The continued increase of variable wind and solar PV generation requires flexible resources to balance demand and supply in the electricity system.
Due to the nature of the future electricity system, two categories of demand response are distinguished in this study. Firstly, the day to day variability of both renewable generation and the demand cycle, make storage systems and low cost demand response potentially attractive options. Secondly, at the time of very high electricity consumption and low electricity generation by wind and sun, demand response can play a key role in ensuring security of supply. Since the latter event is relatively rare, an additional volume of demand response could be more cost effective than the likely alternative: a back up conventional power plant (at least for the coming.