What Fueled The Previous Growth In The Smart Demand Response Market?
The smart demand response market has seen considerable growth due to a variety of factors.
• The growth of the smart demand response market has been quite swift in the last few years. The market was expected to see an increase from $31.4 billion in 2024 to $36.33 billion in 2025, exhibiting a compound annual growth rate (CAGR) of 15.7%.
The factors contributing to the growth during the historical period include energy policy and regulation, concerns regarding grid reliability, environmental consciousness, pilot programs and demonstrations, as well as fluctuations in energy prices.
How Does the Forecast Look for the Smart Demand Response Market?
The smart demand response market is expected to maintain its strong growth trajectory in upcoming years.
• The market size for smart demand response is anticipated to experience brisk growth in the upcoming years, expanding to $59.16 billion by 2029, with a compound annual growth rate (CAGR) of 13.0%.
The predicted growth during this period is due to factors such as the incorporation of renewable energy, supportive policies and incentives, the adoption of electric vehicles, resilience, and the modernization of the grid, as well as the integration of energy storage. The period is also expected to witness key trends such as digitization and IoT, advancements in technology, initiatives for grid modernization, dynamic pricing structures, and an increase in IoT and smart devices.
What Are The Leading Drivers Of Growth In The Smart Demand Response Market?
The smart demand response market is projected to expand due to a significant surge in energy costs. These costs encompass the financial expenditure on sourcing and utilizing various energy forms such as electricity, fuel oil, gasoline, heating oil, and natural gas. The swift rise in energy costs acts as a catalyst for the smart demand response growth as it offers financial benefits prompting consumers and businesses to engage dynamically in demand response programs. As an instance, Eurostat, headquartered in Belgium, stated in April 2023 that the average household electricity prices in the EU in the second half of 2022 saw a remarkable increase compared to the same time in 2021, escalating from €23.5 per 100 kWh ($24.58) to €28.4 per 100 kWh ($29.92). Alongside, gas prices also climbed from €7.8 per 100 kWh ($8.34) to €11.4 per 100 kWh ($12.27) in the similar period, indicating a considerable increment in energy costs. Thus, these soaring energy costs are fuelling the growth of the smart demand response market. As a key driver of the smart demand response market, the rising energy demands are projected to boost its growth. Energy demand refers to the collective need for electrical power at a specific moment, which is evaluated in kilowatts (kW) or megawatts (MW). The smart demand response plays an instrumental role in managing power demand by dynamically modulating electricity consumption concerning real-time grid situations and pricing indications. For instance, in December 2023, the Energy Information Administration based in the US reported that in 2022, the total electricity consumption in the United States was approximately around 4.07 trillion kWh, an increase of 3.2% relative to 2021. Therefore, this escalating power demand is propelling the growth of the smart demand response market.
How Are The Segments Defined Within The Global Smart Demand Response Market?
The smart demand response market covered in this report is segmented –
1) By Type: Voluntary Demand Response, Contractual Mandatory Demand Response
2) By Technology: Automated Demand Response, Direct Load Control, Dynamic Pricing
3) By Application: Residential, Commercial, Industrial
Subsegments:
1) By Voluntary Demand Response: Incentive-Based Demand Response, Emergency Demand Response
2) By Contractual Mandatory Demand Response: Capacity market-Based Demand Response, Regulatory Demand Response
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What Trends Are Reshaping The Future Of The Smart Demand Response Market?
Trend 1:
Prominent businesses within the smart demand response market are increasingly concentrating efforts towards rolling out innovative solutions, such as grid-balancing solutions, which are allied to technologies and strategies that harmonize electricity supply and demand on the power grid, thereby ensuring stability and reliability. An example would be CPower Energy, a US-based energy solutions provider, which in June 2022, initiated four demand response programs that will compensate energy consumers for lowering their energy usage during peak times. These programs were conceptualized to reinforce the company’s efforts in supplying grid-balancing solutions, particularly with the onset of the summer season.
Enhancing Energy Efficiency Through State-Of-The-Art Demand Response Technologies
Major players in the smart demand response market are pivoting to the introduction of new electric grid-optimized products to increase market profitability. These electric grid-optimized products are essentially technologies and services within the smart demand response sphere that are customized to elevate efficiency and dependability, managing electricity consumption intelligently in response to real-time demand changes. To illustrate, in September 2022, Rheem Manufacturing Company, a US-based firm specializing in water heaters and ventilators, launched a smart electric water heater enabled for demand responses. This product, designed to adapt to upcoming energy standards and geared for seamless power grid integration, registers a UEF of up to 93, making it an economical option for individuals seeking to cut back on energy costs. The water heater incorporates demand response capabilities, and features advancements such as EcoNet Wi-Fi technology, scheduled operations based on time-of-use, as well as real-time energy use tracking for optimal energy efficiency.
Who Are the Key Players In The Smart Demand Response Market?
Major companies operating in the smart demand response market report are:
• Enel S.p.A.
• Hitachi Ltd.
• Siemens AG
• General Electric Company
• Cisco Systems Inc.
• Oracle Corporation
• Mitsubishi Electric Corporation
• Schneider Electric SE
• Honeywell International Inc.
• ABB Ltd.
• Johnson Controls
• Toshiba Corp
• Eaton Corporation PLC
• Con Edison Solutions
• Itron Inc.
• Landis+Gyr
• Aclara
• EnerNOC
• LS Power Development LLC
• Opower Inc.
• Comverge Inc.
• GridPoint
• Uplight
• Bidgely
• Echelon Corporation
• AutoGrid
• Blue Pillar
• Virtual Peaker
• Axiom Exergy
• Powerley
What Is The Most Dominant Region In The Smart Demand Response Market?
Asia-Pacific was the largest region in the smart demand response market in 2024. The regions covered in the smart demand response market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
