Demand Response

Consider the following: It is mid-august and a four day heat-wave has just begun. Luckily you have central air conditioning. For a little added comfort you also bought a few new fans to help circulate the air. Unfortunately, you are not alone. The heat-wave is affecting the entire region. Virtually every household is blasting the A/C and turning on those extra fans. This type of situation can cause a dramatic increase in the use of electrical power in entire states and regions. If the demand, or amount of power that is being used exceeds the supple, or amount of power that is available for use, there is a strong possibility that power outages could occur.
Demand Response is a system that could prevent situations like this. Basically, demand response would utilize a two-way smart grid. Energy would be flowing out to residences and business with data flowing back from them. If the demand starting rising too quickly, and threatened to surpass the supply, the flow of energy could be automatically reduced to prevent a crisis. Another use of demand supply is to balance out the energy use during peak and off peak hours. Automatic systems could be installed to dim the lights, or turn off the air conditioning for several hours during the day at businesses and homes. This may not seem like it would have a significant effect, but if it is utilized over an entire state or region, it could help to stabilize the power supply. This has the potential to make it unnecessary to build new power plants. Since plants have to be designed to supply the highest demand, if the demand was balanced throughout the day, utility companies could avoid building plants for increase in overall power use. In theory, these savings would then be passed along to the customer, as well as the savings from the reduced power usage they are already agreeing to.
Although Demand response is not widely in use, it does have great potential for balancing power use and preventing crisis like blackouts. Major power companies are offering financial incentives for businesses to participate in demand response. Businesses can agree to reduce their power usage specific amounts each day. If they exceed the power use on that day, or whatever time period they base it on, the company can be charged fees. If they are under their usage limit, they may be given monetary compensation or credits to use if they exceed it again. In this way it is beneficial for all parties involved. The companies and households can save money. The power grid will be more stable and less susceptible to blackouts, and power companies will save money in the long run by not having to build additional plants.