The integration of solar photovoltaic (PV) systems into the distribution network creates various stability and reliability issues associated with the intermittency of solar PV power generation. Energy storage is a vital component required for overcoming the intermittency of solar PV. This study presents a priority-based demand response management (DRM) for loads with large time constants to create virtual energy storage. The virtual energy storage thus created can be used for partial levelling of intermittent output from solar PVs. The proposed DRM algorithm involves controlling loads with large time constants such as air conditioning systems and refrigerators based on the forecasted solar PV generation. The proposed method is evaluated using data-driven simulations, weather data and mathematical models. The proposed algorithm is highly suitable for megacities that have high number of multi-storey residential buildings. Utilising the virtual storage capacity available from the appliances will reduce the investment as well as the operation cost of renewable energy such as solar PV. Analyses on impact on temperature, percentage of interruptions, cost savings and impact on energy storage sizing are also presented for evaluating the performance of the proposed algorithm. Nomenclature T n ac, on(max) usual turn ON time of the nth air conditioner T n ac, off(max) usual turn OFF time of the nth air conditioner T n ref, on(max) usual turn ON time of the nth refrigerator T n ref, off(max) usual turn OFF time of the nth refrigerator x ac, on , x ac, off proportion of turn ON and turn OFF time for air conditioners x ref, on , x ref, off proportion of turn ON and turn OFF time for refrigerators T n ac, on current turn ON time of the nth air conditioner T n ac, off current turn OFF time of the nth air conditioner T n ref, on current turn ON time of the nth refrigerator T n ref, off current turn OFF time of the nth refrigerator p j vsc, c estimated virtual storage capacity (charging) during jth interval p j vsc, d estimated virtual storage capacity (discharging) during the jth interval p j bpd power required from the battery during the jth interval p ave_pv_op average solar PV output on a given day N off ref number of refrigerators that can be turned off N off ac number of air conditioners that can be turned off N on ref number of refrigerators that can be turned on N on ac number of air conditioners that can be turned on