• News ▾
    • Politics
    • Energy
    • Justice
    • Finance
    • Business
    • Science
    • Nature
    • Carbon markets
    • Explainers ▾
      • Clean energy transition
      • Sustainable Aviation Fuel
    • All news
  • Investigations
  • Series ▾
    • Clean Energy Frontier
    • Aviation’s Green Dream
  • Comment
  • About ▾
    • About
    • The team
    • What we stand for
    • Write for us
    • Transparency
    • Advertising, partners and sponsorship
  • Contact
Sign up for Climate Weekly
  • News ▾
    • Politics
    • Energy
    • Justice
    • Finance
    • Business
    • Science
    • Nature
    • Carbon markets
    • Explainers ▾
      • Clean energy transition
      • Sustainable Aviation Fuel
    • All news
  • Investigations
  • Series ▾
    • Clean Energy Frontier
    • Aviation’s Green Dream
  • Comment
  • About ▾
    • About
    • The team
    • What we stand for
    • Write for us
    • Transparency
    • Advertising, partners and sponsorship
  • Contact
Sign up for Climate Weekly
Partner Content
Oct 5, 2022
Comment, Energy, News, Sponsored

Demand response: A win-win solution to climate and energy price crises

By shifting electricity demand away from peaks, customers can get cheaper bills and cleaner electricity can be prioritised
A dispatcher works at Texas's grid operator Electric Reliability Council of Texas (Photo: Dpysh w)

Joe Lo

News editor

Sponsored articles are produced by Climate Home News journalists with the support and collaboration of partners on topics of mutual interest.

Learn more
Share:
  • X (Twitter)
  • Facebook
  • LinkedIn
  • WhatsApp
  • Email

Governments around the world share two problems right now: climate change and soaring energy prices. Investment in renewables and in energy efficiency are commonly and rightly touted as a solution to both but a third solution, known as ‘demand response’, gets far less attention.

Citizens want enough electricity to keep the lights on and governments have tried to give them that by supplying enough electricity to meet demand. But people’s demand for electricity is not constant, it goes up and down throughout a day and throughout the year.

In richer countries, many people fire up their air conditioning, switch on their lights and plug in their electric vehicle when they get back from work. After dinner, they turn on their dishwasher and they open the fridge during the advert break for Game of Thrones.

Governments have to provide enough electricity to meet not just the average electricity use but the peak electricity use – half-time in the Superbowl on a boiling hot day. They can make this easier by flattening out the peaks, by getting people to use electricity when demand is low and not when it’s high.

That doesn’t work for every use. Nobody wants to watch television at 3am or run their air conditioning when it’s cold. But people can run their dishwashers and washing machines at night-time. Industrial customers like aluminium smelters can often be flexible with their electricity use too.

That can help avoid power cuts and it can stop desperate grid operators paying extortionate prices for electricity to keep the lights on. When a heatwave hit Europe recently and spiked air conditoning use, the UK’s grid operator paid 5,000% more than usual to import electricity.

What’s all this got to do with climate change?

For the next few decades, electricity will be supplied by a mix of clean electricity and dirty electricity. Grid operators will use the clean electricity when they can and fossil fuel-powered electricity when that doesn’t fully cover demand.

For example, California gets most of its electricity from zero-carbon sources. But, it is building new gas generators which are only to be used when the supply of clean electricity can not meet demand. So the less demand outstrips supply, the less fossil fuels it will use.

More important than that though, according to Brattle Group analyst Ryan Hledik, is that demand response will make electrification and decarbonisation cheaper. If you can charge up your electric vehicle with cheap electricity at night rather than expensive electricity at 6pm then you are more likely to tell your friends to swap their gas-guzzler for an electric vehicle.

In many parts of the developing world, there’s not enough electricity to go around even before electric vehicle and electric heat pumps are rolled-out. So, as countries develop and homes and transport are electrified, demand response is key to keeping the lights on.

How is demand response done?

The simplest way to encourage consumers to shift their electricity use is to offer them discounts on their electricity bill if they do so through ‘time of use rates’. This works like ‘off peak’ fares on public transport or ‘happy hours’ at a bar, encouraging customers who can shift their demand to do so.

Currently, these rates have been targetted at electricity-guzzling businesses rather than households – as this is where demand response can have the most impact for the least amount of outreach work. (CHECK WITH SOURCES)

Hledik says that demand response is most advanced in North America. In the Canadian province of Ontario, for example, electricity costs different amounts at different times of the day. Andrew Dow, from Ontario’s grid operator IESO, said it’s cheaper at night because it’s not being used as much.

Big electricity users pay their electricity bills proportionately to their use in the five highest demand hours of the year. “So these businesses are incentivised to monitor electricity demand throughout the year and, when they see something that could be one of the top five peaks of the year, businesses are incentivised to reduce their use,” Dow explained.

South Africa takes similar measures. Malcom Van Harte works for their grid operator Eskom. He told Climate Home that 22 large industrial electricity customers are incentivised to shift their peaks by ‘time of use’ rates. When electricity is scarce, households get adverts over the television and radio asking people to switch off non essential equipment

A twist on ‘time of use’ is that electricity users are asked to switch off 10-20% of their electricity when demand looks like outstripping supply. If they accept this request, the customer is then exempted from the planned outages which plague South Africa, known as ‘load shedding’.

In the US state of Vermont, an utility called Green Mountain Power is deploying Tesla powerwall batteries to peoples’ homes. Most of the year, the resident gets to use this battery as a backup generator, to absorb excess power from their solar panels or to reduce their bill on a ‘time of use’ rate. But, for the few days a year when Green Mountain Power is desperate for electricity, it can take control of the battery and use its electricity to power the grid. “It’s a win-win situation”, said Hledik.

In the future, electricity users could even be paid to give the electricity from their vehicle’s battery back to the grid at peak times. This is known as ‘vehicle to grid’ power and, Hledik said, is still at the pilot phase. “It’s still very much at a point where the technology and the commercial business case are being tested and proven,” he said, “whereas the simpler ‘time of use’ rate concept is something that’s available at scale.

How will the energy transition affect demand response?

As electricity systems become increasingly based on renewables, daily and seasonal patterns of supply will shift. Fossil fuel power plants can pump out electricity whenever 24/7 and 365, as long as you can keep feeding them fossil fuels. But the sun and wind come and go.

The first chart shows wind (purple) and solar (yellow) potential vs demand (orange) throughout the year in the US. The second shows the same but throughout a summer’s day in the US. (Tong et al)
The same figures as above, but for South Africa, which has southern hemisphere seasons

Hledik said that parts of the US with high solar deployment like California and Arizona are already seeing this shift. Previously, grid operators have tried to delay electricity use from the post-work peak of 6pm to more like 8pm.

Now they have more electricity than they need between midday and 2pm when the sun is at its highest. So they’re trying to get dishwashers and washing machines on in the middle of the day rather than in the late evening. Luckily, the sun’s power dips at night which is when demand for electricity is also at its lowest.

TAGS:
Future of energy
Your subscription could not be saved. Please try again.
Your subscription has been successful.

Our free newsletter is a must-read for anyone working on climate change issues. Sign up today to receive it every Friday.

Stories from the same category

  • Jul 10, 2025
    Sponsored

    Pacific islands push back against growing climate threats

    Islanders can become more resilient to rising seas and extreme weather by protecting marine habitats and adapting farming methods
    Read more
  • A boy doing homework by solar lantern
    Jul 1, 2025
    Sponsored

    How off-grid solar is beating the odds to transform lives in rural Africa

    By embracing solar power, many African countries are seeing improvements in electricity access, but financial barriers remain
    Read more
  • Jun 18, 2025
    Sponsored

    Workers and grassroots groups push Just Transition agenda at Bonn climate talks

    Social movements want justice placed at the heart of national climate planning, and a new global mechanism to support worker and community-led transitions
    Read more
  • Jun 17, 2025
    Sponsored

    What could a Fossil Fuel Non-Proliferation Treaty look like?

    As climate negotiations get underway in Bonn, an initiative set up to work on a pact against fossil fuels is discussing its structure and ways to promote the phase-out of coal, oil and gas
    Read more
  • An electric vehicle being assembled in Singapore, part of the electrification process that could help them achieve net-zero.
    May 7, 2025
    Sponsored

    Is electrification a no-brainer in the race to net-zero?

    Switching to electricity in homes and on the road is a relatively painless way to cut emissions, but few countries have a holistic approach to going electric
    Read more
  • Giving nature breathing room builds climate resilience
    Apr 22, 2025
    Sponsored

    Giving nature breathing room builds climate resilience

    Farming communities in El Salvador are reaping the benefits of working with nature by planting trees, harvesting rainwater and other ecological practices
    Read more

    Other stories

    Jul 18, 2025
    Politics

    Brazil offers COP30 cruise ship rooms and cost caps but negotiators remain unhappy

    While some developing countries have been offered rooms on two cruise ships at $220 a night, others will have to pay up to $600 in a process criticised as “opaque”
    Read more
    Aerial view of the Sigma lithium mining site in Poço Dantas, Jequitinhonha Valley, Brazil.
    Jul 17, 2025
    News

    In Brazil’s lithium belt, locals fear push to dismantle legal protections

    As demand for transition minerals soars, pro-business lawmakers and environmental activists in COP30 host Brazil are in a tug of war over how to regulate the mining industry
    Read more
    Jul 16, 2025
    News

    Airlines risk legal challenges by advertising jet fuel as “sustainable”, NGO warns

    Amid suspected fraud in the production of sustainable aviation fuel (SAF), a new report says the airline industry should stop calling all alternatives to kerosene “sustainable”
    Read more
    Jul 14, 2025
    Comment

    To help people prepare for extreme heat, we must communicate better

    As a new report shows a dramatic increase in the hottest days in the UK, closing gaps in public understanding of the risks and how to stay safe is urgent
    Read more
    Jul 11, 2025
    Finance

    Rich nations accused of delaying loss and damage fund with slow payments

    Wealthy countries have handed over less than half of what they promised to the loss and damage fund for victims of climate change
    Read more
    Jul 10, 2025
    Sponsored

    Pacific islands push back against growing climate threats

    Islanders can become more resilient to rising seas and extreme weather by protecting marine habitats and adapting farming methods
    Read more
    Jul 10, 2025
    Comment

    Donors were supposed to step up, not step back on climate finance

    Governments are diverting funds from hard-hit communities, slashing aid and boosting military spending
    Read more
    A wide angle photo of the plenary in the UN building in Geneva, showing negotiators participating in the 55th session of the UN Human Rights Council from 2024.
    Jul 9, 2025
    News

    UN Human Rights Council fails to call out fossil fuels after decision cuts mention

    A proposal by the Marshall Islands and Colombia calling on countries to transition away from fossil fuels had to be dropped from the final UNHRC resolution
    Read more
    COP30 President André Corrêa do Lago
    Jul 9, 2025
    Politics

    COP30 president: Transition from fossil fuels can start without climate talks

    In an exclusive interview, André Corrêa do Lago says negotiators can work out rules or a timeline for the energy transition, but it’s up to countries to act on what they agreed
    Read more
    Jul 9, 2025
    Politics

    Scientists hail rapid estimate of climate change’s role in heat deaths as a first

    Researchers pinpoint the death toll from last month’s heatwave in Europe, and say nearly two-thirds of the deaths were linked to the effects of climate change
    Read more
    Climate Home News is an award-winning independent digital publication reporting on the international politics of the climate crisis.

    • News
    • Clean Energy Frontier
    • Investigations
    • Sponsored
    • Explainers
    • Advertising, partners and sponsorship
    • About
    • Contact us
    • Privacy policy ▾
      • Terms and conditions
    DESIGNED BY SPOOVIO | DEVELOPED BY XT