Demand response (DR) allows utilities and power grid operators to balance electricity supply and demand during peak use. They do so by incentivizing consumers to reduce or shift their electricity consumption.

Application of Demand Response

Utilities and energy suppliers use DR programs to send so-called DR signals to electricity users. These signals can be based on load or price.

  • Load-based signals incentivize users to reduce their electricity consumption during peak demand. For example, a utility might send a signal to DP-participating customers asking them to delay cooking by one hour during the hottest part of the summer day when air-conditioners add considerable strain to the system.
  • Price-based signals incentivize users to shift their electricity consumption throughout the day. For example, a utility might offer a lower electricity price at night than during the day and charge even higher rates during peak usage.

In exchange for participating in DR programs, users can receive financial incentives, such as bill credits or rebates.

Importance of Demand Response

Below are some of the many benefits that demand response programs bring to users and utilities. DR may help:

  • Maintain the stability of energy generation. DR programs can reduce the need for utilities to invest in new power generators or expensive grid upgrades to meet increasing electricity demand.
  • DER integration. Moving towards distributed energy resources (DERs), like solar, wind, and even electric vehicle batteries, is pivotal in becoming independent of fossil fuels. Demand response programs can utilize the availability of DER energy produced by users.
  • Lower generation and consumption energy costs. DR lowers the need for utilities to rely on fossil-based “peaker power plants”—power generators turned on during peak electricity usage. This decreases expenses for utilities, which may also mean lower tariffs for users.
  • Lower costs and higher revenue for CPOs and EV owners. Charge point operators (CPOs) participating in DR programs can lower operating costs and increase revenue by offering dynamic pricing that adapts to real-time energy market prices. Dynamic pricing is also beneficial for EV drivers because it allows them to charge when electricity is cheaper.
  • Entering national legislation. Increasingly more countries are introducing demand response as part of electricity grid regulations. On the one hand, this ensures the grid’s stability in view of the growing energy consumption from EVs. Furthermore, demand response programs are a tool to introduce green resources into the energy mix as part of the global transition from fossil fuels to renewable energy.

A Practical Example of DR

A vehicle-to-grid (V2G) -enabled EV is connected to an OpenADR-enabled charge point. A utility sends a DR signal around 18:00 o’clock—a typical time of peak electricity use. This stops the EV from charging and pulls energy from the EV’s battery, which acts as an energy storage unit. Charging resumes later into the night during low energy demand, while the EV owner receives an incentive for participating in a DR event.

Additional Information for DR

  • The OpenADR Alliance is a non-profit organization that promotes the use of OpenADR—a standard for exchanging demand response messages between utilities, CPOs, EV drivers, and other participants.
  • There are currently two versions of OpenADR: OpenADR 2.0 and OpenADR 2.1. OpenADR 2.1 is the latest version and includes a number of new features, such as V2G support.

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