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14 October 2022

InnoBlog: Smart grid challenges - saving money on energy bills

 This blog is the second in a two-part series on the challenges around consumers being more active in the energy transition.

 

The previous blog discussed how consumers equipped with assets such as solar photovoltaic (PV) panels, battery energy storage or electric vehicles (EVs) can sell their excess electricity back into the grid and actively participate in the energy transition.

 

However, what about consumers without such assets; can they also actively participate? The answer: yes, of course - through something known as “demand response”.

 

Demand response (DR), as defined in the Clean Energy Package (CEP) of the European Union, is “the change of electricity load by final customers from their normal or current consumption patterns in response to market signals, including in response to time-variable electricity prices or incentive payments, or in response to the acceptance of the final customer's bid to sell demand reduction or increase at a price in an organised market”.

 

In simpler terms, DR aims to promote consumers’ engagement with their consumption. Though different demand response options exist, the basic premise is the same: demand is elastic and so consumption can be adjusted in response to price signals, consuming when prices are low and cutting back when prices are high. Through this, consumers have the potential to save money on their bills.

Power grid perspective

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The challenges

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