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How Energy Efficiency and Demand-Side Management Can Save the Grid—and Your Wallet
Let's Save Energy
Alliance to Save Energy's Blog
Efficiency is back in the mainstream of the energy dialogue as those tasked with providing energy face growing demand, restricted supplies and deep concerns about rising costs.
“Demand side management is the new supply,” Paula Glover proclaimed in her moderator’s introduction of a dynamic panel at USEA's Advanced Energy Technology Showcase. Ms. Glover, ASE's president & CEO, and USEA brought together leading experts from the American Gas Association (AGA), Opower, Smart Electric Power Alliance (SEPA) and Sunrun.
The discussion centered on the vital role of demand-side management (DSM) in meeting the nation's growing energy needs, saving customers money and strengthening our energy system.
"Demand side is really the first fuel here... the cheapest way to come up with extra capacity or supplies is to engage the demand side," said JD Toppin, Global Managing Director at Opower. "Giving them some personalized information, like if you do this, you will save maybe 100 bucks a year or 200 bucks a year... Giving customers a reason to care is a really important attention getter."
Demand-side management is a broad concept encompassing everyday technologies like smart thermostats, electric vehicles, energy-efficient products, distributed solar and battery storage. This is where the concept of virtual power plants comes into play. When aggregated, distributed energy resources make significant contributions to grid reliability and stability, serving as a "first fuel" and often providing the most cost-effective source of additional capacity.
"We're talking about cool technologies that you probably have in your house,” said Lesley Jantarasami, SEPA’s VP of Research and Industry Strategy. “If you aggregate them, you can actually have a very significant source of energy that can contribute to grid reliability and grid stability."
Panelists underscored that scaling demand-side solutions requires extensive collaboration across the entire energy ecosystem – legislators, regulators, utilities, and consumers. Non-profits such as the Alliance play a vital role in convening these diverse stakeholders for dialogue and pushing for modernization.
Demand Side Management Saves Money
Activating demand-side resources is significantly less costly than building new generation and transmission, making it an attractive solution, especially given rising capital costs. A 2023 Alliance-sponsored report, Demand is the New Supply, said in the U.S. demand-side solutions can create up to 200GW of capacity quicker and for billions of dollars less than generation and infrastructure.
"We're serving load behind the meter and that's less load that needs to be delivered,” said Thad Culley, Director of Regulatory Policy at Sunrun. “The cost to build new generation and transmission [versus] the cost to activate demand side resources, there's really not a comparison. The cost difference is enormous."
Collaboration is Key
Despite challenges, panelists shared an overall optimistic outlook. They noted growing recognition from policymakers about the role of DSM in enhancing energy reliability and affordability, especially in the face of increasing load and extreme weather events.
Natural gas is an underrecognized part of the DSM equation.
"For us, demand side is really looking at things, providing customers with the right tools to basically limit gas use when it's needed the most,” said Matt Agen, Chief Regulatory Counsel at AGA. “So basically, it's a peak shaving device."
Whatever the cause, whether it be new demands from data centers, increasing heat waves, bone-chilling winters, or other weather events, electrification, or economic growth, the moment we are in calls for a more serious emphasis on efficiency demand side management and at the Alliance to Save Energy, we and our members are here for it.
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