Concerns about the reliability of electricity supplies have motivated researches to investigate the possibility of electrical consumers to take a more active role in the operations of the power system. The work in this paper looks into the potential of an industrial chemical plant to provide support to the electricity grid by means of demand-side response (DR) programs. To do so, this paper proposes a method to assess the flexibility of the plant to provide electrical power reserves while ensuring that the production demand is satisfied, as well as an economic analysis of the plant operations incorporating DR programs to quantify the incentives the plant should receive in order to participate in these programs. Therefore, the current study presents a novel optimization framework which integrates production scheduling with DR programs, with the aim to determine optimal decisions for the operating * corresponding author Email address: d.xenos@imperial.ac.uk (Dionysios P. Xenos) June 7, 2016 conditions within the plant while safely providing services to the electricity grid. Preprint submitted to Applied EnergyKeywords: demand-side management, demand response, optimization, industrial smart grid, power reserve, air separationIndices/Sets ch1 ∈ CH1 measurements of variables of convex hull problem one ch2 ∈ CH2 measurements of variable of convex hull problem two ch3 ∈ CH3 measurements of variable of convex hull problem threee ∈ E products of air separation plant (e.g., N 2 and O 2 )set of headers connected with compressor i J (u) set of headers that are connected to air separation unit u U (z) set of air separation units connected to storage tank z U (e) set of air separation units that produce product e Z (e) set of storage tanks that store product e