Demand Response Analysis

NREL analysts evaluate the potential value of demand response to future bulk power systems. Demand response can be interpreted broadly as any modification of end-use electricity load operation for the purpose of providing grid services.

NREL uses production cost and capacity expansion modeling to capture capacity, energy, and ancillary service value achieved through demand response, via a combination of electricity load reductions at peak times (capacity, contingency reserves, peak-load energy value), energy shifting, and load-following or regulation reserves.

Demand Response in Florida

In The Value of Demand Response in Florida, NREL examined future Florida power systems under a range of photovoltaic (PV) penetrations and flexibility options. In addition to demand response, the project team analyzed to what extent more flexible operations and battery energy storage might increase the economic carrying capacity of solar PV. Flexibility becomes a potentially important component of preserving PV value at penetrations around 15% of annual energy.

Chart showing annual solar PV penetration versus incremental PV value, with different scenarios of flexibility and demand response plotted. Value tends to decrease as PV penetration increases, and flexibility becomes a potentially important component of preserving PV value at penetrations around 15% of annual energy.

Based on NREL's scenario assumptions, demand response can provide flexibility similar in overall impact to 1 gigawatt of 6-hour battery energy storage spread throughout the Florida Reliability Coordinating Council (FRCC) power system, with important differences concerning which types of generation are displaced by the two resource types.

The value of demand response to the FRCC system was also analyzed more generally, in terms of production cost savings and operational impacts. Production cost savings for the high-demand-response scenario (applied in the absence of any other flexibility options) ranged from $76 million to $259 million, depending on PV penetration. Greater savings were found for higher PV penetrations, even though higher PV penetrations also depress overall production costs. As such, the percentage savings range was even wider, from 0.5% to 2.2%.

Flexibility almost uniformly reduces the number of gas generator (combined-cycle units and combustion turbines) number of starts. Additional system flexibility, including demand response, often actually increases the number of coal starts because the additional flexible resource can be the difference between being able to keep a coal plant off for the full minimum downtime.

NREL is also researching interactive effects between demand response and battery energy storage operations.


NREL researchers identified the significance of building flexibility to the grid to determine technology costs. Through scenario analysis, researchers implemented demand-side flexibility resources against modeled future grid scenario hourly prices. One such study was conducted on Florida Reliability Coordinating Council’s operations, where it was found that solar PV was cost competitive.

Access the dataset: Grid Service Values of Generic Marginal Building Flexibility in Modeled 2030 U.S. Power Systems.

Find out more in the Reducing Grid Costs While Abating Emissions: Opportunities for Flexible Building Loads technical report.

With demand increasing for electric heating and cooling, and greater shares of renewable energy powering the grid, demand response has more opportunity to provide energy shifting or operating reserve services. NREL’s study on estimating the aggregate size of electric water heater demand response resources uses detailed simulation modeling of the housing stock to produce electric resistance water heater and heat pump water heater demand response resource estimates suitable for bulk power system planning models. This study identifies new computational methods for directly representing device-level flexibility and analyzing aggregation processes to develop battery-like resources able to contribute to supply-demand balancing and price formation in wholesale power markets. The study uses dsgrid-flex, a software package for translating device-level information into descriptions of aggregate, megawatt-scale demand-side flexibility, to predict the ability of individual water heaters to operate flexibly in response to grid signals.

With the rise of electric vehicles, more stress is being put on the electric grid to charge vehicles. Managing electric vehicle charging will create a more reliable and operational grid system. NREL researchers helped to discover how managing charging can support power system planning during normal and contingent events. Through analysis on adoption rates and electricity increase scenarios, researchers identified the value of managed electric vehicle charging.

NREL lead research efforts on demand response, used to reduce load during system peak times. Researchers analyzed contingency reserve resources and energy-shifting to offset power use during emergency events. Researchers sought to identify how energy efficiency and demand response affect each other’s power system value and the cobenefits of these interactions. NREL also identified the constraints of demand response, including operational limitations. To do this, a proposed demand response implementation was tested with real-world load data for Bangalore, India. Bangalore added demand response resources to its electricity system and researchers investigated the impacts of increasing demand response under different renewable scenarios.

Being able to mimic these decisions and conditions in real-time is important, so researchers used the PLEXOS production cost model to plan operational costs. Researchers found that demand response can lower production costs, as was the case in Florida. In addition, NREL conducted a study of residential water heaters to analyze energy shifting and operating reserve services on a New England Power system. Exploring renewable energy resources was key to understanding potential roles of demand response to modify load operations and provide grid services.

There is a global movement toward renewable energy generation to substitute for fossil fuel use. NREL researchers reviewed the fundamental changes to technology, policy, market, institutional dynamics, and more. Part of these changes in the Clean Grid Vision study included analyzing the demand side of electricity and how demand is affected by supply during a changing economy and global environment. NREL researchers discovered how important demand-side subjects are in a clean grid strategy.

The Electrification Futures Study was a multiyear project that looked at the opportunity to electrify the U.S. power grid. The study examined the advancement and adoption of electric technology and analyzed electricity consumption growth. One way to do this was by improving NREL’s Regional Energy Deployment System (ReEDS) model. NREL researchers improved the representation of load shapes and peak demand in ReEDS to better capture how regional interactions could be impacted under widespread electrification. Increasing electricity demand also impacts the system’s operation and flexibility to meet demand. Through scenario analysis, researchers explored a range of potential futures including end-use technology advancement, storage technology improvements, and constraints on bulk power systems.

Find out more in a presentation on Electrification Futures Study: Power Systems Operation With Newly Electrified and Flexible Loads.

NREL supported the City of Los Angeles in its goal of 100% renewable energy power by 2045 through the Los Angeles 100% Renewable Energy Study (LA100) study, which analyzed potential pathways the city can take to achieve its goal. As part of the study, NREL researchers explored how electricity is consumed now by LA customers, how that might change through 2045, and potential opportunities to better align electricity demand and supply. To achieve 100% renewable energy by 2045, Los Angeles will need to deploy a combination of renewable energy technologies including wind, solar, and electric transportation.

Read the Los Angeles 100% Renewable Energy Study Executive Summary for more information. 

Related Publications

Getting to 100%: Six strategies for the Challenging Last 10%, Joule (2022)

Building and Grid System Benefits of Demand Flexibility and Energy Efficiency, Joule (2021)

The Curtailment Paradox in the Transition to Higher Solar Power Systems, Joule (2021)

Demand Response Potential From the Bulk Grid Perspective, 36th Peak Load Management Conference (2017)

Capturing the Impact of Storage and Other Flexible Technologies on Electric System Planning, NREL Technical Report (2016)

Water and Climate Impacts on Power System Operations: The Importance of Cooling Systems and Demand Response Measures, NREL Technical Report (2016)

On the Inclusion of Energy Shifting Demand Response in Production Cost Models: Methodology and a Case Study, NREL Technical Report (2015)


Elaine Hale

Senior Research Engineer