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What is Demand Response? and how does it work?

What is Demand Response?

Demand Response was introduced in Japan as a new solution to stabilize the Japanese power supply by adjusting "demand-side resources" rather than the supply side of power.

Customers can cooperate in improving power supply capacity by temporarily shutting down their facilities and reducing their power usage or switching to backup power sources when supply and demand are tight.

This system also allows customers to receive financial incentives for participating in Demand Response. Customers can secure a stable new source of revenue by participating.

Demand response

How Demand Response work?

Demand response

Demand Response event will involve the following steps:

1. The grid operator predicts a grid stability problem and sends a balance notification to the aggregator.
2. Aggregators send Demand Response requests to consumers.
3. The designated client modulates their consumption/generation level.
4. The aggregator reports the reduced power capacity to the grid operator.
5. The grid operator pays incentives to the aggregator.
6. The aggregator pays incentives to clients.

Why Demand Response?

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Until recently, grid operators relied completely on traditional power stations to meet fluctuations in demand. When demand increases, in order to avoid the risk of a blackout, utilities, and grid operators must boost their energy supply by acquiring it on the market, or firing up a “spare” power plant built to meet these demand peaks.


However, the climate crisis and the resulting need to decarbonize the economy means that by 2050, 79% of the energy produced is expected to come from renewables, which by their very nature produce an unpredictable energy supply that cannot be turned “on and off.” On top of that, global electricity demand will rise an estimated 60% by 2040.

Therefore, Demand Response is becoming more important because programs allow utilities and grid operators to adapt to this new energy scenario by enabling them to offer incentives to companies to be more flexible in their energy demands. In other words, Demand Response programs, which provide financial payments to companies who agree to modulate their energy consumption in response to grid signals, are the tool used to improve grid stability while making it possible to integrate renewable energy into the grid.

It’s a win-win solution for companies looking to boost their bottom line, and for grid operators seeking to avoid significant capital expenditures on new capacity.

What is the benefit to participate Demand Response?

Why Demand Response? There are many Demand Response benefits for companies, and several types of Demand Response programs are available. These programs offer an opportunity for companies, schools, offices, factories, commercial property, and retail malls to tackle high energy costs because they create a valuable revenue stream that can be reinvested to deliver even greater savings.

In addition to a new revenue stream that can be reinvested, Demand Response programs are the ability to improve energy management, thereby helping to meet sustainability goals that are becoming mandated by governments around the world. Demand Response can also be a social contribution that facilitates the transition to renewable energy and leads society toward a greener, more sustainable future.

Please also read "What types of facilities are eligible to participate?" and "How to participate in Demand Response?"

Enel X was founded as a subsidiary of Enel, one of the largest utility companies in the globe, and has a wide range of experience and know-how in the field of energy. Enel X Japan is an aggregator that has been providing Demand Response programs in Japan since 2012. Our experienced experts will analyze and propose a customized program based on your industry and requirements to maximize your revenue from Demand Response.

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