Demand response (DR) programs offered by utilities to their residential customers are essential tools for managing demand and are a key component of governmental energy policies. Taking a cue from their counterparts in the United States, utilities around the world are gradually realizing the potential benefits to themselves as well as their customers of introducing DR programs to their residential customers. By 2018, according to a new report from Pike Research, a part of Navigant’s Energy Practice, more than 23 million households worldwide will participate in demand response programs, more than double the number that do so today.

The fastest growing segment of the residential DR market will be price-based programs that rely on dynamic pricing, which may usher in a whole new way of dispatching DR, the study concludes.

"Dynamic pricing offers an opportunity for utilities to expose consumers to price signals with a more accurate representation of the actual price of electricity at any given time,” says senior research analyst Marianne Hedin. “It could eventually become the most common load curtailment scheme for households, dispatching demand response much more frequently at very short durations. It will also change the way utilities determine their rate plans and their dispatch strategies."

While traditional direct load control programs remain the most common form of DR, the number of price-based programs is expected to increase rapidly, according to the report. By 2018, about 8.7 million households worldwide are expected to be enrolled in some type of price-based program, one-third of the total participating in demand response.

The report, “Residential Demand Response”, examines the developing global market for residential demand response programs, including technology issues, market drivers and barriers, and regulatory factors. The report includes detailed comparisons of price-based and direct load control DR programs as well as profiles of 17 key market players. Market forecasts for residential DR participation, spending, and load curtailment (in megawatts), segmented by region, are provided through 2018. An Executive Summary of the report is available for free download on the Pike Research website.