The document discusses demand side management (DSM) in the context of distribution generation and smart grids. It defines DSM as modifying consumer energy demand through methods like financial incentives or education. The goal is usually to encourage reducing energy use during peak hours or shifting it to off-peak times. This helps reduce the need for network and power plant investments to meet peak demand. The document then outlines various DSM programs and strategies like demand response, time-of-use pricing, and direct load control.

1. Class-7: Demand side management :
Demand response
Course: Distribution Generation and Smart Grid
Prof. (Dr.) Pravat Kumar Rout
Subhasis Panda (Research Scholar)
Department of EEE, ITER, Bhubaneswar
Siksha ‘O’Anusandhan (Deemed to be University),
Bhubaneswar, Odisha, India

2. Demand side management 1/5
 Energy demand management, also known as demand-side
management (DSM) or demand-side response (DSR),
is the modification of consumer demand for energy
through various methods such as financial incentives and
behavioural change through education.
Usually, the goal of demand-side management is to
encourage the consumer to use less energy during
peak hours, or to move the time of energy use to off-peak
times such as night-time and weekends.
Peak demand management does not necessarily decrease
total energy consumption, but could be expected to
reduce the need for investments in networks and/or power
plants for meeting peak demands.

3. Demand side management 2/5
An example is the use of energy storage units to store
energy during off-peak hours and discharge them during peak
hours. A newer application for DSM is to aid grid operators
in balancing intermittent generation from wind and
solar units, particularly when the timing and magnitude of
energy demand does not coincide with the renewable
generation.
Now adays, DSM technologies become increasingly feasible
due to the integration of information and
communications technology and the power system, new
terms such as integrated demand-side management (IDSM), or
smart grid.

4. Demand side management 3/5
DSM is the planning, implementation, and monitoring of those
utility activities designed to influence customer use of
electricity in ways that will produce desired changes in the
utility’s load shape, i.e., changes in the time pattern and
magnitude of a utility’s load.
Utility programs falling under the umbrella of DSM include:
load management, new uses, strategic conservation, electrification,
customer generation, and adjustments in market share.

5. DSM includes only those activities that involve a deliberate
intervention by the utility in the marketplace so as to
alter the consumer’s demand.
Under this definition, customer purchases of energy-
efficient appliances as a reaction to the perceived need for
conservation would not be classified as DSM
Demand side management 4/5

6.  It is generally most convenient for utilities to look at
DSM in terms of broad load shaping objectives. The
load shape is the daily and seasonal electricity demand by
time-of- day, day-of-week, and season.
 Within this context, six broad categories of load-shape
objectives can be distinguished: peak clipping, valley
filling, load shifting, strategic conservation,
strategic load growth, and flexible load shape.
Demand side management 5/5

8. Peak Clipping
 Peak clipping is generally considered as
the reduction of peak load by using
direct load control.
 Direct load control is most commonly
practiced by direct utility control of
customer‘s appliances.
 Another example of peak clipping is the
use of interruptible/curtailable rates for
industrial and commercial customers.

9. Valley Filling
•Valley filling encompasses building off-peak loads.
•This may be particularly desirable for those times of
the year where the long-run incremental cost is less
than the average price of electricity.
•Adding properly priced off-peak load under those
circumstances decreases the average cost to
customers.
•Valley filling can be accomplished in several ways, one
of the most popular of which is by adding new
thermal energy storage (water heating and/or space
heating) in place of loads served by fossil fuels (gas- or
oil-fired).

10. Load shifting
This involves shifting load from on-peak to off-peak periods.
Popular applications include use of storage water heating, storage space
heating, coolness storage, and customer load shifts.
In this case, the load shift from storage devices involves displacing what
would have been conventional appliances served by electricity (e.g.,
installing thermal energy storage water heaters in place of regular electric
water heaters)

11. Strategic Conservation
 Strategic Conservation is the load-shape change that
results from utility-stimulated programs directed
at end-use consumption.
 The change reflects a modification of the load shape
involving a reduction in sales often as well as a change
in the pattern of use.
 In employing energy conservation, the utility planner
must consider what conservation actions would occur
naturally and then evaluate the cost effectiveness of
possible intended utility programs to accelerate or
stimulate those actions.
 Hence, the distinction between “naturally” occurring
and deliberately induced changes in energy
consumption and load shape is important. Examples
include weatherization and appliance efficiency
improvement.

12. Strategic Load Growth
 Strategic Load Growth is the load-shape change that
refers to a general increase in sales, stimulated by
the utility, beyond the valley filling .
 Load growth may involve increased market share of loads
that are, or can be, served by competing fuels, as well as
economic development in the service area. Examples include
dual fuel heating, heat pumps, and promotional rates.
 In the future, load growth may include electrification.
Electrification is the term currently being employed to
describe the new emerging electric technologies
surrounding elelectric vehicles, industrial process heating,
and automation.

13. Flexible Load Shape
 Flexible Load Shape is a concept related to reliability,
a planning constraint. Once the anticipated load
shape, including demand-side activities, is forecast
over the planning horizon, the power supply
planner studies the final optimum supply-side
options.
 Load shape can be flexible-if customers are presented with
options as to the variations in quality of service that they
are willing to allow in exchange for various incentives.
 The programs involved can be variations of interruptible
or curtailable load; concepts of pooled, integrated energy
management systems; or individual customer load control
devices offering service constraints.

15. Demand side management 3/3

16. Demand response
Demand response (DR) is defined as “changes in
electric usage by end-use customers from their
normal consumption patterns in response to
changes in the price of electricity over time, or to
incentive payments designed to induce lower
electricity use at times of high wholesale market
prices or when system reliability is jeopardized”

17. Energy efficiency programs
Efficient energy use, sometimes simply called energy
efficiency, is the goal to reduce the amount of energy
required to provide products and services.
Improvements in energy efficiency are generally achieved by
adopting a more efficient technology or production process or
by application of commonly accepted methods to reduce
energy losses.

18. Architecture and components of
DSM 1/2
DSM frameworks are designed to optimally manage the electric resources
of users through a specific architecture. The following are the basic
components of the DSM framework:
Local generators: local energy plants generate electric energy that can
be either used locally or injected into the grid.
Smart devices: electric appliances that are able to monitor themselves,
thus providing data, such as their energy consumption, and that can be
remotely controlled.
Sensors: used to monitor several data within the house, temperature
and light. Power meter sensors can be used to monitor and control
these appliances.

19. Architecture and components of
DSM 2/2
Energy storage systems: are storage devices that allow the DSM
system to be flexible in managing electric resources.
Energy management unit (EMU): exchanges information with the
other elements of the system and manages the electric resources
of users based on an intelligent DSM mechanism.
Smart grid domains: the distribution, operation, market, service
provider and customer domains of the smart grid. A utility
company, which is part of the market domain, supplies electric
energy to users from whom it receives payments according to
energy tariffs.

20. Classification of demand response
programs
Demand
response
programs
Price based DR
programs
Incentive based
DR programs

21. Incentive based DR programs
Incentive based
DR programs
Direct load
control programs
Load curtailment
programs
Demand bidding
programs
Emergency
demand
reduction
programs
These programs pay participating consumers, who
reduce their consumption at peak hours or
during events.

22. Direct load control (DLC)
programs
In these programs, some consumers or
appliances are registered in the program and
allow the utility to shut down or cycle them,
when needed (normally during peak demand or
events). The participating consumers are paid
incentives.

23. Load curtailment programs
In these programs, the registered consumers
are paid incentives for curtailing their
consumption as the wish of the utility. Typically,
registered consumers, who fail to respond to
incentives, are severely penalized.

24. Demand bidding programs
These programs are typically offered to large-
scale consumers (larger than 1 MW). During
contingencies or peak demands, the consumers
may bid to curtail part of their consumption at
a certain bid price .

25. Emergency demand reduction
programs
As per this program, in severe contingencies,
the consumers are paid a considerable
incentive for reducing their usage. These
programs may assist a power system to
enhance its reliability.

26. Price based DR programs
Price-based
DR programs
Time of use
pricing
Critical peak
pricing
Real-time
pricing
Inclining
block rate
In price-based DR programs, the consumers are charged with
different prices at different times of consumption. In this way, the
consumers are charged according to the supply cost of electricity. By
increasing tariffs during peak demand hours and contingencies, utilities
incentivise consumers to reduce their consumption.

27. Time of use (TOU) pricing
In this DR program, the electricity price for consumers
depends on the time interval that the electricity is used.
Typically, a day is divided into three intervals, named as
peak interval, mid-peak interval and off-peak interval.
The consumers are severely charged for consuming
electricity at peak interval. In this way, they are
encouraged to reduce their consumption at peak hours
and shift their shiftable loads to off-peak hours .

28. Critical peak pricing (CPP)
This program is akin to TOU, except for the
time when the reliability of the power system is
jeopardized and then the normal peak price is
replaced by a very higher price . This program is
only employed for a couple of hours per year
and improves power system reliability .

29. Real-time pricing (RTP)
In this type of pricing, the electricity tariffs
typically change hourly, reflecting the
fluctuations in the price of wholesale electricity
market . Typically, the consumers are notified on
a day ahead or hour-ahead basis. RTP is
becoming very popular in DR programs and
smart homes.

30. Inclining block rate (IBR)
This program offers a two-level price, based on
the total consumption of a consumer. The
electricity price goes to a higher level, if the
consumption reaches a threshold. This program
reduces the need for unnecessary investments
in generation, transmission and distribution
systems .

31. Advantages of demand response
programs 1/4
DR programs lead to reduction in peak to average ratio
(PAR) of demand . This prevents unnecessary investments in
generation, transmission and distribution systems and thereby supply
cost of electricity is decreased.
During peak-demand hours, the generating units with high amount
of emissions are unavoidably commissioned, because the
generating units with lower emissions have already been fully
loaded. Therefore, DR programs, through reduction of peak-
demand, decrease the amount of emissions.

32. Advantages of demand response
programs 2/4
During power system contingencies, DR programs reduce the
consumption level, especially through direct load control (DLC)
programs and emergency load reduction programs. Therefore, the
stress on power system is decreased, in a way that system
operator is not obliged to shed some loads and conclusively, power
system
Using DR programs that assist power systems during peak-demand
hours or contingencies, the probability of occurrence of price spikes
in wholesale electricity market is decreased and the need for market
interventions by regulatory agencies is reduced.

33. Advantages of demand response
programs 3/4
Using DR programs decreases the possibility of market power
exercise by generation companies (GENCO’s) in wholesale
electricity markets, therefore, market efficiency is increased.
In DR programs, the dependence of retail tariffs on the wholesale
market price, leads to more efficient usage of resources in
electric power systems.

34. Advantages of demand
response programs 4/4
DR allows higher penetration of intermittent renewable energy
resources in electric power systems. In balancing generation and
demand, DR programs help power system to overcome
difficulties arising from uncertain nature of intermittent
renewable energy resources.
Using DR programs, consumers enjoy bill savings by
rescheduling their consumption patterns.

36. Classification of optimization
algorithms used for DR optimization
1/2
Optimization
algorithm used for
DR optimization
Classic algorithms
Meta-heuristic
algorithms

37. Classic
algorithms
Linear programming
or mixed integer
linear programming
Nonlinear
programming or
mixed integer
nonlinear
programming
Meta-heuristic
optimization
algorithm
Particle swarm
optimization
Genetic algorithm
Teaching learning
based optimization
Simulated annealing

38. Challenges of DSM

39. Challenges
of DSM
Scalability
Consumer’s
behaviour
Complexity
Lack of
Infrastructure
Interoperability
Security and
Privacy

40. References
 Gelazanskas, L., & Gamage, K. A. (2014). Demand side management in
smart grid: A review and proposals for future direction. Sustainable
Cities and Society, 11, 22-30.
 Esther, B. P., & Kumar, K. S. (2016). A survey on residential demand side
management architecture, approaches, optimization models and
methods. Renewable and Sustainable Energy Reviews, 59, 342-351.
 Jordehi, A. R. (2019). Optimisation of demand response in electric
power systems, a review. Renewable and Sustainable Energy Reviews, 103,
308-319.

41. Questions
 Define demand side management?
 What are the major advantages and disadvantages of DSM?
 What are the major challenges and issues to implement
DSM in smart microgrid system?
 What are the six broad categories of load-shape objectives
of DSM?
 Give detail about architecture and components of DSM?
 What are the major incentive based DR programs?
 What are the major price based DR programs?