Demand Response in the Energy IndustryInternet of Things (IoT) in Energy Industry

Demand response provides excellent opportunities for consumers to influence the management of the electric grid by either reducing or altering electricity usage during peak periods in response to time-based rates or other incentives.

Through more consumer control, demand response programs can greatly reduce the strain on transmission and distribution networks. In other words, the load can be increased on a more voluntary basis when power supplies are readily available. Alternatively, the load can be reduced when power supplies are relatively limited, without causing any major impact on the consumer.

Virtual Power Plants

A Virtual Power Plant consists of a network of decentralized, medium sized power facilities such as wind or solar farms and flexible power consumers and battery technology. The interconnected units are controlled centrally through a Virtual Power Plan but ultimately operate independently.

The primary aim of a Virtual Power Plant is to relieve the load running on the grid by distributing the energy created across the individual units during peak load periods. 

Energy Efficiency

Energy efficiency is essentially the aim to reduce the amount of energy used to provide products and services. Becoming more energy efficient would provide multiple benefits to individual nations and collectively reduce the impact on the world. Within the UK, more efficient use of energy would save as much power generated from six nuclear power sites and reduce overall energy costs by over £7bn.




The main benefit of demand response is improving resource-efficiency of electricity production. This is achieved by the closer relationship between consumer electricity prices and the value they place on electricity. Increased efficiency provides a range of wide benefits including:

• Consumer financial benefits which includes savings on bills as well as incentive payments offered to consumers that manage electricity demand in response to time alterations in electricity rates or wider incentive programs available.

• Market-wide financial benefits refer to the reduction in wholesale market prices, lowered due to demand response avoiding the need to use expensive energy systems during periods of lower demands. Sustaining the demand response reduces system capacity requirements, allowing load-serving technology to develop or potentially build less new capacity. Longer term, the reduction in capacity will result in customer savings.

• Reliability benefits relate to operational security and capacity savings created by demand response systems reducing the potential of forced outages that ultimately incur additional costs and challenges to consumers.

• Market performance benefits relate to demand response systems controlling the ability of suppliers influence over market prices and their option to increase power prices above actual production costs.


Demand Response Information

International Energy Agency

Read more about demand response programs at the International Energy Agency. The IEA works to ensure reliable, affordable and clean energy for its 29 member countries and beyond. Their mission is guided by four main areas of focus: energy security, economic development, environmental awareness and engagement worldwide.

Smart Demand Response

The Smart Demand Response document presents the result of joint work between network operators and suppliers assessing how the role of Demand Response in the future of Great Britain's (GB) electricity supply might be realised.