Demand response (DR) is becoming an important part of the resource mix for utilities and grid operators, especially in managing peak electricity demand. Utilities face significant challenges, however, in rolling out DR programs to large numbers of their residential customers. According to a recent report from Pike Research, a part of Navigant’s Energy Practice, the worldwide participation level of residential demand response programs will reach only 16.4 percent by 2018, among households with access to such programs.

“Utilities around the world are gradually realizing the potential benefits of introducing demand response programs to their residential customers,” says senior research analyst Marianne Hedin. “While the total number of households participating in demand response programs will be more than 23 million in 2018, that still represents a relatively small fraction of the total addressable market.”

Among the forces constraining more rapid growth in the residential DR market are consumer backlash to smart meters, the cost of delivering demand response to residential customers, and an overall lack of consumer engagement with and interest in this option. Pricing programs that rely on dynamic pricing, which offer consumers a clear financial incentive for adoption of DR, will be the fastest growing segment of the residential DR market.