With the rapid development of smart grid, the penetration of renewable energy resources is higher than ever and keeps growing. However, the output of renewable energy units, such as solar photovoltaics and wind turbines, is characterized by sudden and unpredictable changes. This paper proposes a novel electrical peak demand curtailment allocation (DCA) method to manage demand-side resources in response to fluctuations in renewable energy outputs. The proposed DCA method can curtail end-use loads faster than traditional demand response (DR) programs and prevent under frequency load shedding (UFLS) operation when facing sudden and unpredictable outputs of renewable energy. This DCA method considers DR potential and load curtailment priority. Case studies are conducted to demonstrate how the developed DCA method can be implemented to mitigate fluctuation in renewable outputs by curtailing electrical demand, considering communication network latency. This paper also evaluates the impact of applying different cybersecurity encryption methods on DCA operation. The simulation results prove that the developed DCA method can mitigate the impact of renewable energy fluctuation and respond fast enough to avoid traditional UFLS operation.