DEMAND RESPONSE Implementation

India’s growth plans need seamless power supply. However, instead of continuously adding generation facilities, we can readjust the demand pattern to match with the available supply. This article deals with different aspects of creating demand-supply balance…

The economic growth of the country has led to an increase in power demand but it is affected by limited energy resources, which have led to overexploitation of the resources. The focus in India is shifting towards restructuring of the power sector i.e., instead of generation adapting to demand, demand can be made flexible or altered as per generation requirement for demand-supply balance, thus relieving stress on power infrastructure. In a restructured power network with the integration of distributed energy resources, the role of consumers has changed with the capacity to consume as well as generate power. Demand-Side Management (DSM) is a combination of long-term demand reduction and short-term energy management for supply/demand balance to incorporate renewable energy resources integration. Demand response and energy efficiency are two major components of DSM. Demand Response (DR) is offsetting the load consumption pattern of consumers in terms of time and quantity in response to some signal from a utility. DR helps utility in their load management and provides financial benefits, service incentives to the consumers for their participation. Reduction in consumption patterns by end-user related to service curtailment is measurable, predictable, reliable, and has a faster response time compared to generation. Reduction in capacity requirements due to DR implementation translates into a reduction in CO2 emissions helping the environment. Effective DR Programs are keys for smart grid deployment as well as the promotion of green and clean energy resources.

Various state utilities in India pay high prices for peak hour procurement and cannot keep pace with the growing demand for electricity threatening security and reliability of power. Whenever the government looks for new investment in the electricity sector, DR can be looked at an equal footing with power generators as an option for meeting demand. Deployment of DR programs across utilities in India requires certain infrastructure like hardware, software, control and communication systems. The Government of India has come up with various policies, standards, and regulations for the inclusion of DSM and DR in the power sector. Social awareness about DR is still at a minimum level in India even among elite consumers. For effective implementation of DR in India, various regulatory, financial, and social issues have to be tackled by state utilities.

Types of DR programs

DR programs are classified based on control strategy, price and load. The type of DR program adopted depends upon factors like response frequency of participation from consumers, motivation and driving factors made available to consumers, supporting infrastructure available for implementation, and potential impact on the level of energy services. Types of programs depend upon power and information flow among the DR participants i.e., utility, aggregator, system operator and consumer. In centralized control response decisions for load activation and deactivation are taken by the power utility. The decision to control the load profile is from a network security and congestion point of view. In decentralized control, response decisions are taken by consumers, utility only gets information about the net consumption of consumers through an aggregator. Utility designs incentive/price signals to motivate and influence consumers and these are communicated to them regularly. This type of control is much faster as compared to centralized control and the privacy of users is secure. The classification of DR programs is shown in figure 1.

Figure 1:- Classification of DR Programs

DR based on price is classified as incentive/penalty based and dynamic price based. In an incentive-based DR program utility has a contract with the consumers for their participation in the adjustment of system peak. The type and magnitude of incentives are usually specified in the contract. In incentive-based programs, consumers get rewards for giving DR providers some level of control over electrical equipment of consumers whereas, in dynamic price-based DR depending on price signals, consumers schedule their loads voluntarily. The utility offers fixed or time-varying incentives that obey DR contracts during system stress. Penalty-based DR program also levies a penalty on customers for disobeying contract. In direct load control utility or system operator such as aggregator has direct control over the electrical equipment of consumer and manage the operation of load scheduling and curtailment. Incentives are in the form of monthly bill credits or rebates for each load curtailment. In Emergency, DR Program consumers receive incentive payments for demand reduction when the system is short of reserves for helping the utility in maintaining system reliability. In Capacity market program consumer or end-users offers load curtailment in the form of system capacity which acts as an alternative for expansion of existing infrastructure for utility. Consumers receive an incentive in the form of monthly bill credits or rebates for providing load reduction. For interruptible/curtailable load (IL/CL) program consumers are offered discounted rates or bill credits for adjusting their load demand during scheduled or unscheduled system outages. In ancillary services DR schemes large consumers reduce their capacity as an operating reserve in the form of bids in wholesale power markets.

For Dynamic Price-based DR schemes pricing mechanisms are designed according to the load level of the entire system. Consumers are provided with time-varying prices that are decided based on the cost of electricity in different periods. In a time of use (TOU), pricing mechanism end users are given different price slabs for energy usage during different hours of the day. The price arrived is a reflection of the average cost of generating energy corresponding to the complete duration of the day. Most of the states in India have commissioned TOD tariffs. In a real-time pricing program (RTP) the prices vary dynamically for every demand interval based on demand-supply dynamics. Energy prices are updated at very short notice of either 15 minutes or hour time block based on market dynamics in wholesale electricity markets. Consumers benefit by taking advantage of low market prices by deferring their usage period. Critical peak pricing (CPP) is a combination of both TOU and RTP. It is the superimposition of real-time related rates on time of use pricing. In peak load pricing program, different price is set for energy usage for each period in a day. Numbers of such periods in the day are identified and prices are informed to consumers in advance prior to one day before implementation. Based on average power consumption in each period price value for each period is calculated.

Based on how the load is scheduled or curtailed and their effects on net energy consumption DR programs are further classified as task-related DR and energy-related DR.

For all of these above-mentioned DR programs, the basic infrastructure needed are load control switches, smart meters, advanced metering systems, communication systems and data computation facilities. Based on the motivating factors in these DR schemes, options for Indian consumers are suggested. DR pilot projects in India have been evaluated based on dynamic pricing options like TOU, CPP, and RTP. Table 1 highlights various features of DR programs.

DR implementation in India

DR Barriers and Enablers

Barriers to DR implementation can be broadly classified into three types, financial, regulatory, and knowledge-based. Lack of information and effective communication technology, deficiencies in sensing and computation, lack of market structure /mechanisms, advancement required for changes in the role of stakeholders, ownership, and trust related to the privacy of consumer data are the major issues. Creating awareness and understanding of DR concepts have a significant impact on DR implementation. Improving the functioning of markets related to DR, design of effective contract bids for motivating consumer participation, exchange of DR as a resource among multiple parties, and advancement in technology for DR aggregators participation are various steps towards enabling DR over market barriers. To ensure a minimum payback period various schemes such as contracts for difference, transaction costs distribution among participants, standard procedures for enforcement needs to be taken care of. Automation is a key enabler, the use of smart devices, smart controllers, HEMS by consumers will help their participation without human intervention. Correct and clear information by the DR provider as well as confidentiality regarding data security to end consumers is also a key enabler.

Major hurdles for DR implementation in India are lack of awareness among consumers, lack of technical ability of utility staff, lack of investment/ finance for DR project, subsidized prices of electricity for certain sections of domestic and agricultural consumers, lack of enforcement standards, regulations by government institutions. DR participants need to install smart meters, smart equipment, HEMS, communication infrastructure, information management system which needs investment. Need for secure, reliable, and high bandwidth communication infrastructure between end-users and utilities for transmitting information regarding bid data, the price signal is a challenge for state utilities in India. Lack of persuasive incentives, no standard measurement, and verification procedures for DR evaluation are challenges to evaluate exact DR benefits. Proper coordination strategies and schemes need to be developed among utility, load aggregators, system operators, regulators end consumers for the success of DR implementation in India.

Potential DR benefits

DR deployment can create a lot of opportunities in the area of energy, economics, and the environment for the country. A peak power demand deficit exists in the country and the traditional approach of meeting peak demand by utilizing expensive generation units is not a feasible option. DR as a power resource can address the issue by deferring generation capacity, delay in augmenting transmission network, reducing congestion and integrating renewable resources. DR can also improve the resource efficiency of electricity production as well as address the load shedding problem. The dispatchable nature of DR is an effective tool for capacity addition as the gestation period of this resource can be from instant, hourly to daily variation thus helping in maintaining reliability and stability of the network. The Government of India has the plan to add 175 GW of power through renewables by the year 2022. Due to ramping up and down the nature of renewable sources, DR can help to augment the stochastic nature of RES and provide necessary capacity addition. Effective DR Implementation can provide environmental benefits at an affordable cost helping in meeting emission targets set for the country during COP 21 in the Paris climate conference. Successful implementation of DR pilot projects in the country will help in ensuring trust among consumers regarding data privacy, data use based on regulations. Projecting the realizable technical and economic potential of DR creates interest among stakeholders for their participation in DR programs. Many state utilities across India have initiated the process of the consumer survey, load research, and market research to find out the technical and economic potential of DR.

Framework for demand response implementation in India

The objective of the framework is that it will help the state utilities throughout the country to identify the potential of DR and to undertake various steps for the design and implementation of appropriate DR strategy in the future. Various steps for the DR framework for implementation in the country are discussed.

  • Studying demand-supply variation of electrical load: – Detailed analysis of demand-supply variation of a load will help in identifying  timings for curtailment or enhancement of load during the DR event. With the analysis of rising time and fall time in the load curve, it is possible to identify the loads taking time to start up as such types of loads cannot be dispatched easily during the DR event. Renewable energy potential available in each state needs to be worked out to find out the scope for DR potential and implement an effective DR program.
  • Load forecasting and determining sector-wise load pattern: – Accurate forecasting of the load has a significant impact on operation and control of utility in a restructured and competitive power environment. When a forecasted load does not match with an installed capacity of generators other alternatives such as demand response and energy efficiency can be utilized. Load forecasting helps in getting an estimate of additional generation capacity required to meet demand, getting insights of various load patterns and end-use operations contributing to peak load.
  • Estimating the technical and economic potential of DR: – To compare the cost-effectiveness of DR with other alternative feasible options, it is important to identify its technical and economic potential. The technical potential is load curtailment volume, which is realized based on technical constraints. If data regarding both technical and economic potential is established by utility various loads can be targeted. Hardware and control strategies for different load categories like critical, thermostatically controllable, dispatchable, deferrable loads have to be identified. Managing A/C load is one of the most effective and easier ways of load curtailment and can be promoted among Indian consumers.
  • Deciding policies regulations and incentives for DR inclusion: – For the inclusion of DR programs in the power sector government of India has initiated steps in terms of the development of policies, standards and regulations. DR technologies’ penetration in a country will see accelerated growth once policies and standards are in place. The Central Electricity Regulatory Commission (CERC) and State Electricity Regulatory Commission (SERC) have a role to frame regulatory policies. Policies will help to develop standards to meet interoperability, communication and security challenges of DR. Various policies and initiatives like Accelerated Power Reforms Development Program (APDRP), Integrated Power Plant Scheme (IPDS), Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme that will connect 250000-gram panchayats on fibre network will help in setting up the necessary infrastructure for effective DR implementation among stakeholders.
  • Impact assessment and participation evaluation: – Assessment of consumer participation in the DR program both through voluntary and mandatory means need to be thoroughly investigated by utility or third party appointed by the utility. Such an investigation will help in estimating the level of DR expected from targeted participation at reference price/incentives. Mapping up of sector-wise consumers, different load categories depending upon end-user needs to be taken up by demand-side management cell. Effect of monetary, service incentives and other policies on the amount of peak load shifted has to be evaluated.
  • Transaction costs evaluation: – Implementation of DR program across will incur the cost for developing hardware, software, and communication infrastructure, cost of up-gradation of billing systems, and consumer education costs. Operating costs to the utility will consist of administrative costs and incentive payments to participating consumers. Economics has to be worked out whether these costs can be distributed across all stakeholders or can be borne by the utility itself. The upfront cost for DR infrastructure has to be justified through energy bill savings for end consumers, brokerage fees from load aggregators and reduction in purchasing power during peak hours by the utility in terms of Rs. /MWh or Rs./MW shifted.


Energy savings, lower energy prices, energy security and environmental benefits are key drivers for DR implementation in India. DR technologies like smart appliances, smart metering systems, data management systems, software, control and communication systems are keys for the development and adaptability of DR. Implementation of DR in the Indian power grid can enhance grid capacity, improve quality and reliability of power as well as reduce the carbon footprint of the nation.




Jayesh G. Priolkar holds a Master’s degree in Energy Systems from the Indian Institute of Technology Bombay, Mumbai.  He is working as an Assistant Professor at Goa College of Engineering, Goa, India. His research interests include Energy Management and Smart Grids.

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