## 2 Theoretical Background
### Demand-Side Management  
The concept of Demand-Side Management embraces all of the activities, implemented by utility operators, which are designed to influence or directly modify the power profiles of electricity customers in order to ensure a more reliable and efficient operation of electrical grids. The DSM concept is not new in the landscape of UESs. The application of DSM models, in fact, has been proposed since the early 1980s by energy utilities to influence the load profiles of electricity customers [25]. According to [25], the main objectives of DSM can be classified into six different categories as shown in Figure 2: peak clipping, valley filling, load shifting, strategic conservation, strategic load-growth, and flexible load shape. The main objectives depicted in Figure 2 can be further grouped into two main categories: load management actions and strategic conservation actions. Load management refers to those actions that are intended to modify the power profile of end-users at specific times of the day or periods of the year (e.g., seasons), and encompasses peak clipping, valley filling, load shifting, and flexible load shape. Peak clipping, also known as peak shaving, is one of the most important objectives of DSM. The aim of peak clipping is the reduction of system peak loads, and is generally required in case of scarce (or even loss of) power capacity, or in  
Figure 1: Taxonomy of emerging electrical energy concepts in modern urban energy systems and smart grids. Adopted from [1]. VPP: virtual power plant; DER: distributed energy resource; RES: renewable energy source; PEV: plug-in vehicle. Figure 2: Classification of the main objectives of Demand-Side Management. Adopted from [25]. case of high incremental costs in the production of electricity. Peak clipping can be either obtained by the direct or indirect reduction of the power consumption of customers, respectively, by means of control signals or price signals. Another form of reduction of system peak loads is represented by load shifting, which aims to shift the power demand of end-users from peak times to off-peak times by means of price signals or through energy storage systems. Valley filling is, conversely, the goal of increasing the power demand of customers in time periods where long-run incremental costs are less than the average price of electricity. Finally, flexible load shape can be considered as the combination of the three main load management modes, and aims at a more complex and flexible modification of the power demand patterns of end-users. Strategic conservation is the group of DSM objectives that aims at a general modification of energy consumption by means of utility-stimulated programs. This group includes: strategic conservation and strategic load-growth. Strategic conservation represents the goal of reducing the consumption of electricity (e.g., through energy efficiency actions), while, conversely, strategic load-growth aims at increasing the power consumption of end-users following economic development policies or economies of scale. The DSM concept has evolved rapidly during the last decade, mainly due to the improved communication and control capabilities offered by modern ICT solutions [13]. Even though the main objectives of DSM introduced in [25] can still be considered actual, the ways researchers, utilities, and market operators envisage the implementation of such objectives have changed significantly. In particular, the load management concept has evolved into the so-called Demand Response (DR). In [14], [PERSON] proposed two interesting metrics for the classification of current DR schemes based on the entity that initiates the DR request and on the objective of the request. Three different entities are typically involved in the application of DR schemes: the electricity market, which pursues stakeholders' benefits, the utility, which is primarily engaged with operation and reliability issues, and customers, who mainly care for electricity bills and quality of service.