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Electricity demand response refers to consumer actions that change the utility load profile in a way that reduces costs or improves grid security. The focus of demand response has mainly been on the commercial and big industrial sectors because of the large demand reduction that they can offer to the utility grid operators. Utilities are showing increasing interest in residential demand response (RDR). RDR can be treated as an energy resource which can be assessed and commercially developed, however, there are still some issues that remain to be addressed for RDR to be successful. These include price unresponsiveness of some residential consumers, equity issues and high cost of the metering infrastructure. The aim of this paper is to investigate and present some of the challenges in achieving effective voluntary demand reduction based on a review of residential demand response literature as well as the general residential energy use behaviour literature. The authors propose the use of a hybrid engineering approach using social psychology and economic 2 behaviour models to overcome these challenges and realize the benefits of supply security and cost management.

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