Demand Response: Managing Electric Power Peak Load Shortages with Market Mechanisms A Review of International Experience and Suggestions for China

Electric power “demand response” (DR) programs are implemented by electric power utilities, with government support, to cause changes in consumers’ electricity use, usually to reduce or shift electric power peak load demands. Demand response programs rely on market-based mechanisms, through either special incentives for consumer changes in demand, the pricing system, or both. Utilities in developed countries use these programs as one means to manage peak load shortages as they emerge, rather than having to resort to administrative rationing. They are also a far less expensive alternative to adding and operating costly peak load power generation and supply infrastructure, or quick-ramping-up capabilities, to fully meet demand.