Demand response programs vary by electricity market. Still, they typically fall into two categories – emergency and economic. Under emergency conditions, grid operators ask participants to reduce consumption. Significant disruptions like transmission line failures, power plant problems or damages from natural disasters trigger demand response. Conversely, economic programs are designed to respond to price triggers, instead of capacity shortages. Price triggers are tied to “peak events” that have a significant impact on electric bills. Therefore, participating businesses can save money by avoiding them and also receive payment for their reduction.
Implementing demand response is relatively simple.