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What is Demand Response and how does it work?

Demand Response (DR), also known as Demand Side Response, DSR or Demand Management, is an energy flexibility program used globally as a cost-effective way to maintain grid reliability and security. This program extends its reach to a diverse spectrum of energy users, including businesses, government agencies, and households.


Participating in Demand Response means that energy users can actively contribute to grid stability and, in return, enjoy financial incentives. They achieve this by either reducing their electricity consumption or activating an onsite generator in response to a signal. In simple terms, Demand Side Response empowers electricity customers to proactively and voluntarily adjust their electricity consumption patterns to gain financial benefits.

Our Virtual Power Plant (VPP) is the largest in Australia (BNEF) and is made up of organisations’ distributed energy resources (onsite equipment, backup generation and battery energy storage systems), that reduce energy usage in response to conditions of electricity grid stress.


We manage the end-to-end process for our clients, and always ensure participation suits your operational needs. Program participants earn regular payments, enhance resilience and support the grid and local community by helping to keep the lights on.

Demand Response and the Energy Transformation

Demand Response

Join our Virtual Power Plant and support the energy transition

What are the four types of Demand Response?

Speak with an expert today to learn how Enel X can help you achieve your energy goals.

There are 4 types of Demand Response programs in Australia:
  • Emergency Response
  • Peaking Response
  • Frequency Control
  • Load Shifting

Emergency Response

Emergency Response is used when there is not enough electricity supply to meet consumers’ needs. This is usually called on if major generators break down, during summer peaks when demand is unusually high, or some combination of these factors. Energy users can reduce their demand for electricity in return for incentive payments to keep the grid stable and avoid power outages.
  • In New South Wales, the government has introduced new incentive schemes—such as the Peak Demand Reduction Scheme—due to the critical risk of supply shortfalls in the coming years.
  • In Western Australia, Emergency Response is incentivised through schemes that reward participants for being on standby for the Australian Energy Market Operator (AEMO) to call upon when traditional generation is insufficient to keep the lights on.
  • In the remaining states of Australia, Emergency Response is largely provided through the Reliability and Emergency Reserve Trader (RERT). AEMO calls on electricity users to reduce grid power when demand outstrips supply.

Enel X participates in each of these programs by offering our clients’ energy load during grid emergencies, who are paid for their contribution.

Peaking Response

Peaking Response involves energy users reducing demand or increasing generation based on the wholesale electricity price, which fluctuates in response to supply and demand. In today’s volatile electricity market, power prices can spike to $16,600 / MWh. Not only does this contribute to supporting grid reliability, it also helps reduce power prices for all users which is a critical services in this time of rising electricity prices. With Enel X, energy users are alerted to periods in which prices are high and there is a valuable opportunity to earn spot market revenue. Users then respond by curtailing their equipment or using their on-site generation assets in a pre-agreed manner. 

Frequency Control

Protect the grid’s frequency with instantaneous response

Wholesale DRM

Peaking Response

Earn revenue in today’s volatile energy market whilst supporting reliability and lower power prices

Ancillary services

Ancillary services Demand Response is used to keep the frequency of the electricity system stable. Energy users are paid to provide Frequency Control Ancillary Services (FCAS), by reducing demand to keep the grid operating within its usual frequency range of around 50 Hertz.

Enel X provides ~30% of the total frequency reserves today. We directly contributed to reducing Australia’s FCAS prices when we entered this market (AEMO, 2018). Our portfolio responds to an event by immediately dropping the majority of client consumption. This brings the grid back into the normal frequency range by balancing demand against supply.

Load Shifting Demand Response

Loads with high levels of flexible demand can participate in regular Load Shifting Demand Response. This means increasing demand during times of low prices, usually during the middle of the day, and decreasing a corresponding amount of demand during times of high prices, usually the evening peak period. The value this provides is particularly important as the grid becomes more and more powered by solar, with high levels of generation during the day and a steep drop in solar generation levels during the evening.


If you have an asset with high levels of flexible demand, such as chillers that power refrigerated spaces, or battery energy storage systems, Enel X can support your participation. We can do this as your electricity retailer, or through other mechanisms that allow you to provide demand response without impacting your retail arrangements.

What are the benefits of Demand Response?

  • Maximise payments to your bottom line: Enel X manages your participation from start to finish, ensuring you earn the highest possible financial reward.
  • Improve your facilities’ resilience: Demand response participants receive advanced notification of grid stability issues, enabling them to proactively protect their facilities from potential power outages. In addition, if you enrol your backup generation assets in our VPP, participation leads to more regular testing, and helps to iron out any assumptions around reliability, with the safety net of grid power to switch back to.
  • Support your community: Your participation helps maintain reliable electricity in your community, and helps to keep the lights on.
  • Allow for the integration of more renewables: a clean grid powered by wind and solar generation requires they kinds of support demand response can bring to balance out the periods when the sun is not shining or wind levels are low.

How to participate in Demand Response?

Enel X makes participation easy. We take care of the complex details so you can stay focused on running your business.

  1. Our expert team will work with you to identify your energy reduction potential and create a strategy that delivers maximum value with minimum impact to your operations.
  2. We install necessary metering devices at your facility to establish communication with our Network Operations Center (NOC), so we can monitor your energy consumption levels in real-time.
  3. Your site is then enrolled and ready to respond when a dispatch begins. Our team remains on standby to support you at all times.
  4. Throughout the process, we fully manage enrolment, measurement, verification and payments on your behalf.

What can I expect during a Demand Response dispatch event?

  • Notification: When there is a need for demand response, Enel X puts its VPP into action. Enel X will notify you via email, phone or SMS, depending on your preferences, to inform you when the dispatch will begin and end.
  • Response: At the start of the dispatch, your facility will reduce its electricity usage according to your predetermined plan - either manually or automatically through our Network Operations Center (NOC).
  • Support: Before, during, and after a dispatch, our NOC remains in communication with your facility. Our staff is available 24x7x365, supporting you to ensure that you achieve the highest possible levels of performance and payments.


Businesses and some government agencies are already being rewarded for one or more forms of Demand Response. To learn more about your options, get in touch with one of our experts.