Demand Response

Demand response refers to programs that utilities use to cut power consumption when electricity use is especially high, such as on a hot summer day. Utilities give commercial energy consumers incentives to lower their power use so that electricity supplies are adequate and they can prevent power outages.

Currently in Virginia, all residential customers are on flat, average rates that do not vary by time of day or season, no matter how much the cost to generate or deliver electricity fluctuates as demands on the system rise and fall. There are currently programs in Virginia allowing commercial energy consumers to participate in demand response programs.

Flat rates combined with the growth in the use of air conditioning — one of the highest demands during peak periods — has led to peak power demand growing faster than overall growth in electricity consumption. Rising peak demand can strain the electricity system and potentially hurt the reliability of the power grid.

Demand response improves the overall efficiency of the electricity system (including transmission and distribution) but differs from traditional energy efficiency in that it is more dynamic and controllable, meaning that it can be “dispatched” to meet rising demand in lieu of turning on a power plant. Demand response focuses primarily on reducing use during the peak period, and involves providing customers with price signals or time‐based incentives to encourage them to reduce their peak use. Demand response can also react to infrequent conditions or threats to system reliability, like blackouts. All of these responses are coordinated through various technologies that allow utility providers to monitor and adjust usage, such as smart meters.