DSR services. What they are and how they can support Poland’s power system

Expert perspective

Paweł Biegajski, specialist in energy‑project financing

According to data from the Energy Regulatory Office, the volume of domestic gross electricity production in 2022 reached 175,157 GWh, which was 0.9% higher than the year before.

The draft scenario for the preliminary consultation of the updated Polish Energy Policy until 2040 (PEP2040), published in June, states that net electricity production in Poland may increase by more than 36% compared to 2022. The target level for 2040 is set at 244 TWh [1]. These figures clearly confirm that electricity demand is rising, and with it the environmental challenges and the need for a revolution in the generation structure and energy flexibility. One of the ideas for mitigating the negative effects of temporary market imbalance is DSR services.

What is energy flexibility?

Ensuring the country’s energy security in times of major international change is the main goal of the updated assumptions for Poland’s Energy Policy until 2040. The document highlights the key role of RES development, increasing technological diversification, and expanding capacity based on domestic sources[2]. This further increases the importance of ensuring continuity of supply for consumers while maintaining flexibility and stability. This raises questions about the nature of energy flexibility, demand‑side control strategies, and specific services that increase its scale.

According to a popular definition, energy flexibility is the ability of an energy system to adapt to changing supply and demand conditions[3]. It refers to actions that, among other things, improve the ability to match electricity generation capacity to changing demand or the availability of raw materials used in production. Energy flexibility is strongly linked to the concept of DSM (Demand Side Management), which involves controlling the demand side. The role of DSM is to manage power and electricity demand in a way that minimizes expenses related to maintaining and developing the power system.

DSR services – demand‑side control strategies

DSM techniques can take various forms. Their application results in effects visible in load‑variability patterns, including[4]:

• peak shaving – reducing power demand during peak load periods, typically in the afternoon,
• valley filling – increasing electricity consumption during off‑peak periods,
• load shifting – combining the characteristics of the two previous categories,
• strategic conservation – situations where a global reduction in energy consumption is crucial,
• strategic load increase – situations where the operator aims to increase electricity sales,
• flexible load shaping – ensuring supply reliability while adjusting loads to the current system situation.

Considering these effects, companies involved in energy distribution and trading use the following demand‑side control strategies[5]:

• price‑based responses – controllable devices operate in a mode that minimizes the electricity bill,
• voluntary curtailment – the electricity supplier proposes consumption reduction at certain times,
• work scheduling – the energy consumer (usually high‑power) operates according to a set schedule,
• limiting device operating time – imposing restrictions on when a device may operate during the day,
• changes in power consumption at a given setting – the operating range of a device or machine depends on predefined parameters,
• load‑level control,
• short‑ and medium‑term curtailment – applied when power deficits occur in the energy system.

These strategies focus mainly on economic and technical incentives. In practice, psychological stimulators are also used (education and lifestyle activities, information campaigns highlighting the benefits of active electricity savings, energy audits), as well as administrative‑legal measures (e.g., fees for reactive power consumption, changes in local time, or restrictions on the use of energy‑intensive machinery).

Unfortunately, despite having the necessary knowledge and including the above actions in strategic documents for the energy market, DSM services have so far been used insufficiently in Poland. The main barrier to development is inadequate legislation and the small number of aggregators who could mediate in acquiring and managing services. Signing contracts with households or small businesses, whose consumption is negligible for the entire system, has neither technical nor economic justification (without intermediaries). For this reason, operators focus on stronger development of DSR services, which form part of Demand Side Management strategies.

What are DSR services?

Demand Side Response (DSR) is a service in which an end user reduces electricity consumption or shifts it in time in response to changes in electricity prices or upon instruction from the transmission system operator[6]. DSR is not a new concept globally. Instruments supporting the balancing of electricity supply and demand were introduced as early as the 1970s. Today, due to the dynamic growth in energy demand, interest in services that reduce demand is increasing. Who can benefit from them, and what do they gain in return?

Who can join the DSR programme?

Because offering DSR services to small consumers lacks technical and economic justification, any verified entity can become a participant (holding an oRED certificate, having the ability to reduce power demand, or possessing internal generation sources such as a generator, photovoltaic installation, cogeneration unit, or energy storage system). Importantly, operators mainly target energy‑intensive companies — those with a connection capacity above 200 kW or annual electricity consumption exceeding 2 GWh. For consumers with power demand above 300 kW, certification is automatic. DSR services should therefore be of interest to representatives of the food, chemical, mining, metallurgical, processing, packaging, construction, and recycling industries. Operators also do not exclude sports halls, swimming pools, cinemas, cultural and entertainment facilities, farms using halls and equipment for plant cultivation or animal breeding, as well as large retail stores and shopping centres.

In exchange for readiness to reduce electricity consumption, PSE pays remuneration specified in the contract with the consumer. On average, for simply declaring readiness to reduce consumption by 1 MW, they can pay up to 200,000 PLN per year! DSR can therefore be a good way to reduce electricity bills. Financial incentives are not the only benefit for companies participating in Demand Side Response. Others include:

• Integration with a virtual power plant, enabling the use of modern tools such as energy storage or EV chargers.
• Optimisation of electricity‑purchase costs through tools for tariff selection or avoiding exceedances.
• Minimisation of supply‑disruption risks during peak demand periods.
• Image benefits, supported by the message: “I support Poland’s energy security.”

How does DSR work in practice?

Experience from the UK, the United States, and the Czech Republic shows that implementing DSR increases the efficiency, flexibility, and predictability of the power system. Moreover, the development of demand‑reduction services helps limit the scale of new generation capacity based on conventional fuels.

In practice, implementing DSR in a company begins with signing an agreement with an aggregator. Under this agreement, the company voluntarily and temporarily reduces energy consumption or shifts it in time upon instruction from Polskie Sieci Elektroenergetyczne S.A. The agreed remuneration is paid regardless of whether such an instruction is ultimately issued. If it is issued, it applies only during peak periods when the operator lacks available power reserves or when they are difficult or expensive to access. This usually happens when several critical factors occur simultaneously:

• high temperatures,
• low renewable‑energy generation,
• a failure at a power plant,
• damage to power lines.

PSE may issue an instruction once per quarter between 7:00 and 22:00. It is sent at least 7 hours before the planned reduction. If the programme participant does not comply, they will not receive remuneration for readiness or will receive only part of it.

How do industrial plants manage load shifting?

Shifting power consumption is a major challenge for industrial plants. Many owners emphasise that production lines require full functionality of all components. Temporarily shutting down several of them requires restarting the entire system, which may take several hours. However, effective ways to reduce power consumption do exist. To minimise the impact on the electrical grid and avoid demand peaks, companies can take steps such as:

• switching off selected equipment or lighting in halls, warehouses, manoeuvring areas, or office spaces,
• adjusting production hours to periods when demand reduction is required,
• changing settings and schedules of HVAC systems, pumps, compressors, refrigeration units, or other high‑consumption devices,
• activating backup generators,
• drawing electricity stored in energy‑storage systems,
• adjusting the operating schedule of cogeneration units.

Can DSR services also be used for other groups of electricity consumers?

In Poland, DSR services are currently directed at medium and large enterprises. However, there is no legal provision that would exclude other users from participating in the programme. Theoretically, any entity connected to the grid that has the ability to reduce demand or shift it in time could contribute to increasing the energy flexibility of the Polish economy.

To achieve a meaningful reduction effect, smaller consumers such as households or small businesses would need to be aggregated by an intermediary. Consumption reduction could occur through refraining from using electrical devices such as computers, air conditioners, washing machines, dishwashers, induction hobs, or lighting. These activities could be carried out at different hours. The motivation for such actions would be additional remuneration paid by Polskie Sieci Elektroenergetyczne.

Undoubtedly, organising an efficient and attractive DSR programme for dispersed consumers is a major organisational challenge. It requires not only solving technical issues but also creating a system of incentives accepted by the market. However, the development of such services, combined with other DSM‑type measures, could translate into numerous benefits:

• improved energy efficiency of power grids,
• better quality and reliability of electricity supply,
• reduced greenhouse‑gas emissions,
• lower operating costs of the power system,
• savings for consumers,
• enhanced energy security,
• greater awareness and engagement of consumers in the energy market

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1. [1] Scenario 3. For pre‑consultation of the update of KPEIK/PEP2040, Ministry of Climate and Environment, p. 5.
2. [2] Assumptions for the update of Poland’s Energy Policy until 2040, Ministry of Climate and Environment, p. 1.
3. [3] Energy Flexibility in Poland, p. 9.
4. [4] Bućko P.: Competition in the provision of regulatory system services. Rynek Energii, no. 2, 2008.
5. [5] Bućko P.: Regulatory system services in the field of active power. PG Publishing House, Gdańsk 2011.
6. [6] P. Bućko, W. Stahl, Implementation of DSR services based on the example of single‑family homes,
   Rynek Energii no. 2(147) 2020, p. 25.

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