4 Differences between Demand Side Management & Demand Response

Energy cost in different buildings and facilities, either industrial or residential, has an important impact on their general costs. Energy prices have been rising steadily in Europe in recent years, and energy consumption is increasing too.

Energy professionals know that this situation must be stopped and that they have taken action, managing energy efficiently. Reducing energy cost is one of the main objectives of energy managers, facility managers and building operators. In addition, they aim to meet environmental or sustainability standards and objectives set by governmental organisations such as the EU or at a national level.

In order to achieve this, energy professionals work on “Demand Side Management” (DSM). When they want to work with more detail, they apply “Demand Response”.

Sometimes energy professionals use the terms Demand Response (DR) and Demand Side Management (DSM) interchangeably, but they are not the same.

Of course, they can complement each other, helping energy managers achieve their energy efficiency goals successfully.

4 Differences between Demand Side Management & Demand Response

First, let’s define the Demand Side Management (DSM) concept. To understand it we must know what is its objective: to achieve a balance between energy production and demand, since the imbalance between these makes the price of energy even more expensive for the final consumer.

Thus, achieving a balance between energy demand and supply (where utilities, system operators and governments, consumers are involved) will lead to a reduction in prices and consequently in costs for the consumer. In addition to complying with climate objectives, cover peaks in demand by increasing the system flexibility…

If we make a general definition of the concept of Demand Response (DR), we can say that it pursues the temporary reduction of electricity consumption by the consumer (discretionary and limited in time) during periods of peak demand and that it is done in exchange for economic incentives.

So, what are the subtle differences between the two?

  1. DSM includes all demand-reducing measures, in other words, it includes both vehicles for its implementation, demand response and energy efficiency. This the following image might help you understand this concept:
    Demand Response vs Demand Side Managment
  2. DMS encompasses a broader concept of energy demand management, while DR works in detail on electric demand – at the moment.
  3. DMS seeks a balance between energy demand and supply both on the side of utilities, system operators and consumers. While DR does it from consumer’s side.
  4. DR encourages consumers to reduce their energy demand in the short term, while DSM includes not only these in DR, but also long-term or permanent energy efficiency measures. DMS includes, for example, light changes, improved automation of the building, change of air-conditioning or thermal machines…

These concepts are often confused because both are intended to help the network operate continuously and smoothly balance the peaks of supply and demand.