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Demand Response Overview

A. Demand Response 
Demand Response (DR) is defined as measurable changes in electric use by demand-side resources (consumers) from their normal consumption patterns in response to a market signal, such as changes in the price of electricity or a curtailment notice by a utility or market operator when overall grid load and system reliability are jeopardized. Traditionally, grid operators turn on more generation resources to handle peak load periods. For grid balancing purposes, turning off demand through DR programs essentially has the same effect as turning on additional generation.

Most DR programs offer economic incentives or payments designed to induce consumers to reduce electricity use for a specified period of time (typically peak periods of the day).  Reductions in energy demand during peak hours may be implemented by shifting electricity use to another time period or by taking measures to use less electricity.

Commercial and industrial consumers with a peak demand load greater than 200 kilowatts (kW) make up a majority of the grid load in the US. Participation in DR programs can create economic benefits for consumers, as well as play a significant role in assuring grid reliability. 

B. How to Participate
Commercial and Industrial consumers participate through DR program providers, such as utilities, Independent System Operators (ISO), Regional Transmission Organizations (RTO) and Curtailment Service Providers (CSPs). Several types of programs are offered by some or all of these program providers. 

There are basically three ways for consumers to implement DR: 

C. Measuring DR Results - Baseline
Establishing a baseline is the key to measuring DR results in any Demand Response Program. The measurable difference between the Baseline Load and the Load on Event Day constitutes the facility's DR performance and is typically used to calculate economic incentives and payments.