Demand response is being promoted in many parts of the world, mainly as an additional means to meet the demand for electricity. Are there other benefits for the grid operators?
There must always be enough power available on the grid to reliably meet customer demand. For that, multiple power generators are typically dispatched over time to meet the demand for electricity.
The operating cost of power generators generally determines which units are dispatched to meet the demand for electricity. Renewables with a zero operating cost will typically be used first, while expensive petrol-powered generators will be dispatched last to cover peak load demand.
Dispatching and running plants with high operating costs increases the market price of electricity. As such, one recurrent challenge for market players has been the management of demand spikes. Demand response programs paying willing customers to curtail demand during those peak times and therefore avoid the need to run extra capacity has proven to be a cost-effective solution.
In addition to load balancing, demand response helps grid operators with three main challenges :
Prevent the construction of new power plants and transportation and distribution infrastructure, as demand rises and old plants are decommissioned;
Integration of intermittent renewable energy resources connecting to the grid, and increase of RES penetration level by absorbing certain amounts that would need to curtailed otherwise;
Management of increased centralised population with more stress on transmission congestion.