework 2024 represents a crucial leap towards a more modern and efficient power grid. By promoting demand flexibility and integrating renewable energy sources, these regulations can contribute to a more sustainable and reliable electricity system for the state.

[1] https://merc.gov.in/wp-content/uploads/2024/08/EM_Demand-Flexibility-DSM-Regulations-2024-2.pdf