Capturing the Full Benefits of Demand Flexibility

The briefing examines the economic potential of demand flexibility, highlighting how smart household devices and aggregated commercial and industrial loads can lower system-wide peak demand and grid costs. It emphasizes that while individual residential devices offer some savings, the full value of flexibility is realized through aggregation and participation in wholesale and ancillary service markets via distributed energy resource management platforms.

• Making just two common household devices flexible—smart thermostats (adjusting HVAC output by 2 degrees) and smart water heaters—could reduce system-wide peak demand by 8 percent and generate annual grid cost savings of $10–15 billion.
• Commercial and industrial (C&I) loads likely offer more flexibility than the residential sector, which accounted for less than half of total loads (37 percent of total kilowatt-hours sold in 2014), although C&I devices are more challenging to access due to diverse characteristics and complex local constraints.
• The highest value for demand flexibility is found beyond retail price signals, specifically in wholesale prices, frequency regulation ancillary services, and distribution-level congestion-relief that can defer infrastructure investment.
• Aggregating diverse loads allows for the creation of a significant grid resource capable of participating in complex markets, such as frequency regulation, which requires continuous four-second adjustments that individual devices cannot typically manage alone.
• Distributed energy resource management platforms enable the coordination of flexible loads, energy storage, and renewable energy sources to respond to minute-to-minute power system needs 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} }