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The integration of a large share of intermittent renewable generation and varying load demand has increased the ancillary service requirement in the modern power systems. Coordinated and controlled operation of these renewable energy sources (RESs) with conventional sources is required to meet this requirement. The ancillary services arising due to uncertain RESs and loads can be managed better if RESs connected in a microgrid (MG) which has the provision of monitoring, control, demand response (DR), and storage in it. This paper proposes and demonstrates the role of a microgrid in providing the ancillary services support to the grid considering the demand response program (DRP). Netload variations are captured during load scheduling considering the DR contribution and aggregated netload of the prosumers. Participants of the DRP receive incentives based on the power curtailment during scheduling. The system performance has been investigated with and without DR and commitment of the microgrid to support the utility grid (UG) considering different types of consumer loads (i.e. Shiftable, controllable and curtailable). The incentives to the consumers, availability of storage system along with power trading regulations impact their contribution in ancillary service support to the system. The simulation results obtained demonstrate the significance of DR in a microgrid system to improve the system performance during dynamic conditions as it improves the load profile by suitably countering the variations in the generation and the load. In addition, the implementation of DRP in the system operation along with the unit dispatch helps in improving the social welfare by providing incentives to the consumers for participation and also reduces the extreme power generation ramping of conventional generators during periods of power stress. • Investigated role of microgrid as an ancillary service provider to the grid • Studied impact of incentives paid to the consumer's participation in electricity market • Analyzed the impact of consumer batteries on the system operating cost • Microgrids found effective in providing emergency support to the utility grid. [ABSTRACT FROM AUTHOR]