This paper presents and evaluates a novel demand response method for households, designed for mitigating intermittency in smart grids with a high share of renewables. The method, named Dynamic Active Demand Response (DADR), is based on an innovative paradigm of offering multiple electricity service levels and a dynamic-active demand response scheme. It provides the grid operator with the ability to influence consumption patterns in real time, so that responding to renewables intermittency is more effective in terms of reliability, predictability and response time. DADR's performance is evaluated using a Monte Carlo simulation model, which assesses the method's intermittency mitigation potential and estimates the expected economic value of implementing it in the Israeli residential sector. Major components of the model are based on a survey, conducted among Israeli households. The survey results indicate that, given a sufficiently attractive economic incentive, participation rates can reach as high as 85-90%. The Monte Carlo simulation results reveal that DADR can make a significant contribution to mitigating renewables intermittency, with energy savings of hundreds to thousands of MWh a day and a positive net economic benefit. (C) 2018 Elsevier Ltd. All rights reserved.