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Demand Response Methods

The last years have witnessed a new opportunity for consumers to play a significant role in the operation of the electric grid. This is due to several factors; the recent technological improvements in home automation allow users to control the energy consumption of their houses online. Moreover, the large-scale introduction of intermittent energy sources - such as wind and solar power - causes fluctuations to the supply of energy and consequently to the price of energy. With the advanced technologies, portions of demand can shape their consumption in order to help balance the supply and demand of energy, in the face of stochastic generation, while optimizing their costs.

demand response example commercial diagram

The research on demand response studies schemes in which the consumers play such important role in the operation of the electric grid. In the following we describe some possible implementations and variants.
  • Electric system planners and operators can use demand response programs as resource options for balancing supply and demand; in order to do this, time-based rates or other forms of financial incentives are used to steer the consumers' behaviors towards a reduction or shift of their electricity usage during peak periods. More centralized and direct schemes include direct load control programs, which give the power to energy companies of cycling air conditioners and water heaters on and off during periods of peak demand in exchange for a financial incentive and lower electric bills.
  • Each single consumer can receive predictions of the energy price for the following hours or days; the consumer can then exploit these predictions and plan his energy consumption for the following hours or days according to the foreseen energy prices, in order to minimize his energy bill. In this scenario one needs to account for the fact that if a large number of users adopt such ahead planning, their aggregate behavior can have a significant influence on the actual energy price.
  • There exists the possibility that some users aggregate and plan their behavior together in order to optimize their performance or provide power system services, such as ancillary services. In particular, an aggregator can represent the interests of the group of users; after taking agreements with them, it has the possibility of bidding into the energy market, selling or buying extra energy for its users in critical moments.