Energy demand management

Energy demand management, also known as demand-side management (DSM) or demand-side response (DSR), is the modification of consumer demand for energy through various methods such as financial incentives and behavioral change through education. Usually, the goal of demand side management is to encourage the consumer to use less energy during peak hours, or to move the time of energy use to off-peak times such as nighttime and weekends. Peak demand management does not necessarily decrease total energy consumption, but could be expected to reduce the need for investments in networks and/or power plants for meeting peak demands. An example is the use of energy storage units to store energy during off-peak hours and discharge them during peak hours. A newer application for DSM is to aid grid operators in balancing intermittent generation from wind and solar units, particularly when the timing and magnitude of energy demand does not coincide with the renewable generation.

The American electric power industry originally relied heavily on foreign energy imports, whether in the form of consumable electricity or fossil fuels that were then used to produce electricity. During the time of the energy crises in the 1970s, the federal government passed the Public Utility Regulatory Policy Act (PURPA), hoping to reduce dependence on foreign oil and to promote energy efficiency and alternative energy sources. This act enforced utilities to obtain the cheapest possible power from independent power producers, which in turn promoted renewables and encouraged the utility to reduce the amount of power they need, hence pushing forward agendas for energy efficiency and demand management.

The term DSM was coined following the time of the 1973 energy crisis and 1979 energy crisis. Governments of many countries mandated performance of various programs for demand management. An early example is the National Energy Conservation Policy Act of 1978 in the U.S., preceded by similar actions in California and Wisconsin. Demand Side Management was introduced publicly by Electric Power Research Institute (EPRI) in the 1980s. Nowadays, DSM technologies become increasingly feasible due to the integration of information and communications technology and the power system, new terms such as Integrated Demand-Side Management (IDSM), or smart grid.

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