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This paper reviews the state of the art of research and industry practice on demand response and the new methodology of transactive energy. Demand response programs incentivize consumers to align their demand with power supply conditions, enhancing power system reliability and economic operation. The design of demand response programs, performance of pilot projects and programs, consumer behaviors, and barriers are discussed. Transactive energy is a variant and a generalized form of demand response in that it manages both the supply and demand sides. It is intended for a changing environment with an increasing number of distributed resources and intelligent devices. It utilizes the flexibility of various generation/load resources to maintain a dynamic balance of supply and demand. These distributed resources are controlled by their owners. However, the design of transaction mechanisms should align the individual behaviors with the interests of the entire system. Transactive energy features real-time, autonomous, and decentralized decision making. The transition from demand response to transactive energy is also discussed.
Chen et al. (Fri,) studied this question.