Demand side management in an integrated electricity market: What are the impacts on generation and environmental concerns?

Smart Grid technology appears necessary to succeed in activating the demand through demand side management (DSM) programs. This would in turn improve energy efficiency and achieve environmental targets through controlled consumption. The many pilot projects led worldwide involving smart grids technology, brought quantitative evaluations of DSM measures on electricity load. Efficient DSM instruments must be fine tuned to respond to very specific issues arising from the generation mix, the integration of intermittent energies or the level of outage risks faced during peak period. Efficient DSM strategies are illustrated through a model involving five countries that carry these different features and under the assumptions of isolated and fully interconnected markets. This paper aims at bringing recommendations regarding the instruments that should be implemented to maximize the benefits of smart grids technology and demand response. Finally, it tends to emphasis the issue of homogenized energy efficiency policies, critical in the building of internal energy markets such as the one the European Union is envisioning.