As the economy grows, so does the demand for energy—stretching our power grid to its limits. Across North America, utilities face rising challenges to maintain grid reliability while avoiding service disruptions and price spikes for customers. The solution lies not just in expanding infrastructure but in smarter, more efficient energy use. That’s where demand side management (DSM) comes in, helping facilities become part of the solution while unlocking significant savings.
What is Demand-Side Management?
Demand side management (DSM) is an umbrella term referring to a utility-led strategy that optimizes how and when energy is used by consumers. DSM programs use a variety of methods to encourage consumers to use less energy during peak hours or shift their energy use to off-peak times. By encouraging efficiency and flexibility, DSM programs reduce the need for costly upgrades to generation and distribution infrastructure.
DSM programs have a longer time horizon and incentivize efficiency. It encompasses a wide variety of initiatives, such as:
- Equipment and process upgrades
- Load shifting
- Peak shaving
- Demand response (DR), a subset of DSM
Some well-known examples of DSM programs are the MASS Save Program in Massachusetts and the Save On Energy Program in Ontario.
DSM also encompasses initiatives such as retrofits, behaviour change programs, and education to encourage energy-efficient practices among end-users. These programs aim for long-term impact, ensuring that facilities transition to smarter energy use while achieving operational and cost efficiencies.
Demand Response: A Key Component of DSM
In comparison, demand response (DR) is a program subset of DSM. It has a shorter-term outlook and incentivizes flexibility to respond to specific grid events in real-time or near-real-time, stabilizing the grid while earning incentives.
Facilities commit to adjusting their energy consumption in real-time to balance out various stresses on the grid. The aim is to address fluctuations in the grid as they happen, and facilities are rewarded for that energy flexibility. Even if its total energy consumption remains constant year on year, a facility can lower its utility bills by temporarily reducing or shifting its electricity usage in response to grid capacity or pricing spikes. Under some DR programs, facilities can use batteries to automatically curtail their demand on the grid as needed or even monetize their electricity savings by qualifying for expanded incentives.
In our previous post, we examined demand response for industrial facilities and briefly discussed how it differs from demand-side management.
Demand Response (DR):
- Definition: DR is a specific subset of DSM focused on short-term actions to reduce or shift electricity demand during periods of stress on the grid or market price spikes.
- Scope: Targeted and event-driven, typically involving real-time or near-real-time adjustments in energy use.
- Goal: Provide grid flexibility, prevent blackouts, and manage costs during peak demand or grid emergencies.
- Mechanism:
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- Signals from utilities or grid operators (e.g., price changes, requests for load reduction).
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- Participation in DR programs is often incentivized financially.
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- Enabled by technology like smart meters, building automation systems, and battery storage.
- Example: A commercial building adjusting temperature or turning off non-essential equipment during a demand response event.
Key Differences:
Demand Side Management (DSM) | Demand Response (DR) | |
Timeframe | Long-term, ongoing | Short-term, event-driven |
Objective | Optimize overall energy usage | Respond to specific grid conditions |
Mechanism | Efficiency upgrades, retrofits, education, behaviour change | Real-time energy use adjustments via automation or manual action |
Scope | Broad. Includes DR as a subset | Narrow. Focuses on immediate grid support |
How DSM Empowers Large Energy Users Facilities
Facilities with significant energy needs—like manufacturers, cold storage facilities, and multi-facility campuses—can benefit immensely from DSM initiatives. Here are some examples of how DSM works in practice for these sectors:
1. Manufacturing and Processing Plants
- Smart Metering: Real-time energy data helps identify inefficiencies.
- Heat Recovery Systems: Reuse waste heat for industrial processes.
- Battery Storage: Shift grid reliance during peak periods and automate DR participation, reducing costs.
- Advanced Automation: Optimize production schedules to align with off-peak energy hours, saving on costs while maintaining output.
2. Cold Storage and Warehousing
- Efficient HVAC Systems: Reduce the energy intensity of refrigeration and climate control.
- Load Shifting: Leverage battery storage to power equipment during on-peak hours.
3. Steel, Cement, and Industrial Gas Facilities
- Peak Shaving: Smooth out energy peaks to reduce demand charges.
- On-Site Generation: Install renewable systems to lower overall grid dependency.
- Energy-Efficient Upgrades: Retrofit older equipment to modern standards for improved energy performance.
At Peak Power, we specialize in developing and optimizing battery storage, solar + storage, and smart EV charger management. These kinds of projects may even qualify for rebates from your local utility or for payments from capacity markets, depending on your region. If you’re contemplating energy-efficiency projects for your facility, our experts can help you explore local incentives and figure out next steps.
Why Invest in Demand Side Management Initiatives?
1. Stabilizing the Grid
By reducing peak demand and increasing efficiency, DSM ensures a more resilient and reliable electricity grid. For facilities, this means fewer disruptions and a more predictable energy landscape. Facilities with behind-the-meter energy storage solutions and renewable energy systems contribute significantly to this grid stability.
2. Boosting Your Bottom Line
DSM reduces energy costs through efficiency, curtailment, load shifting, and participation in incentive programs. Facilities can monetize their energy flexibility with distributed energy resources (DERs). Additionally, demand-side programs help facilities optimize operational schedules to consume energy at lower tariff times, further reducing costs.
3. Pursuing Net Zero
Another important benefit of DSM is that it helps energy managers achieve their environmental targets. By transitioning to more efficient equipment and processes, as well as reducing energy consumption during peak demand periods, your facility can reduce its Scope 2 emissions.
Why Choose Peak Power?
At Peak Power, we’re experts in implementing energy storage solutions tailored to industrial and commercial facilities. Our end-to-end services include:
- Battery Storage Development with our proven 5-step process to get started with energy storage
- Advanced Battery Storage Optimization and Operations Software for facilities looking to better leverage their existing DERs.
- Coincident Peak Notifications for facilities looking to curtail and reduce costs during peak demand events which spike energy prices
Demand-side management is about building resilience, lowering costs, and preparing for a sustainable future. If you’re ready to explore how our solutions can transform your facility’s energy operations, Peak Power is here to help. Contact us today to learn more or see if your facility could be eligible for a zero capex energy storage system through a shared savings agreement.
Our market knowledge and expertise can help you get the most out of your energy operations.