Demand response is simply a temporary reduction or shift in electricity use.
It is Changes in electric usage by demand-side resources from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.
Demand Response Programs:
Demand response programs are designed to enable customers to contribute to energy load reduction during times of peak demand. Most PG&E demand response programs also offer financial incentives for load reduction during times of peak demand.
Residential Demand Response programs are typically incentive-based, opt-in programs that allow the utility to ask you to reduce your electricity usage during an “extreme” or “critical” event, or to reduce your usage directly from a remote location. While there’s no singular form the programs take, in the residential sector, they tend to involve the installation of thermostats that can be controlled remotely by the utility in the event of an emergency, and/or by the customer with a mobile device.
Why is Demand Response necessary?
Occasional storms and heat waves, as well as periodic power plant repairs and maintenance, have the potential to affect California’s supply and demand for electricity. When demand is high and supply is short, power interruptions can sometimes be the result. Building enough power plants to satisfy every possible supply and demand scenario is one possibility, but the cost and environmental impact of that would be tremendous.
Demand response programs are designed to be both fiscally and environmentally responsible ways to respond to occasional and temporary peak demand periods. The programs offer incentives to businesses that volunteer and participate by temporarily reducing their electricity use when demand could outpace supply.
References:
http://www.sdge.com/aboutus/longterm/longtermDemandResponse.shtml
http://www.pge.com/mybusiness/energysavingsrebates/demandresponse/whatisdemandresponse/