Demand response is the change in electric usage by end-use customers from their normal consumption patterns. This response is based on to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardised (Federal Energy Regulatory Commission).
Demand response activities are actions taken by the end-consumer to shift electricity consumption. There are three types of demand response:
- Emergency demand response is employed to avoid involuntary service interruptions during times of supply scarcity.
- Economic demand response is employed to allow electricity customers to curtail their consumption when the productive or convenience of consuming that electricity is worth less to them than paying for the electricity.
- Ancillary services demand response consists of a number of specialty services that are needed to ensure the secure operation of the transmission grid and which have traditionally been provided by generators.