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Analysis on Market Mechanism of Demand Response and its Outlook in China

Demand response (DR) is a change in the power consumption of an electric customer, either reducing or suspending electricity load at a certain period of time to better match power supply. In China, the implementation of DR is so far mainly led by government and has not play a role in power system operation yet, due to lack of corresponding market mechanism. Subsidies for users have funding concern, and bring risks to the sustainability of DR. In this paper, the construction suggestion of market mechanism of DR in China is proposed. The paper summarizes the US and European DR experience first. Then it introduces the key DR pilot projects in China. Finally the paper presents the suggestion and outlook of DR mechanism in the Chinese electricity market.