What is Demand Side Management?

The term Demand Side Management refers to a group of actions designed to manage and optimize a site’s energy consumption and to cut costs, from grid charges to general system charges, including taxes. 


The aim of Demand Side Management is to modify the overall consumption picture - consumption time profile, contractual supply parameters (contractual power and grid connection parameters) - in order to achieve savings in electricity charges. 


As a result of the high penetration of renewable sources and the decentralization of production, grid managers in many countries are encountering increased instability on the grid and consequent disruptions to services. To limit these impacts and ensure a balance between energy consumption and the amount of power being fed into the grid, managers can now utilize generation and consumption systems that offer so-called “grid services” in return for payment, thus increasing the costs for the electrical system.


The first step in Demand Side Management is to carry out an in-depth analysis of on-site consumption: this clarifies the peculiarities of each individual site and whether consumption habits can be optimized without resorting to additional instruments.  Whenever a change in habits is not feasible or simply not sufficient to achieve the desired cost reductions, the on-site (behind the meter) installation of the following solutions can be evaluated:



These solutions require an Energy Management System, which is a dedicated computer platform that will: 


  • Monitor all the assets involved (consumption sites, batteries, production systems);
  • Optimize contributions from batteries and production systems in real time, cutting costs associated with intake from the grid and minimizing battery aging;
  • Use the assets involved to supply services to the grid.


Why is demand side management important?

Demand-side management (DSM) is a concept in the energy industry. It has become an increasingly popular way of managing electricity costs in countries with high penetration of renewable sources and a growing awareness of the impact of the increasing use of renewable energy sources.


An example are wind and photovoltaic plants, which are being deployed to meet the growing needs of the population and to prevent the grid from being over-reliant on one source of energy, while at the same time maintaining a balance between supply and demand.


Who benefits from demand side management?

Demand-side management (DSM) is an emerging field in the energy industry. Utility companies are increasingly adopting it as part of their efforts to control their costs and reduce the impact of energy shortages on their bottom lines.


DSM is also effective in controlling the potential adverse effects of power cuts during peak hours of the day and in case of high charges or congestion of electric grids.


These factors can lead to higher costs and inconvenience to the end-users, especially during weekends and at off-peak hours.


What is the difference between demand-side management and demand response?

Demand Response (DR) is a type of demand-side management (DSM). DSM is the umbrella term that refers to reducing electricity usage during peak hours to keep electricity costs lower for all consumers. DR is just one type of DSM, and it fosters energy efficiency, direct load control, customer education, and financial incentives (to name just a few of its benefits).

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