One technique that is gaining recognition in the area of green energy and the more effective management of the Electricity Grid is Demand Response (DR). The goal of DR is to manage consumer consumption of electicity in response to supply conditions. An effective DR policy will result in consumers reducing their electricity consumption at critical times or in response to rising prices. DR differs from Dynamic Demand as the latter entails the use of devices which passively switch themselves off when the grid is overloaded. Devices with DR switches by contrast respond to explicit requests to switch off. DR can involve the reduction of power used and differs from energy efficiency schemes which implies the using of less energy to perform a particular task.

We know therefore that DR is a distinctive technique. The overriding rationale of DR would appear to be of societal benefit rather than of economic benefit for the utility companies. By managing consumer consumption, DR improves the reliability of the electricity grid and reduces peak electricity prices by decreasing peak demand. In essence, it is a set of actions that are taken to reduce load on the grid when congestion that threatens the supply-demand balance occurs or when market conditions raise the price of the electricity supply. 

There are two types of DR. The first category of DR is triggered in response to emergencies and is referred to as interruptible DR. This DR category is activiated by utilities in cases of local system emeergices. The second category is prices responsive and is activated by utilties in the case of high wholesale electricity prices. DR is typically managed as a program consisting of participating (and volunteering) customers. Under the energy-only DR payment option, participants receive payment only for curtailment during a DR event. With capacity-payment DR, on the other hand, participants receive regular payment or a discount for being available for DR events.

Savings estimates for implementing DR for energy conservation and curtailment are in the billions of dollars. Customers benefit from availing of energy at cheaper prices. The question regarding DR is why utilty companies would implement it if it ostensibly reduces profits. Is DR something that will be regulatory driven rather than adopted voluntarily by utility companies?

If one looks beyond market price the benefits of DR can be seen for utility companies. Emergency DR programs are designed to relieve grid reliability issues. Extremely high demand for electricity, shortages of generation and significant transmission contraints can all be alleviated by DR. This ensures a smoother operation for utility companies and reduced maintenance issues and operational fire fighting.

Unsurprisingly, there is a high level of research activity in the area of demand response. The Pier Demand Response Research Center (http://drrc.lbl.gov/pier-drrc.html) at the Lawrence Berkeley National Laboratory in California are undertaking projects for the development of demand responsive technologies in buildings and the use of Critical Peak Pricing (CPP) as a form of price responsive demand response. The demand response and smart grid coalition (DRSG - see http://www.drsgcoalition.org/), a trade association for companies that provide products and services in the areas of demand response, smart meters and smart grid technologies, have developed policy recommendations advocating the use of DR as part of any solution to America's environmental problems. DRSG count IBM, Oracle and the Zigbee Alliance among their many members so, clearly, DR has the attention of significant industry players.

DR is gaining credence among utility companies, particularly in the US. Pacific Gas and Electric Company (http://www.pge.com/demandresponse/) have a demand response program that offers incentive for business owners who curtail their facility's energy use during times of peak demand while Puget Sound Energy (http://www.pse.com) in Washington state began a residential DR pilot program in October 2009 to evaluate how water heating and central air conditioning customers can voluntarily manage their electric demand during peak periods.

Demand Reponse, then, can be a key driver in the development of a green energy strategy for a country. As well as societal benefits both the consumer and the utility companies can benefit from the adoption of a DR policy.