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Smart grid have flexible demand response patterns, adapt to multiple energy generation forms, diversify and decentralize energy supply, intellectualize energy storage ways and coordinate operation between transmission and distribution grids and micro-grid. This paper analyzes the effect of renewable energy generation, distributed generation and large scale demand response on ancillary service, and quantify reserve and peak shaving capacity when implementing Interruptible Load Management and Time-of-Use. The example results show the consumer side is equal to generation side. In the end, this article preliminarily suggests that developing smart grid should make full use of the existing resources, and firstly enhance power demand side management and improve the interaction between consumers and power grid to improve grid's ability of accommodating renewable energy and efficiency of using electrical power resources.