Barriers outlined in Table 1 above justify some form of action to overcome them. Policies
should aim to encourage both energy and economic efficiency (Sorrell, 2004). Timing is
particularly important for electricity, where generation prices fluctuate significantly
according to the time of day. At times of peak demand, for instance, electricity production
costs are significantly higher because peak-load generators must be dispatched to satisfy
demand. Most residential customers are not exposed to these changes so that there is little
incentive to shift consumption away from times when it is most expensive to produce.
Future peak-load plant investment decisions are affected by this lack of demand response,
as is the ability to match demand and supply reliably. DSM includes demand response and
energy efficiency measures, such as load management, energy efficiency and electrification
activities and has evolved in response to changes in industry structure and policy priorities
since the oil shocks in the 1970s (CRA, 2005). DSM can be administered by utilities, state
agencies, or non-profit organisations. More recently, dynamic demand-side activities such
as time-of-use (TOU) or critical-peak pricing (CPP) and other forms of demand response,
e.g. interruptible loads, have become central to improving market efficiency and system
control (Bilton et al., 2008).
We are interested in analysing the wide range of demand-side policies implemented
internationally. This includes policies that seek to reduce demand and improve overall
energy efficiency as well as those that aim to improve the economic efficiency with which
energy is used. Our focus is on demand-side strategies, i.e. packages15 of measures that aim
to overcome barriers in a coherent and coordinated way. This type of approach lends itself
well to demand-side policymaking where there is a range of barriers, several policy goals