Demand response (DR) is able to contribute to the secure and efficient operation of power systems. The implications of adopting the residential DR through smart appliances (SAs) were investigated from the perspective of three actors: customer, distribution network operator, and transmission system operator. The types of SAs considered in the investigation are: washing machines, dish washers and tumble dryers. A mathematical model was developed to describe the operation of SAs including load management features: start delay and cycle interruption. The optimal scheduling of SAs considering user behaviour and multiple-rates electricity tariffs was investigated using the optimisation software CPLEX. Further, the financial benefits for SA users subscribing to multiple-rates electricity tariffs were investigated. The savings are mainly a result of the appliances’ load shifting feature and are sensitive to user settings. The savings averaged at 7% of the household annual electricity bill. For households in the United Kingdom, the SAs had a payback period of less than three years and a net present value of up to £206. Furthermore, the operation of distribution networks with different uptake rates of SAs was investigated. A simulation containing a load modelling method and a network model determines, through time series power flow analysis, the network branch loading and voltage profile. The thermal ratings and voltage limits were exceeded on the LV network due to deterioration in the temporal diversity of the appliance utilisation. A regional controller for SAs was developed which effectively limited the network peak demand and voltage drop. A framework was introduced which enabled transmission system operators to access demand response from SAs in a timeframe suitable for operating reserve. A multiple time-step simulation was developed that assessed the load reduction from a number of households as a response to a reserve instruction. The instruction was modelled as a price increase with a short notification period. It was estimated that up to half of the current operating reserve requirements of Great Britain’s power system can be obtained with 20% uptake of SAs.