Stronger Together: Systemic Efficiency through Demand Management - Smart Energy Decisions

Demand Management, Energy Efficiency, GHG Emissions  -  August 5, 2020 - By Jake Duncan, IMT

Stronger Together: Systemic Efficiency through Demand Management

Most conversations around clean energy are focused on what type of energy we are using, but to fully decarbonize our economy, we also need to address when energy is used. The timing of energy consumption is critical because renewable energy sources typically have periods when they are more and less available. By purposefully managing energy usage, we can better match the demand for power with the availability of clean energy.

In previous blogs, we learned that renewable energy currently has limits on how and where it is used and that electrification may require substantial increases to building and grid infrastructure. In this blog, we will explore how an “efficiency with“ mindset leads to fundamentally expanding the definition of “efficiency” to include timing of energy use, along with magnitude.  This concept is called demand management and is key to enabling a successful transition to an electrified, renewable-powered society.

What is Demand Management?
Most technology, even the most efficient version, uses energy indiscriminately. Your refrigerator is always on and your water heater charges whenever the water too cold. New capabilities enable certain technologies to be smarter about when they use energy and how much, while still providing the same level of service. An example of this idea in action would be programming your water heater to charge when there is clean energy available, as long as it keeps a minimum amount of hot water ready for use.

If we can set up systems to require or encourage these technologies (and more) to consume energy when it is available from renewable sources, we will need less infrastructure change and can achieve our carbon reduction goals even faster.

The main types of technology that currently have demand management capability are:

  • Electric vehicle charging
  • Battery storage
  • Electric water heaters
  • Smart thermostats
  • Smart window glazing or shades
  • Plug loads

Figure 1. Impact of Demand Flexibility on a Residential Load Profile.


This figure, from the Rocky Mountain Institute, explains this concept well. Let us take a little more time to unpack this here.

The yellow bell curve indicates solar energy production throughout the day. Each of the colorful spikes indicates an electricity use. At the top, we see uncoordinated demand – technology runs regardless of what type of energy is available. The space under the yellow line is not filled in, which means some solar energy is either wasted or sent to the grid to be used elsewhere.

The bottom has a focus on demand management. Here we see a majority of consumption coordinated with solar production. The water heater and the EV charge during the day. The AC runs a little longer than normal so it can coast after the sun sets. The dryer and AC still run when there is no solar power, but that’s okay because the battery system can use stored solar energy. In addition, because we are smart about coordinating our technology and have an efficient building envelope, we need a smaller battery to deal with excess solar, saving money, and using less raw materials.

Energy efficiency is a critical enabler to demand management. The more efficient each appliance and the entire building is, the easier it is to capitalize on load shifting because the building can maintain temperature easier and the smaller each technology’s load is, the more can fit under the solar curve.

The ability to shift each of these technology’s consumption patterns clearly has vast carbon saving potential. The real value, however, comes from coordinating each of these technologies at the building scale.

Grid-Interactive Efficient Buildings are the Future of High Performing Buildings
Buildings that are capable of shifting different pieces of energy consumption in response to a signal (electricity prices, carbon emissions, reliability issues, or more) are called Grid-Interactive Efficient Buildings (GEB). A GEB, illustrated below, is an active participant in both building and grid-scale decarbonization.

Grid-Interactive Efficient Buildings are an acknowledgment that the future of buildings are buildings that use on-site renewables and smart, efficient, and electrified equipment to run the building and connects with the larger grid in order to maximize the use of clean power. They also highlight the efficiency with mindset by communicating that baseline efficiency, like a tight building envelope, makes the whole concept work by right-sizing every other installed system.

The Growing Value of Grid-Interactive Efficient Buildings
GEB generates value to the building owners, building occupants, and society through deep energy and carbon savings that translate to a more efficient clean energy transition and through increased resilience.

Deep Energy and Carbon Savings
The analysis by the Rocky Mountain Institute from Figure 1 analyzed the value of flexibility from the six end-use technologies listed in Figure 1 in the state of Texas. They found that demand flexibility raised revenues for renewable projects by 36%, accelerating the renewable industry. The avoided fossil fuel generation resulted in $1.9 billion dollars in avoided costs and a 20% decrease in carbon emissions.

Lowering Peak Demands
Peak demand represents the minutes or hours with the highest level of energy demand, and there needs to be enough power generation and infrastructure available to meet peak demand. This means building power plants known as ‘peakers’ that sometimes run only a few percent of the hours year each year – yet ratepayers have to pay millions to build and maintain these plants that disproportionately pollute low-income communities. The Brattle Group found that shifting flexible loads could save an estimated 20% of anticipated peak demand in 2030, resulting in $15 billion annually in avoided costs for ratepayers nationwide.

Less Grid Investment
As we electrify buildings and vehicles, the increased load will cause local grid infrastructure to require expensive upgrades, like new substations and transformers. If buildings become both efficient and grid-interactive, some of these investments can be avoided or deferred. For example, an analysis by Synapse Energy Economics showed how a combination of efficiency, solar, storage, and demand response (all aspects of a GEB) could potentially defer a planned substation investment in Washington, DC indefinitely and save ratepayers up to $211 million. 

Increased Resilience
As climate change leads to more extreme weather, like heat waves and frigid weather, the flexibility to respond to extreme events become increasingly valuable. Another analysis by Synapse found that peak demand during the 2018 polar vortex would have doubled across some northern cities if all heating load were electric, possibly leading to more outages. However, a combination of efficiency and load shifting could save a significant amount of peak demand, lowering the chance of a life-threatening outage during a cold snap.

Smarter buildings could help the built environment respond to pandemics, like the Covid-19 crisis. The sensors and flexibility mechanisms contained in a GEB could help buildings understand airflow and occupant patterns to determine safe occupancy levels.

Redefining Efficiency in terms of the Grid
Efficiency is not just about using less power to achieve the same goals; it’s also about being smarter about when and how we use energy from the grid. We need to take a systems-level approach so we efficiently leverage all clean energy resources available.  This approach means we don’t need to conceptualize, permit, and pay for as many new renewable sources of power. We can meet the demand for clean energy sooner, meaning we also reduce carbon emissions and pollution faster and at a lower cost to taxpayers, investors, and consumers.

Grid-Interactive Efficient Buildings do all of the above by combining renewable power, energy efficiency, and smart technology into a building that is fundamentally integrated with the larger community. This is both a technological and power integration, and a metaphorical one that connects the building’s energy usage to the community need for clean air, clean water and a stable climate. 

What you can do
Grid-Interactive Efficient Buildings are the future of high-performing buildings. All who are interested should start by pursuing further education. See NASEO’s GEB library for a wealth of information. Next, cities, real estate representatives, and utilities should begin to implement enabling technology, policies, and programs to accelerate GEB adoption. The following are suggested next steps:


  • Start with the State & Local Energy Action Network’s Intro to GEB for State and Local Governments
  • Consider developing a Building Performance Standard that encourages GEB
  • If possible, develop building codes that require grid- interoperable equipment
  • Work with your utility on GEB pilots and programs

Commercial Real Estate

  • Invest in the smart technology needed to make your building a GEB
  • Train your building operators on how to use advanced building automation systems and to participate in utility programs
  • Enroll in or ask your utility for GEB programs


  • Ask your utility commission for time-of-use pricing that is coordinated with carbon emissions, so you can send accurate signals to GEB
  • Work with local advocates and real estate representatives to develop a GEB program.
  • Consider how GEB can be a valuable asset to your service territory 


This column originally appeared as an IMT blog.

Jake Duncan, senior associate at the Institute for Market Transformation, supports IMT clients by establishing the economic and environmental foundations for energy efficiency policies, programs, and investments. He provides quantitative analysis and market research for IMT’s programs, applying previous experience in the energy and utility spaces. Jake holds a bachelor’s degree in economics from Georgia College and a master’s degree in Climate Science and Policy at Bard College’s Center for Environmental Policy.

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