Evolution and current status of demand response (DR) in electricity markets: Insights from PJM and NYISO

In electricity markets, traditional demand side management programs are slowly getting replaced with demand response (DR) programs. These programs have evolved since the early pilot programs launched in late 1990s. With the changes in market rules the opportunities have generally increased for DR for participating in emergency, economic and ancillary service programs. In recent times, various regulators have suggested that DR can also be used as a solution to meet supply – demand fluctuations in scenarios with significant penetration of variable renewable sources in grid. This paper provides an overview of the evolution of the DR programs in PJM and NYISO markets as well as analyzes current opportunities. Although DR participation has grown, most of the current participation is in the reliability programs, which are designed to provide load curtailment during peak days. This suggests that there is a significant gap between perception of ability of DR to mitigate variability of renewables and reality of current participation. DR in future can be scaled to play a more dynamic role in electricity markets, but that would require changes both on technology as well as policy front. Advances in building technologies and energy storage combined with appropriate price signals can lead to enhanced DR participation.