What is Demand Response?
Demand Response is a program that allows commercial and industrial (C&I) consumers to increase or decrease their energy consumption in response to peaks in electricity supply and demand, resulting in greater grid flexibility and stability as well as a more efficient use of energy infrastructure and resources.
How does Demand Response work?
Generally speaking, a Demand Response event will involve the following steps:
1. The grid operator predicts a grid stability problem and sends a balance notification to the aggregator;
2. The aggregator receives the balance order and uses special algorithms to optimize the distribution of the request between the clients in its portfolio to reduce or increase their energy consumption;
3. The designated client modulates their consumption/generation level (this can be done either automatically or manually);
4. The load modulation is made available to the grid operator;
5. Following verification that the service has been correctly provided, the client receives payment as agreed under contract.
There are many Demand Response benefits for companies, and several types of Demand Response programs are available.
In Italy, a client can provide Demand Response services by participating in an Aggregate Virtual Consumption Unit (UVAC in Italian). The requisites to participate in this Demand Response program include modulation capacity of at least 1 MW, capability to modulate the intake from the grid within 15 minutes of receiving the dispatching order, and capability to sustain that modulation for at least three consecutive hours.
UVACs can participate in the Spot Dispatching Services Market by making bids presented by the Balancing Service Provider or by offering fixed-term services for periods requested through specific tenders. In that case, payment will involve a fixed component for providing the availability to offer the service, plus compensation upon activation.