Part 2: Demand Response: How Demand Response Works: An Outline of Essential Elements


How Demand Response Works: An Outline of Essential Elements


Demand response (DR) aims to increase the efficiency of grids simply by inducing energy-saving behavior among consumers. If the United States eliminates all its wasted energy, it could save enough electricity every year to power all of Canada for that same period. Those trillion-dollar savings should be enough incentive for consumers to use energy mindfully.

Issues That Challenge Demand Response

While DR strategy is simple, it is not without challenges. There are still some knots along the way that providers need to untangle.


Onboarding participants is like turning a fastfood junkie into a vegan. Demand response programs require participants to adjust their schedules, curb heating and cooling, and limit their usage at critical times. Utilities motivate end-users to get past these initial inconveniences with attractive financial benefits:

  • Dynamic time-based rates
  • Incentives for direct load control


Detailed opt-out provisions could easily get dropped from the priority list during the planning process. Ironically, a clear process for opting out helps enroll more consumers because of the additional peace of mind.


The Essential Elements of DR Program


Advance Planning and Contracting

Before utilities implement any form of voluntary or mandatory DR program, they have to go through initial steps:

  • Adopt and develop a specific program
  • Solicit voluntary participation from existing consumers
  • Establish contracts with participating users, including a clear opt-out provision
  • Engage with suppliers and providers for load reduction software and hardware


Preparatory steps eat up a lot of time, but cutting corners at this point will hurt both consumers and providers in the long run with lower efficiency and costly mitigation measures.


Infrastructure and Program Management

The strategy also needs well-placed infrastructure and strategic management to work. This includes new software in the control centers, collaborations with tech providers, and assistance to customers for installing the necessary technology. Devices for enrolled homes and spaces include:

  • End-user interfaces
  • Load-control devices
  • Advanced metering systems
  • Remotely controlled communication devices


Notifications to Users Regarding Energy Reduction Periods

Strong communication between utilities, third-party providers, and users is indispensable. Users have to be notified early via emails, fax, mobile messages, or remote devices when utilities want them to make specific load-reduction actions. DR events will usually be called for emergency, economic, or ancillary service reasons.


Emergency happens to shave excessive demand on critical periods to prevent load shedding and blackouts.


Economic initiates load reduction on the most expensive periods to proactively decrease the average cost of electricity.


Ancillary service targets to improve the efficiency and reliability of electrical load transmission in the grid.


Reward System Based on Efficiency Performance

Pricing and incentives are the primary drivers for positive user behavior towards demand response. Consumers enjoy lower energy costs based on their own efforts to cut-down unnecessary demand on the grid.


Discounted time-based rates, peak reduction rebates, and other financial incentives will apply depending on the type of program the utility rolls out. The payment scheme has to be clear, significant, and reasonable or at least perceived to be by the consumers.


DR Consumers Take the Reins on Grid Efficiency


Overall, DR makes energy distribution reliable and sufficient without increasing the supply. It eliminates waste and brings down the costs of energy generation and transmission. The main hurdle is for consumers to understand and accept their crucial role in making this efficiency strategy successful.


Currently, in the United States, energy distributed using demand response systems account for less than 10% of the total distributed electricity. Majority of grid users are not yet participating in DR, which means there is a huge room for efficiency improvement if more consumers cooperate. If you are a corporate or household user who wants to help make mainstream energy sources sustainable, consider engaging in a DR program rolled out by your electricity provider. The positive impact of that action will ripple out to many more generations.

Walters Wholesale Lighting and Controls Division, is a leader in the Demand Response arena, contact your local Walters branch to see if we can help set your next project in motion.

Sirikit Hiyasmin Loong-Elebaran is a Filipino Freelance Writer who has 9 years of technical niche experience. She mainly provides content for electrical and IT companies. She is also the CEO and Founder of and . You can reach her at


Tags:  electricity; demand resposne; electric; natural gas; technology
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