DSM Initiatives

Demand side management (DSM) is an effective way to improve energy efficiency in a cost effective manner, by changing the energy consumption patterns of various consumers. It encourages the installation of products with improved end-use technologies that consume less energy, thereby reducing the overall electricity bill of the consumers. DSM fine-tunes electricity consumption with the production and distribution of electricity, thereby helping utilities reduce their peak power purchases on the wholesale market, and by lowering their overall operational cost. Various DSM initiatives have been adopted by utilities and encouraged by the government to achieve energy efficiency for both industrial as well as household consumers.

DSM programmes 


Energy Efficiency Services Limited’s (EESL) Unnat Jyoti by Affordable LEDs and Appliances for All (UJALA) scheme has significantly contributed to energy efficiency improvement by promoting the use of LEDs, and energy efficient fans and tube lights. Launched in 2015, UJALA is one of the most effective DSM initiatives in the country for promoting energy efficiency in the lighting industry. Under the scheme, EESL distributed LED bulbs to households at 40 per cent of the market price, bearing the total upfront investment and risk coverage. The key success factor behind the scheme has been the decline in LED prices owing to demand aggregation and bulk procurement.

As of March 18, 2020, 362.19 million LEDs have been distributed across the country. This has resulted in annual energy savings of 47,037 million kWh, cost savings of Rs 188.15 billion, peak demand reduction of 9,417 MW, and carbon dioxide reduction of 38.1 million tonnes (mt). Apart from this, EESL is distributing energy efficient tube lights under UJALA. So far, 7.18 million tube lights have been distributed under the scheme. EESL is also implementing a national scheme, PAVAN, under UJALA for the distribution of Bureau of Energy Efficiency (BEE) 5-star rated energy efficient fans. As of March 18, 2020, about 2.32 million fans have been distributed under the scheme, which is equivalent to energy savings of nearly 215.73 million units (MUs) per year.


For industrial consumers, one of the key DSM programmes is perform, achieve and trade (PAT) scheme, which has created a market for trading of energy saving certificates (ESCerts). These certificates are issued to industries that reduce their specific energy consumption beyond the target. The PAT scheme was launched in 2012 by BEE under the National Mission on Enhanced Energy Efficiency. PAT is a multi-cycle scheme and is now in its third cycle of implementation (2017-18 to 2019-20). This cycle, with an energy reduction target of 1.06 mt of oil equivalent (mtoe), covers 116 designated consumers (DCs) across six sectors – thermal power plants, cement, aluminium, pulp and paper, iron and steel, and textiles.

PAT cycle IV (2018-19 to 2020-21) has been notified on March 28, 2018 with a total of 109 DCs and a total reduction target of 0.6998 mtoe. These DCs are from eight sectors consisting of six existing sectors and two new sectors – petrochemicals (naphtha crackers and gas crackers) and commercial buildings (hotels). PAT cycle V (2019-2020 to 2021-22) has commenced from April 1, 2019 with 110 DCs from the existing sectors of PAT. The total energy consumption of these DCs amounts to 15.244 mtoe and it is expected to generate total energy savings of 0.513 mtoe.

Under PAT cycle I (implementation period 2012-13 to 2014-15), the DCs achieved 8.67 mtoe energy reduction, or around 1.25 per cent of the total primary energy supply in India, overachieving the target by 30 per cent. PAT cycle II (2016-17 to 2018-19) covered 11 sectors with an energy savings target of 8.87 mtoe.


The agriculture demand side management (Ag-DSM) scheme was initiated by BEE during the Eleventh Five Year Plan (2007-2012), with the objective of reducing the energy intensity of agriculture pumping sector by carrying out efficiency upgradation of agricultural pumpsets. Under AgDSM, inefficient agricultural pumpsets are being replaced with BEE 5-star rated energy efficient pumpsets.

In the first pilot Ag-DSM project implemented in Solapur district of Maharashtra, 2,209 pumpsets have been replaced with energy efficient star-rated pumpsets reflecting annual energy savings of 6.1 MUs. The replacement of 590 old agriculture pumps with new star-rated energy efficient pumps in Phase I in the Nippani and Byadgi circles of Hubli Electricity Supply Company Limited has also been completed successfully, having achieved energy savings of 37 per cent. In this regard, an MoU was signed by BEE with the Indian Council of Agricultural Research to conduct training and awareness programmes for farmers to promote the use of energy efficient agricultural pumpsets, which will help double farmers’ income and produce “more crop per drop”. In 2018-19, training and awareness programmes have been conducted in Nagaland, Chhattisgarh, Sikkim, Gujarat and Andhra Pradesh.

EESL is also working to provide reliable solar power supply to agricultural pumpsets by setting up solar mini-grids. Solar-powered PV pumpsets can be used to irrigate the farms during day time, thereby reducing dependence on diesel fuel. As of February 2020, EESL has installed over 73,800 pumps in Andhra Pradesh and Uttar Pradesh.


Apart from this, BEE is implementing the municipal demand side management (MuDSM) programme with the aim of improving the overall energy efficiency of urban local bodies (ULBs). BEE has identified immense energy saving potential in the municipal sector. The programme covers 175 ULBs across the country to conduct energy audits, prepare detailed project reports and implement through energy service company mode. Implementation of demo projects in 15 ULBs was undertaken on a pilot basis during the Twelfth Plan period (2012-17).

National Programme on Energy Efficiency and technology upgradation of MSMEs

Recognising the importance of micro, small and medium enterprises (MSMEs) in promoting energy efficiency, the National Programme on Energy Efficiency was flagged off by BEE in 2007. The lack of finance is one of the stumbling blocks for MSMEs to implement energy conservation measures and energy efficient technologies. With this cognisance, BEE implemented 21 pilot energy efficient technologies with financial assistance in four SME sectors. To aid the replication of these technologies across the sectors, cluster level entities (local service providers and industrial associations) were also strengthened.

Capacity building of discoms

The BEE is implementing a capacity building programme for discoms to support various DSM initiatives. The programme includes load management, development of a DSM action plan and implementation of DSM activities. During the first phase (2012-17), BEE had selected 34 discoms for participating in the programme as beneficiaries. During the second phase (2017-20), the remaining 28 discoms are included under this programme. Zone-wise, five project management consultants have been engaged for the purpose. Some of the other activities under the programme are providing manpower support and conducting training programmes for them.

Standards and labelling

The BEE’s standards and labelling programme aims to provide consumers with information about the energy and cost saving potential of household goods and other equipment. Under the programme, the mandatory star ratings are extended to room ACs, frost-free refrigerators, tubular fluorescent lamps, distribution transformers, direct cool refrigerators, colour TV sets, electric geysers, variable capacity inverter air conditioners and LED lamps. Besides, various voluntary appliances are covered under the star labelling programme, which include general purpose motors, ceiling fans and agricultural pumpsets.

Other initiatives

The Smart Meter National Programme aims to bring about efficiency in the distribution system, leading to better service delivery. A smart meter sends automatic meter readings to the supplier, and also shows energy consumption to the consumer. This helps manage energy usage as well as estimated bills, thereby promoting efficiency in electricity usage. Under this programme, 1 million smart meters have been installed so far across Uttar Pradesh, Delhi, Haryana and Bihar.

EESL has identified that 40-60 per cent of India’s energy costs arise only from supplying water, and an estimated 480 MUs of electricity is wasted every year due to inefficient water pumps. Under the Atal Mission for Rejuvenation and Urban Transformation, EESL is working with the Ministry of Housing and Urban Affairs to retrofit energy efficient pumps across 500 smart cities.

Last year, EESL also initiated the Super-Efficient Air Conditioning Programme for residential and institutional consumers. Under this, it is distributing superior super-efficient air conditioners at prices that are comparable to the most energy-efficient ACs in the market. To this end, EESL signed MoUs with Tata Power, BSES Rajdhani and BSES Yamuna Power to deploy super-efficient ACs and other energy efficient appliances to consumers under their jurisdiction. The pilot programme will target deployment of 50,000 new ACs of high energy efficient technology.

There are several challenges in the implementation of DSM programmes such as the lack of seriousness on the part of state discoms and governments, weak financial position of discoms, and uncertainty regarding the large-scale impact of DSM pilot projects. Addressing these issues would go a long way in promoting energy efficient consumption in industries as well as households.

Nikita Gupta



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