load / Demand Response:
The problem of peak load demand is that it may exceed current supply capacities
which will make it necessary to build expensive new generating stations to meet
the peak load demand. To overcome this problem, the utility introduces demand
management by encouraging the consumer to participate in the demand response
methods , In these methods, incentives are offered to customers depending on their
behavior in the demand response programs. Normally, customers change their
consumption voluntarily. However, in some cases, the failure to meet the
requirements will result in a penalty for customers. Generally, there are many types
of incentive-based demand responses includes:
 Direct load control (DCL):
According to the advanced agreement between customers and utilities,
utilities can remotely control some customers’ appliances (e.g., air
conditioners and water heaters). The notices for the operation are normally
announced a short time ahead. To participate in this method, customers need
to be equipped with a remote-control switch system so that utilities can
reschedule, turn on, or turn off the appliances. Direct load control is
primarily applied to the residential sector or small-scale commercial sector.
It is not suitable for the industrial sector because the industrial sector needs a
precise process.
 interruptible/curtailable load tariff:
Compared with direct load control, this method is normally applied to the
industrial sector and large-scale commercial sector. When the system is
congested, customers are asked to reduce some loads to a certain level. By
participating in this, customers can receive a rate discount or bill discount.
However, if customers fail to respond in the predefined time period, they
could receive a penalty. In this method, the operation frequency and the
duration are limited.
 Emergency demand response program
Instead of being asked by the utilities to take part in demand response
programs, customers can make decisions by themselves in this method. On
the basis of the generation and demand situation, utilities announce the total
amount of electricity that must be curtailed. Customers can bid for the
amount on the basis of their own situation and the wholesale market. Once
the bid has been accepted, customers must provide the specified curtailment,
otherwise, they will receive a penalty. This method is also suitable for largescale customers. Small-scale customers can be integrated by aggregators and
involved as a unit. The regulatory framework through which electricity
pricing is determined.
 But when the system is short of reserve, customers are required to reduce
their predefined consumption. The announcement is normally released one
day ahead. These curtailments are treated as system capacity to replace the
conventional generation and delivery resources. By proving their ability for
curtailment, customers can receive a reservation payment. And by providing
the reduction, customers can receive an incentive. In contrast, if they fail to
provide it, they could receive a penalty.