Current Practice and Thinking with Integrating Demand Response for Power System Flexibility in the Electricity Markets in the USA and Germany

Regulators worldwide are aiming to increase system flexibility by leveraging the untapped potential of demand response. In this article we review and compare the literature on current practice and thinking about the role of demand response in three distinctly different markets that represent leading global examples of demand response: two regional electricity markets in the United States (PJM and ERCOT) and the national market in Germany. Furthermore, we describe the share of demand response in each market segment and the corresponding market design. We found, firstly, that interruptible loads and emergency generators (demand response) are used as a contingency reserve only, for no more than 30 h per year. Secondly, the share of demand response is about 4 % of the unforced capacity requirement (including emergency generators). Thirdly, the discussion of demand response also shows that there is a lot of uncertainty on how an appropriate level playing field between flexible resources should look in detail. Nevertheless, regulators are aiming to further enhance the reliability and competiveness of demand response programmes.