Consumers were previously treated in a homogeneous, today with the introduction of new technologies each consumer will have different features. For the success of Utilities in developing this new scenario, they must have the ability to understand the different distribution topologies and further understand the consumption profile of each class of consumer.
Demand Response involves encouraging customers to cut back or shift their electrical use or demand in response to grid emergencies or high market prices for electricity.
Today there are three different types of Demand Response services:
- The first is where customers receive compensation for electing to standby to reduce a portion of their electric demand in a grid emergency. These are called "capacity resources" and are typically activated a few times a year for up to 6 hours at a time.
- The second type involves sending customers price signals to encourage them to reduce demand during peak hours. The higher the hourly prices, the greater financial incentive a customer has for reducing their electric load. Customers can participate at their discretion for as little as one hour at a time. These are called "energy markets."
- The last involves very short grid-initiated curtailment events with very short notification. These are typically 10 to 30 minute reductions with 10 minutes notice. These are called "ancillary services" and help the grid operator smooth out short-term imbalances of electrical supply.