Demand Response (DR) is a class of demand-side management programs in which utilities offer customers incentives to reduce their demand for electricity during periods of critical system conditions or periods of high market power costs. Realizing the benefits of demand response has not been as easy as hoped, and challenges remain in both wholesale and retail markets that complicate the use of DR as a capacity resource. This paper examines these challenges, chronicles some DR experiences to date, and illustrates how various barriers to successful DR programs can be overcome. An overview of DR is presented for the commercial sector, design components, end-use and facility targets for load reduction, and enabling technology options. Utility costs and system benefits, reasons why customers participate and barriers to participation are then discussed. Next follows some lessons learned and, based on successful programs around the country, and recommendations for the best practices in program design.
Additionally, this paper touches on energy efficiency as a second element of demand-side management, and explores the relationship between efficiency and demand response.