Demand response has emerged as an important tool in the development of smart grid technology, as governments and utilities seek to encourage more efficient consumption of electricity. Greater deployment of demand response measures, however, is dependent on the coordination between various stakeholders and on public reception, both of which to date have seen mixed results. This GR Brief lays out the issues involved with the use of demand response, which key players are involved, and where it is likely to go in the future.

Due to the Thanksgiving Holiday, the next GR Energy and Climate Brief will be sent out on November 29th, 2010.

Amid the excitement surrounding the smart grid’s promise to transform US power infrastructure, the implementation of demand response mechanisms offer an important early look at key implementation challenges.  Proponents have touted the smart grid’s ability to dramatically reduce operational costs, lower power plant emissions, incorporate more intermittent renewable energy sources, and enable power generation and distribution at smaller scales and more local levels.  One form of smart grid technology that has made progress is demand response, currently managing 5.8% of peak demand with the potential to reach as much as 20% by 2020.  Steps forward face several significant challenges, including consumer backlash over smart meter rollout, unclear leadership, and overcoming the inertia inherent to a century-old grid infrastructure.  How quickly demand response penetrates new markets and adds wattage to its management systems will inform how other technologies evolve and move towards a fully realized smart grid.  This GR brief outlines a framework for thinking about demand response, identifies challenges preventing the industry from moving forward, and highlights key players able to advance demand response developments. 

What is Demand Response?

Demand response is an energy management approach that addresses the mismatch in the way utilities deliver electricity to their customers by balancing demand with supply as well as supply with demand.  Since energy demand fluctuates throughout the day, utilities adjust supply in real-time to meet changes in consumer energy usage. 

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