Overview of Demand Response under the Smart Grid and Market paradigms

Abstract

Demand Response (DR) is an important ingredient of the emerging Smart Grid paradigm. Although much of the DR emerging under Smart Grid is targeted at the distribution level, DR programs are regarded as important elements for reliable and economic operation of the transmission system and the wholesale markets. In the context of Energy and Ancillary Service markets facilitated by the ISOs/RTOs, DR programs may be broadly classified as market-based or reliability-based depending on the conditions under which DR is deployed: The former provide for DR vis-a¿-vis economic signals, while the latter are generally triggered under emergency conditions. Depending on the ISO/RTO market design and applicable operational standards, the market products DR can offer may include Energy, Reserve Ancillary Services (i.e., Supplemental/Non-spinning Reserve, Spinning/Responsive Reserve, or Regulating Reserve), and Capacity. In this paper we first explore different facets of Demand Response under the Smart Grid paradigm. We then briefly summarize the existing and evolving Demand Response programs at different ISOs/RTOs and the product markets they can participate in. We conclude by addressing some of the challenges and potential solutions for implementation of DR under Smart Grid and Market paradigms.