Part 4: Demand Response: A Win-Win Solution for Affordable and Efficient Electricity


Demand Response: A Win-Win Solution for Affordable and Efficient Electricity

 Demand response is an increasingly valuable tool for driving efficiency and cost reduction in grid-powered energy consumption.

 Like most other sectors, the energy industry is going customer-centric. The new strategy gives consumers the power to program their consumption volume and schedule based on their unique electricity needs. But the goal is more than keeping consumers happy, although that must also be a part of it.


This article covers the basics of demand response, how it works, and why we need it now.


What is Demand Response? 

The Federal Energy Regulatory Commission identifies demand response (DR) as a change in the energy consumption behavior of end-users incentivized by price changes and other programs designed to motivate certain energy usage choices. In other words, it helps utilities match the supply of electricity to the present demand.


The strategy most affects energy consumption behavior related to these major uses of electricity:

  • AC Switch
  • Natural Gas
  • Electric Vehicles
  • Electric Water Heater
  • Thermostat Programs
  • Commercial & Industrial


Why Even Consider This Approach? 

This innovative approach to power delivery promises multiple improvements to the existing power grid.

  • Faster usage information gathering and dissemination to providers and users to aid better decision-making for both parties
  • Lower electricity costs for both wholesale and retail markets, both from efficiency factors and demand response incentives
  • Develops technologies, strategies, and tools to modernize the grid and make the existing infrastructure compatible with smart home dynamics
  • Enhances consumer participation for electricity delivery fitted for their unique needs
  • Better usage distribution that shaves demand on peak hours, minimizing the need to shed load and the occurrence of power outages


Both consumers and utility win with the implementation of DR programs. Providers operate with greater efficiency from the balanced supply and demand. Consumers also benefit from a consistent and reliable supply of electricity when they need it.


If the efficient delivery of electricity helps address additional energy needs in the near future, it will also help reduce the number of power plants that need to be built for future use. Both parties will benefit greatly from this possibility.


How Does it Work? 

In terms of operation, the primary goal of this strategy is to decrease the demand load during peak usage hours and scatter that to other hours with lesser usage. Utilities need the full cooperation of consumers to achieve this. Without consumer change in consumption behavior, the whole system will not work.


Utility providers eliminate this roadblock by providing pricing incentives and rebates to elicit user participation. Some of the most effective rewards strategies include:

  • Time-of-use pricing
  • Critical peak pricing,
  • Variable peak pricing
  • Real-time pricing
  • Critical peak rebates
  • HVAC cycling discounts


Evidently, homeowners and business owners see the benefits of this approach. As of 2018, more than 4 million consumers have already enrolled in one or more types of DR program with their electricity provider.


A Win-Win Strategy for Bringing Down Power Costs

The demand response concept is a win-win solution for both providers and consumers for optimizing energy use and bringing down its costs. The approach truly has the capacity to bring efficient and sustainable methods for the traditional grid, as long as providers, authorities, and end-users commit to equitable energy consumption programs.


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 response; electric; natural gas; technology
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