Demand response mean that, people have a particular time when consumer are paid to shift or lower energy consumption. In certain time of the day, electricity is very expensive to produce, but at another time of the day it is cheap. So what demand response should do or contribute is to tell or help people to shift from the expensive hours to the cheap hours. It is a pricing mechanism
How does work ?
To know it works, we need to know about demand response consumers to understand how it will work. A consumer is anyone who uses electricity. For demand response, a consumer could be factory, a group of businesses like supermarket chain, an office building or a farm that uses irrigation.
Demand response consumers have one thing in common. They basically have some megawatts they can sell or rather they can manage or reduce the power usage for a period of time. Factories can offer demand response by changing their production shingle or by using a standing by generator.A group of supermarkets can do the same by switching their freezers off for an hour a time. Office building can demi light or adjust air conditioning temperature with no noticeable impact on convert level. Farms can reduce water pressure in the irrigation system.
How consumers get involved in demand response ?
In order for consumers to get involved, they need to meet certain requirements. First, being in the right location .this mean being close the trans power.Second, having building management system which allow to control the demand. Third, being able to reduce the demand for 2-3 hours a day in winter and summer. Fourth, being able to measure and capture the data that are accessed and sent from the trans power. That’s mean to have a fuse meter. Finally, being able to respond to any power call at any time.
sources
http://www.pge.com/en/mybusiness/save/energymanagement/index.page
http://www.pge.com/en/mybusiness/save/energymanagement/whatisdr/index.page
http://energy.gov/oe/technology-development/smart-grid/demand-response
http://science.howstuffworks.com/environmental/green-science/demand-response.htm