Ref: I10-CC-02-04 Description of current regulatory practices for the promotion of energy efficiency
4.12 Demand Side Management Demand Side Management (DSM) programmes refer to actions taken on the customer's side of the meter to change the amount or timing of energy consumption. Demand Response (DR) is a subset of Demand Side Management. It usually refers to a set of activities to reduce or shift electricity use to improve electric grid reliability, manage electricity costs, and ensure that customers receive signals that encourage load reduction during times when the electricity grid is near its capacity. The two main drivers for widespread demand responsiveness programmes are the prevention of future electricity crises and the reduction of electricity prices. Additional goals for price responsiveness include equity through cost of service pricing, and customer control of electricity usage and bills. Emergency Load Response programs are interventions aimed at avoiding shortfalls in energy supply. Usually, the Transmission System Operator (TSO) offers a remuneration to particular categories of consumers amenable to planned and unplanned interruptions to their energy supply in order to prevent critical situations in network operations. Such consumers are generally industrial and large commercial operators, whose supply is interrupted when resources supplied by the TSO on the dispatching services market are insufficient to maintain the safe operation of the system. Demand Side Bidding (DSB) is a mechanism that enables consumers, either directly or through a broker, to participate in the electricity market or in the operation of the system through offers that cause changes in their normal consumption profile. This mechanism enables consumers to actively participate in the market and enables final consumers to have price signals that, by reflecting of actual costs, would result in a higher efficiency of the energy system. I successfully implemented, this mechanism should lead to lower utilisation of inefficient power plants during demand peaks or lower utilisation of plants consuming fossil fuels for system regulation. The most commonly used forms of demand participation in the electricity market, are: •
Offers in organised markets or pools: active demand participation leads to a more efficient functioning of markets, as resulting prices derives directly from interaction between supply and demand side forces. It is important to notice that the positions of consumers will generally be of purchasers of energy in the markets, even though a consumer who purchased energy through a bilateral contract before the organised market session, could also act in that market as a seller, to balance its position. If a consumer obtains economic advantages by selling energy instead of consuming it when prices are higher, some other customers will also benefit from this, since prices won’t rise as much as they will without demand reduction. In addition, economic benefits are obtained as a consequence of the mitigation of the potential market power of generators.
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Supply of specific additional services: similarly to generators, certain consumers provide additional services like congestion management, tertiary reserve, tension control, management of problems linked to shortages and disruptions. These services include interruption mechanisms, adopted directly by large consumers or by traders, which act as aggregators of domestic and industrial consumers demand.
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