THE ECONOMICS OF DEMAND FLEXIBILITY

This executive summary from the Rocky Mountain Institute (RMI) analyzes the economic potential of "demand flexibility" (DF)—the use of technology to shift electricity consumption to lower-cost times. The report argues that DF can significantly reduce both customer electric bills and overall grid investment costs by treating demand as a flexible resource ("flexiwatts") rather than a static load.

• Widespread residential demand flexibility in the United States could avoid approximately $13 billion per year in grid-related costs. This includes $9 billion per year in traditional investments for generation, transmission, and distribution, $3 billion per year from optimizing energy demands for hourly prices, and $1 billion per year from providing ancillary services.
• Demand flexibility can reduce U.S. residential peak demand by approximately 8% while maintaining service quality, specifically by managing air conditioning and domestic water heating.
• Residential customers can achieve annual net bill savings between 10% and 40% using existing rates and technologies. The aggregate market size for these savings in the analyzed utility territories ranges from $110 million to $250 million per year.
• Approximately 65 million customers currently have access to opt-in granular retail pricing rates that could enable the implementation of demand flexibility business models without requiring new policy or regulation.
• Demand flexibility can increase the on-site consumption of rooftop solar PV, reducing the need for exports. In analyzed cases, DF increased on-site PV consumption from 53% to 89% for Hawaiian Electric Company and from 64% to 93% for Alabama Power Company.
• In the Northeast United States, if compensation for exported solar PV is reduced to avoided cost levels, demand flexibility could accelerate the adoption of non-exporting solar PV and hasten "load defection," where customers lose utility sales and revenue to on-site generation.

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

{{cite report |last1=Bronski |first1=Peter |last2=Dyson |first2=Mark |last3=Lehrman |first3=Matt |last4=Mandel |first4=James |last5=Morris |first5=Jesse |last6=Palazzi |first6=Titian |last7=Ramirez |first7=Sam |last8=Touati |first8=Hervé |title=THE ECONOMICS OF DEMAND FLEXIBILITY |publisher=RMI |date=August 2015 |url=https://rmi.org/app/uploads/2017/05/RMI_Document_Repository_Public-Reprts_RMI-TheEconomicsofDemandFlexibilityExecSummary.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

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} }