Demand response, also known as load response, is end-use customers reducing their use of electricity in response to power grid needs, economic signals from a competitive wholesale market or special retail rates. In more simpler words, demand response provides an opportunity for consumers to play a relevant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods.
The programs for demand response are being used by electric systems as resources options for balancing supply and demand. These programs have the benefit of lowering the cost of electricity in wholesale markets resulting in lead to lower retail rates.
The United States Department of Energy states that “the electric power industry considers demand response programs as an increasingly valuable resource option whose capabilities and potential impacts are expanded by grid modernization efforts”.
Something I found interesting about demand response was that some companies offer incentives for load reduction during times of peak demand. With incentives I feel this is more of a push for the customer.
Demand response is especially necessary for California since heat waves, storms, or even power plant repairs can affect the supply of demand for electricity. 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.
One of the goals of the Smart Grid R&D Program is to develop grid modernization technologies, tools, and techniques for demand response and help the power industry design, test, and demonstrate integrated, national electric/communication/information infrastructures with the ability to dynamically optimize grid operations and resources and incorporate demand response and consumer participation.
http://energy.gov/oe/technology-development/smart-grid/demand-response
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