Demand Response Is Important—But Let’s Not Oversell (or Over-Price) It

DR proponents often cite wholesale price reductions as the primary source of benefits that justify subsidized payments to DR participants, with costs to be recovered from all consumers. A close review of these claims of cost-saving benefits from price reductions suggests that they substantially overstate the likely benefits of DR. At the same time, they ignore the real cost-savings from load reductions under non-subsidized DR.