Demand-Side Management and Its Impact on the Growing Circular Debt of Pakistan’s Energy Sector

Abstract

In this research, we propose an energy-management scheme for domestic users, which uses the load-shifting strategy of demand-side management (DSM). The research demonstrates that the energy sector’s circular debt problem from the viewpoint of a developing country can be solved by incorporating DSM. Circular debt is a chain reaction that arises when the balance between cost and energy supply collapses. Circular debt is an ongoing problem in Pakistan, where economic crises are continuously posing a threat to the energy sector. DSM is envisioned to address these concerns in a dynamic way thoroughly: introducing DSM can minimize circular debt, increase grid reliability, and smooth the supply–demand operation. Circular debt is directly linked with the subsidy offered by the government of Pakistan. As the cost of energy utilized by consumers increases, the subsidy also increases due to the direct link between the two entities. Therefore, the subsidy can be controlled by energy-consumption management with the adoption of DSM. This study addresses that by incorporating optimized cost solutions, circular debt can be regulated to improve the economy of the energy sector. A genetic algorithm is used as an optimization tool to manage demand and generate an optimal schedule under a dynamic electricity pricing signal. To support the utility, a solar system is used as a secondary energy source. Finally, the results show a curtailment in the payable costs at both the consumer and government ends, thus reducing the circular debt in the bigger picture. The reduction is 18% without and 41% with renewable energy support.