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Price Sensitive Residential Demand Response : Reality check

Demand Response is termed as one of the killer application in Smart Grid roadmaps. The hope is that with penetration of smart appliances, HAN and Smart meters the customers will start participating in the grid operations by dynamically adjusting their pattern of energy usage based on the grid conditions. One of the argument is that residential customers will receive real-time price signal and will bid in to the price sensitive demand response programs. But how much of that is going to be reality. I would say it is a long shot. The price sensitive demand response in the residential customer segment may take a while before it becomes reality. There are several roadblocks, to name few:

  • With incresed use of energy efficient appliances the consumption will go down and the amount of incentive to participate in the demand response programs may not be lucrative to residential customers.
  • In order to make price sensitive demand response lucrative to the residential customers, there needs to be change in the tariff structure which will have to follow the real-time energy prices in order to make an positive impact on the grid operations.
  • The network infrastructure needs to support the communication of the price and DR signals to thousands of residential customers (customers who are enrolled in to the DR programs), which may overlaod the grid communications networks. One of the option talked about is the AMI communication network but more and more AMI networks becoming operational the industry is seeing actual problems with the already stressed out AMI communication infrastructure. DR being the mission critical application the network latency can not be ignored.
  • Secuirty is another biggest issue with price sensitive residential demand response programs because unline commercial and industrial DR customers who can afford to invest in the secure Building Energy management systems, expecting residential customers to have same level of awareness and security in place is not fair.

Then there are technical challenges in terms of real-time DR load monitoring and the maturity of protocols for the price sensitive demand response which can cater to the bandwidth needs for the residential DR. Network latency I already mentioned. Then there will be optimization problems with respect to dynamic load behaviour where the entire supply chain from generation to transmission to distribution to customer participation will have to be optimized.


In conclusion I would like to say that the concept is good and very promising but it will take a while before we start seeing price senstive demand response in reality in the residential customer segment.

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