Capturing the Full Benefits of Demand Flexibility

This briefing by RMI discusses the economic potential of demand flexibility, where household and industrial devices interact with the electric grid based on real-time price signals to reduce costs and peak demand.

• Implementing demand flexibility for just two common residential devices—smart thermostats (adjusting HVAC output by 2 degrees) and smart water heaters—could reduce system-wide peak demand by 8% and generate annual grid cost savings of $10–15 billion.
• The commercial and industrial (C&I) sector offers significant flexibility potential, as residential loads accounted for less than half of total loads (37% of total kilowatt-hours sold in 2014). While C&I loads are more diverse and complex to manage than residential ones, they currently dominate the demand response market.
• The full value of demand flexibility extends beyond retail price signals to include wholesale prices, distribution-level services like congestion-relief to defer infrastructure investment, and ancillary services such as frequency regulation.
• Aggregating individual loads allows them to participate in more lucrative and complex markets that a single device cannot access alone. For example, a water treatment facility can use a software layer to aggregate thousands of diverse pumps to provide frequency regulation, which requires continuous four-second adjustments.
• Modern distributed energy resource management platforms enable the coordination of flexible loads, energy storage, and renewable energy sources. These platforms use continuous signals to forecast demand and dynamically dispatch resources to maintain grid reliability without disrupting customer operations.

APA

RMI (2016). Capturing the Full Benefits of Demand Flexibility. https://rmi.org/resources/capturing-full-benefits-demand-flexibility/

Chicago

RMI. Capturing the Full Benefits of Demand Flexibility. 2016. https://rmi.org/resources/capturing-full-benefits-demand-flexibility/.

Wikipedia

{{cite report |author=RMI |title=Capturing the Full Benefits of Demand Flexibility |date=11 August 2016 |url=https://rmi.org/resources/capturing-full-benefits-demand-flexibility/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2016capturing, author = {{RMI}}, title = {{Capturing the Full Benefits of Demand Flexibility}}, institution = {RMI}, year = {2016}, month = aug, url = {https://rmi.org/resources/capturing-full-benefits-demand-flexibility/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }