Demand Response

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Demand response refers to electricity customers reducing or shifting their electricity use during peak demand periods in response to price signals or other types of incentives. At present, the vast majority of electricity customers are on flat, average rates that do not vary by time of day or season, no matter how much the cost to generate or deliver electricity fluctuates as demands on the system rise and fall. Flat rates combined with the growth in the use of air conditioning—one of the highest demands during peak periods—has led to peak power demand growing faster than overall growth in electricity consumption. Rising peak demand is straining the electricity system and threatening the reliability of the power grid. It also is adding costs that all customers pay one way or the other, while leading to increased emissions.
Demand response technologies are smart grid technologies. They include any products or services that help in the active monitoring and dynamic control of electricity usage. Smart meters are one of the examples. Such meters allow measurement in time intervals, which is essential to being able to send timebased price signals to customers that encourage them to shift usage from one period to another. The meters and other technologies also allow new and better information to be generated and used by both the customer and electricity providers.
Demand Response Cheat Sheet: Stuff you need to know-
  • The estimated minimum amount of power electricity consumers demand on a day-to-day basis is called the baseload.
  • Demand for electric power is highest in the afternoon and early evening. The periods when demand is greatest are called peak usage times.
  • Dynamic pricing, time-of-use rates (TOU) and upgrading to smart grid technology are all examples of demand response programs that could reduce energy consumption, reduce power outages and reduce wholesale energy costs.
  • The current power grid is one-way only — it delivers power where and when power is requested. Upgrading to a smarter, two-way automatic grid would open communication between power plants, delivery systems and buildings. It could automate the flow of electricity as needed, identify load problems and balance uneven supplies of energy.

DEMAND RESPONSE PROGRAMS

Demand Response programs offer incentives to electricity users to reduce their power use in RESPONSE to a utility’s need for power due to a high, system-wide DEMAND for electricity or emergencies that could affect the transmission grid.

Demand Response programs offer these incentives to users who volunteer to participate by temporarily reducing their electricity usage when demand could outpace supply. These high-demand situations are known by a number of different terms: peak demand, peak energy event, critical demand event, peak demand period, etc. Utility and energy planners endorse Demand Response programs as fiscally and environmentally responsible ways to respond to peak demand periods. Below are some of the different demand response programs.

  1. Peak Energy Agriculture Rewards (PEAR)
  2. PJM Interconnection
  3. Demand Response Contracts
  4. Demand Bidding Program (DBP)
  5. Critical Peak Pricing (CPP)
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