China

CN-14:Demand Side Management Implementation Measures

Policy Description

At the end of 2010, the National Development and Reform Commission released the "Demand Side Management (DSM) Implementation Measures", mandating that utilities develop efficiency programs as well as load management systems and that annual electricity savings and demand savings reach at least 0.3% of the previous year's sale volume and maximum load, respectively. Given that industry accounted for 74% of electricity consumption in 2010, the power sector has to work closely with industry to develop DSM capabilities.

Description

At the end of 2010, the National Development and Reform Commission released the "Demand Side Management (DSM) Implementation Measures", mandating that utilities develop efficiency programs as well as load management systems and that annual electricity savings and demand savings reach at least 0.3% of the previous year's sale volume and maximum load, respectively. [1] Given that industry accounted for 74% of electricity consumption in 2010, the power sector has to work closely with industry to develop DSM capabilities. [2]

The new measures require utilities to implement DSM, but in practice, this implementation requires the cooperation and direct participation of electricity end-users. Provincial utilities and authorities are required to design the overall DSM plan, annual target, and implementation strategies, as well as identify major power users with large DSM potential and offer those users consulting on DSM implementation, potentially via energy service companies (ESCOs). The authorities in charge of pricing are also required to look at pricing incentives as a means to support DSM implementation, such as peak-valley pricing, seasonal pricing, reliability pricing, and interruptible load pricing.

While the end users develop DSM capacity, the utilities are required to develop power load management capabilities. The utilities have the capability to directly monitor at least 70% of their maximum load in each locality (mandatory monitoring capability for all users of more than 100kVa) and to directly control at least 10% of their maximum load.

Verification of energy savings through independent third parties is encouraged but not required. [1] NDRC is developing a protocol of measuring and verifying the savings as well as an evaluation system to assess the performance of utility companies in achieving the annual targets.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 2011

End Date: 2015

Policy Linkages

Supports Energy and Carbon Intensity Targets of the 12th Five Year Plan Effort Defining

Agencies Responsible

National Development and Reform Commission
Ministry of Industry and Information Technology
Ministry of Finance

Primary Objective: Energy

Objective

To encourage integrated resource planning for utilities and give priority to DSM in managing new demand for electricity.

Target Group

Utilities, end users (industry in particular)

Driver of energy consumption or emissions affected by policy: Energy Consumption

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

National coverage for all utilities

Quantitative Target? yes

Target: Every year, utilities should achieve savings equivalent to at least 0.3% of the previous year's electricity sales volume and at least 0.3% of the maximum load of the previous year. Power savings achieved through “orderly power consumption” (i.e., power shutdowns/blackouts) shall not be counted as part of the target. In addition, the utility should have the capacity to monitor at least 70% of its maximum load and to control at least 10% of its maximum load. All end-users of 100 kva and above shall be monitored.

Time Period: January 1, 2011 - December 31, 2015, annual compliance

Progress Monitored? yes

Verification Required? no

Enforced? yes

Requirements on the Target Group

Support by Government

Implementation Toolbox

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions China’s electricity sales in 2010 totaled 3.53 trillion kWh [2], so a 0.3% reduction would roughly translate to 11 billion kWh.
Estimated costs/benefits for industry Not available
Estimated cost for government The DSM fund will come from the public utility surcharge beyond the electricity rate, revenue from differentiated electricity prices, and other government budget allocations. The DSM fund is to be used for construction, operation and maintenance of power load management system, subsidies to implement pilot, demonstration and key projects, subsidies to implement orderly power consumption and promotion, training and evaluation related costs. Legitimate expenses in DSM implementation by power grid companies can be incorporated into power supply cost.

References & Footnotes

References

[1] National Development and Reform Commission. Demand Side Management Implementation Measures. http://www.sdpc.gov.cn/jjyx/dzxqcgl/W020101116375881838232.pdf

[2] China Electricity Council. Statistical Overview for Electricity Sector 2010. http://www.cec.org.cn/xinxifabu/2011-02-09/39714.html