Under inelastic demand conditions (D1) consumers will pay nearly any price for
electricity; extremely high prices (P1) may result in a strained electricity market.
If demand response measures are employed the demand becomes more elastic
(D2), meaning that consumers are more in control of electricity prices and will
not pay more than they want to. In this case, a much lower price (P2) will result
in the market.
Whether the consumer is purchasing electricity in a regulated or deregulated
market is a major factor in determining how demand response is considered.
In some government-regulated markets consumers have no financial incentive
to reduce their peak load since their rate will not change. In this type of mar-
ket, utilities often provide programs and incentives for large commercial custo-
mers to reduce peak demand. In a deregulated market, consumers are
purchasing electricity at a market price that varies throughout the day so they
are forced to lower or defer their peak demand to reduce costs.
The electrical demand of a building can be reduced by the EPMS in response
to a request by a utility or to market-price conditions utilizing a method called
load shedding. Load shedding is the reduction of electricity usage from building
systems such as lighting and HVAC systems according to a preplanned load-
prioritization scheme. Whenever peak hours have passed, electricity usage
returns to normal.
An alternative to load shedding is on site generation of electricity during
peak hours to provide the electricity needed past the base load.
P
P1ΔPΔQP2S D2D1Q2 Q1 QFigure 5.2 Demand response.
Electric Power Management Systems 63