DR consists of reducing demand instead of increasing supply. It usually refers to programs that aggregate small reductions from many different users and then treat that reduction as a single block of power1.
Description of DR technologies
DR technologies can come in a variety of forms. In addition to voluntary curtailment exercised by homeowners and commercial building operators on peak demand days, smart appliances capable of executing price-responsive behaviors and direct load control programs offered by utilities are also examples of DR technologies.
A DR “event” is initiated by a utility company facing a shortage of electric power. Given the weather patterns and load profile of their service territories, utility companies can reasonably predict the amount of power that will be consumed on an hourly basis over the upcoming day. If utilities don’t have enough generation capacity or they can’t acquire enough power through their pre-existing power purchase agreements with adjacent utilities, they will declare a DR event. The DR event begins with a signal that is transmitted to the utility’s customer base. This signal elicits a response by customers through voluntary curtailment and of automated DR capabilities. Customers are then compensated for reducing demand based on the parameters of the utility company’s DR program.
DR’s role in outage prevention and service restoration
DR is most effective for preventing “brownouts,” the imbalances on the electric grid that exist when there simply is not enough electricity supply to meet everyone’s needs. One term that many people are familiar with is the concept of a “rolling brownout,” where a utility company will forcibly disconnect service areas on the grid for brief periods of time in order to spread the misery uniformly across a greater cross-section of its customer base.
DR programs allow a utility company to reduce peak electricity consumption and avoid a brownout condition. Current peak-serving methods include the operation of a very expensive set of “spinning reserves.” Spinning reserves are a series of generators that are operational but remain disconnected from the grid. When power levels start to sag, the reserves are connected to the grid and continue to operate until the demand has passed.
Commonly referred to as the California electricity crisis, this event from the early 2000s is perhaps the most famous example of rolling brownouts. Wholesale energy prices jumped by several orders of magnitude due to, as we now know, energy market manipulations. This resulted in rolling brownouts and dramatically higher electricity bills for consumers. The management of this crisis was a contributing factor in the recall of Governor Gray Davis in 2003. Demand response programs, had they been in place, might not have been able to overcome the effects of such a market manipulation, but they certainly would have lessened the impact.
1 Berst, Jesse; Smart Grid 101, Everything you always wanted to know about grid modernization in 5 easy lessons; © 2011 by Smart Grid News, pp. 17.