Our grid is at risk. Can demand response keep the lights on?

With temperatures soaring across the U.S. and relatively new phrases like “heat dome” entering more people’s vocabulary, now’s a good time to talk about our electric grid and what it’s going to take to keep the lights on. My focus today is on the potential of residential demand response programs.

The energy transition is here. Utilities and grid operators are feeling the squeeze between decarbonization goals and soaring electricity demand caused by an influx of new manufacturing growth, increasing electrification of buildings, millions of electric vehicles hitting the road, and the explosion of artificial intelligence (AI) that requires an exponential increase in computing power. All this, while renewables are still slow to come online in most places.

Demand for electricity is surging after staying mostly flat for two decades. Today, electric utilities have nearly doubled their forecasts for additional power needed by 2028. Over the past 20 years, energy efficiency advancements like LED bulbs and ENERGY STAR® certified appliances have helped counterbalance rising electricity demand amid economic and population growth, but it’s no longer enough.

Utilities and grid operators are feeling the squeeze between decarbonization goals and soaring electricity demand caused by an influx of new manufacturing growth, increasing electrification of buildings, millions of electric vehicles hitting the road, and the explosion of artificial intelligence (AI) that requires an exponential increase in computing power. All this, while renewables are still slow to come online in most places.

According to the North American Electric Reliability Corporation (NERC), the current estimated shortfalls in electricity put large swaths of the U.S. and Canada at risk of experiencing blackouts over the next ten years.

While there is no silver bullet, and it’s true that some utilities will have little choice but to keep burning coal and gas longer than they had planned, we do have more options to address the shortfalls. The fear is that either we build more gas-fired power plants, or we have blackouts. But the issue is not this black and white. One of the solutions, and we will have to adopt a myriad of solutions to solve this problem quickly, is doubling down on our commitment to demand response. We need to get very serious about managing demand at peak times, and it’s going to take all of us.

The fear is that either we build more gas-fired power plants, or we have blackouts. But the issue is not this black and white.

CLEAResult has designed and implemented demand response programs for over a decade, and participation has never been stronger. Nearly all our programs are at or exceeding their goals, and many are achieving their full-year targets in record time. One of them even reached its annual goal in the first week after launch.

On the residential side, one million smart thermostat customers participating in a demand response program can deliver 1,000 MW of capacity (1kW each on average) – that’s equivalent to a single, large coal-fired power plant being removed from the grid. The U.S. has over 10 million households participating in a demand response program today. But with over 150 million total residential utility customers, the untapped potential of this one segment is clear – 93% of households either don’t have access or aren’t participating today.

Over the next five years, peak demand in the summer is projected to grow another 38,000 MW nationwide. To meet the rising demand with residential participants alone would require us to achieve 32% participation among all U.S. households (that’s another 38 million), which would be equivalent to adding every resident in the state of California to a program -- an aggressive but not unimaginable target.

However, with data centers and commercial and industrial facilities driving much of this growth, we will need to deliver specific solutions for those segments as well. AI alone is already using as much energy as a small country to operate. In fact, according to the IEA a single Google search takes 0.3 watt-hours of electricity, while a single ChatGPT query takes 2.9 watt-hours. But I digress, and I plan to come back to that challenge in a future blog.

To meet the rising demand with residential participants alone would require us to achieve 32% participation among all U.S. households (that’s another 38 million), which would be equivalent to adding every resident in the state of California to a program -- an aggressive but not unimaginable target.

My point today is that our actions as an industry and as individual residential consumers matter, and they make a measurable difference. While the magnitude of this challenge is unprecedented, many of the specific solutions are not. A revolutionary technology or some other game-changing innovation may get us there sooner, but we actually have much of what we need to solve the problem today. We just need to implement the solutions at a scale we’ve never had to before.

While the magnitude of this challenge is unprecedented, many of the specific solutions are not... We actually have much of what we need to solve the problem today. We just need to implement the solutions at a scale we’ve never had to before.

In summary, as long-term estimates of electricity demand continue to grow, extreme weather events push the grid to its limits, and research continues on technology solutions, we can buy ourselves more time by significantly scaling existing solutions like residential demand response.

What utilities can do today:

1. If you don’t have a residential demand response program, consider adding one now.
2. Consider proven solutions such as automatic, point-of-purchase enrollment of smart thermostats to drive greater participation in automated residential demand response programs. Shifting from opt-in to opt-out is a simple way to ensure more devices are ultimately enrolled.
3. Let’s raise the bar. Today, most utility programs consider 20% adoption the upper limit of the market. We believe it’s time to rethink that ceiling.
4. Continue to focus on multi-family and income-eligible populations who offer the largest efficiency return for every dollar spent. While every income level has a role to play in our success, these groups are the most difficult segments of the market to reach and have the most inefficient systems in place.
5. Increase communication and coordination among operations planning and demand side management programs. By coordinating efforts, these departments can ensure demand response and distributed energy management becomes a continuous and integral part of operations, allowing for utilities to better manage impact on the grid.

What the rest of us can do:

1. Invest in a smart thermostat and join your local utility’s demand response program. Everyone can contribute to solving this problem. If your utility doesn’t have a demand response program, be an advocate – ask why!
2. Inquire about other smart devices. If you have an electric vehicle (EV) charger, smart water heater or other smart appliance, see if your utility offers a demand response program for it.
3. Adjust your habits and tell your friends: Even without a formal program, you can help stabilize the grid by using appliances like dishwashers and dryers during off-peak hours. Charge your EV at night and consider water heater controllers for even more efficient hot water usage.

Down the road, we expect new policies and building codes to drive even higher adoption and participation in residential demand response programs. But there’s still a lot we can do before that day arrives.

Thanks for reading.

Rich