Because electricity cannot be easily stored on a large scale, supply and demand in the electricity grid needs to stay in constant balance in real time. On hot summer days power generators are working full-out and sometimes struggle to keep pace with the demand for power.
In traditional electric grid, utilities have leveraged peaking power plants to increase power generation to meet demand. When demand is high and supply is short, power interruptions can sometimes be the result. Building enough power plants to satisfy every possible supply and demand scenario is one possibility, but the cost and environmental impact of that would be tremendous.
Automated Demand Response(ADR) automatically manages the scale on the electricity users side. Instead of generating more power to keep the balance, ADR technologies reduce consumption on things such as air-conditioners, industrial equipment, electric hot water heaters, lights or dryers automatically. Utilities can pay for automated demand response capacity because it is typically cost effective and easier to procure than traditional generation.
ADR programs are designed to be both fiscally and environmentally responsible ways to respond to occasional and temporary peak demand periods. ADR allows energy users to act as Virtual Power Plant(VPP), and participants in ADR programs get paid for providing ADR capacity.