Demand-Side Management vs. Demand Response

What is Demand-Side Management?

Profound changes are disrupting the energy industry, bringing about new challenges for utilities, system operators and governments around the world: balancing intermittent generation, integrating renewables to meet climate goals, covering peak demand with increased flexibility. These drivers make balancing energy supply and demand more difficult and more expensive than it used to be.

One of the most well-researched fields of electricity system flexibility is called Demand Side Management (DSM), which aims to improve flexibility on the consumer side. The implementation of DSM programs can range from improving energy efficiency with better insulation materials to fully autonomous energy systems that automatically respond to shifts in supply and demand.

DSM can be implemented in two ways: through energy efficiency or Demand Response (DR). Since the RESPOND project focuses on the latter, this post will define and explain the concept of Demand Response in more detail.

What is Demand Response?

The key thing to understand here is that Demand Response (DR) and DSM (Demand Side Management) are not the same thing, even though they are often used interchangeably.  Demand Response refers to programs that encourage participants to make short-term reductions in energy demand. These short-term “responses” are triggered by price signals from the electricity hourly market, or initiated by the TSO or DSO. DR activations can last from a couple of minutes to some hours depending on the DR program, and might include turning off or dimming lighting, adjusting HVAC levels, or shutting down a non-critical manufacturing process. On-site generation and storage systems can also be used to adjust loads drawn from the grid.  The key thing to remember is that these are temporary, reactionary measures that keep the grid running optimally and automatically smooth out and peaks or valleys in power supply and demand.  Demand Side Management (DSM) is any program that encourages the end user to be more energy efficient – so DR falls under this category, but so do longer-term or permanent energy efficiency measures such as lighting retrofits, building automation upgrades, and HVAC improvements.

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