THE ECONOMICS OF DEMAND FLEXIBILITY

The report argues that demand flexibility—the use of technology to shift electricity use across hours of the day—can significantly lower both customer bills and grid investment costs. In the U.S. residential sector, it could avoid $13 billion annually in grid and energy costs while reducing customer bills by 10–40%. The analysis highlights that 'flexiwatts' from appliances like air conditioning and water heaters can reduce peak demand and better integrate renewable energy. However, the report warns that demand flexibility may accelerate 'load defection' if utilities reduce compensation for exported rooftop solar PV.

• Residential demand flexibility in the U.S. has the potential to avoid $13 billion per year in total costs, consisting of $9 billion in traditional grid investments (generation, transmission, and distribution), $3 billion in energy production costs through hourly price optimization, and $1 billion from ancillary services.
• The implementation of demand flexibility can lead to annual net bill savings for residential customers ranging from 10% to 40%, depending on the utility rate structure.
• Focusing on just two residential appliances—domestic water heating and air conditioning—approximately 8% of U.S. peak demand could be reduced without compromising service quality or comfort.
• Demand flexibility can increase the on-site consumption of rooftop solar PV, reducing the amount of energy exported to the grid; for example, in analyzed cases for HECO and APC, on-site consumption increased from 53% to 89% and 64% to 93%, respectively.
• If utilities reduce or eliminate compensation for exported solar PV to 'avoided cost' levels, demand flexibility could accelerate 'load defection'—the loss of utility revenue and sales to customer-sited rooftop PV—particularly in the Northeast United States.
• There is an immediate market opportunity for demand flexibility as approximately 65 million customers currently have access to the necessary opt-in granular retail rates.

APA

Bronski, P., Dyson, M., Lehrman, M., Mandel, J., Morris, J., Palazzi, T., Ramirez, S., & Touati, H. (2015). THE ECONOMICS OF DEMAND FLEXIBILITY. RMI. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsofDemandFlexibilityExecSummary.pdf

Chicago

Bronski, Peter, Mark Dyson, Matt Lehrman, James Mandel, Jesse Morris, Titian Palazzi, Sam Ramirez, and Hervé Touati. THE ECONOMICS OF DEMAND FLEXIBILITY. RMI, 2015. https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsofDemandFlexibilityExecSummary.pdf.

Wikipedia

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BibTeX

@techreport{bronski2015economics, author = {Bronski, Peter and Dyson, Mark and Lehrman, Matt and Mandel, James and Morris, Jesse and Palazzi, Titian and Ramirez, Sam and Touati, Hervé}, title = {{THE ECONOMICS OF DEMAND FLEXIBILITY}}, institution = {RMI}, year = {2015}, month = aug, url = {https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsofDemandFlexibilityExecSummary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }