DEMAND SIDE MANAGEMENT Is every kWh the same? Maximising utility margins through DSM M ore than ever the electricity utilities of Africa are facing headwinds and challenges. These include shortages of generation capacity, growing pressure to electrify large numbers of customers, a financial squeeze, and generally a lack of capacity to deliver both as the supplier of last resort and to function as cornerstones of economic growth. Unfortunately, the conventional utility approach to such pressures is to invest in more generation plants, connect IPPs, construct networks, whilst increasing tariffs in an attempt to balance the financial books. This mindset stems from the perception 34 that utilities simply supply kWhs as a ‘commodity’ to a meter, which consumers buy and use in an unknown way, as long as they pay. In parallel, a disturbing trend for utilities is how the ‘locus of control’ for energy use and costs has shifted towards end users. Consumers of electricity in response to rising prices and uncertainty of supply are now more enlightened than ever on what action to take. Their responses have been to: naturally embrace energy conservation: “turn off the heater, it is costing us too much”; listen to suppliers of energy efficiency products: “let’s retrofit the classrooms with LED light or add variable speed motor drives to our pumps”; and take capital risks on renewable based solutions: “invest in a solar water heater, homeowner or office block PV panels for added greening reasons”. This accelerating trend is catching utilities flat footed as the shifting sales patterns and associated revenue losses are only being realised once the customer has left. Despite being around for years, Demand Side Management (DSM) is a misunderstood and even maligned strategy for senior utility management ESI AFRICA ISSUE 5 2016