Demand Response (DR) is a set of activities and strategies used to manage electricity demand by providing financial incentives to reduce or shift electricity use during peak periods. DR programs are typically sponsored by utilities or grid operators as a way to reduce congestion on the electric grid, lower energy costs, and improve power quality and reliability.
In general, DR programs work by providing financial incentives (in the form of rebates, credits, or other forms of compensation) to customers who agree to curtail their electricity usage during peak demand periods. Customers can sign up for DR programs in advance, or they can be called upon to participate in real-time as needed.
DR programs can be used to target specific types of customers, such as large industrial customers, or they can be open to all customers served by a particular utility. DR programs can also be designed to target specific types of load, such as air conditioning, or they can be open to all types of load.