Impact of DSM on energy production cost and start-up and shut-down costs of thermal units

This paper presents a methodology based on equivalent load duration curve and frequency and duration approaches to assess the economic benefits of Demand-Side Management (DSM) load impact in terms of avoided energy production costs and avoided start-up and shutdown (cycling) costs of thermal units. The proposed method is applied to IEEE RTS data to assess the benefits of DSM load impacts. The sensitivity of avoided energy cost and avoided cycling cost is calculated with varying generating capacity reserve margin in the system. From the utility point of view the loss of revenue due to DSM measures is also worked out with certain assumptions and sensitivity of the revenue loss due to DSM actions is again tested with different generating capacity reserve margin in the system. The study finds that the avoided cycling cost is a major benefit of DSM measures. The study also finds that the real revenue loss is far less than the apparent revenue loss seen by the utility as the benefit of reduction in start-up and shut-down costs is not realized in the loss of revenue calculations.