Ensuring environmental sustainability is one of the activities that companies can take up as part of their corporate social responsibility (CSR) obligations under schedule VII of the new Companies Act. This provides an excellent opportunity for companies to contribute to Indias energy security and climate change concerns. Demand side management (DSM) initiatives are one crucial and relevant way for companies to work towards environmental sustainability.
DSM generally refers to initiatives undertaken by electric utilities/distribution companies (discoms) to motivate and facilitate their consumers to adopt select electricity saving, load management, fuel substitution (substituting electricity with, say, solar energy) or demand response measures (collectively referred to as DSM measures). DSM includes maintaining or enhancing the economics and quality of service provided to consumers.
Conserving electricity through DSM makes a lot of sense in the Indian context not only because power generation in India is the largest contributor to CO2 emissions (roughly 42-43% of total CO2 emissions of 1.745 billion tonnes in 2011) but also because the potential to save electricity through efficiency measures is huge. The Planning Commissions Integrated Energy Policy Report estimates that at least 15% of total generation can be saved. This translates into a potential saving of 136 billion units of electricity at todays generation levels, or reduction of CO2 emissions by about 136 million tonnes per year at optimum levels.
The beauty of DSM is that, although the funds for facilitating it come from consumers themselves, appropriate selection of DSM measures accomplishes load and energy relief for the power utilities, respite from power cuts for consumers, and reduction of the countrys CO2 emissionsall of this economically, i.e. without burdening consumers with enhanced tariffs, and government and discoms with enhanced subsidy bills. In the Indian context, where consumers face shortages as well as spiralling tariffs, DSM by utility companies is really important.
American, European, Australian and even some Asian power utilities have mainstreamed DSM in their day-to-day operations. The usefulness of DSM can be gauged from the fact that utilities, especially in the US, are now routinely spending as much as 2-3.3% of their annual revenues on DSM. But distribution company-led DSM initiatives have hardly taken off in India, except in Maharashtra. Under the regulatory regime of the Maharashtra Electricity Regulatory Commission, mostly privately-owned utilities in Mumbai have been designing and running DSM programmes since 2005.
It is not as if no efforts have been made to introduce DSM in other states. The