Sam Hartnett
Senior Product Marketing Manager, Uplight
First Published Q2 2025
The New Era of Load Growth
After decades of relatively flat electricity demand, we now face persistent and accelerating growth as transportation, heating, and industrial processes increasingly electrify. This is in addition to AI-fueled data center load growth that is making headlines. However, this isn’t just more of the same load growth utilities faced in the 20th century. Today’s growth is markedly different – lumpier, more localized, and often bidirectional – creating new challenges for grid planning and operation.
Historically, utilities simply built more generation, transmission, and distribution infrastructure to meet rising demand. Faced with ever-lengthening interconnection queues, decade-long delays in developing new transmission, and increasing cost pressures on distribution networks, this supply-centric response is no longer sufficient on its own. As one utility executive put it, “We cannot just build our way out of this situation. The cheapest kilowatt-hour is still the one never used.”
While traditional supply-side solutions remain vital, many utilities are taking a more rigorous and holistic look at how load flexibility programs––including time-varying rates (TVR), energy efficiency (EE), and demand response (DR) programs––can scale up to meet evolving capacity and energy needs. Increasingly, the answers lie in an integrated approach called the Demand Stack, which reimagines the way these programs can be coalesced into a whole greater than the sum of its parts.
The Current DSM Landscape
Today’s demand-side management programs represent approximately $7.8 billion in spending, delivering impressive results with over 270 TWh in energy savings and 35 GW of capacity. Given that the Department of Energy predicts that virtual power plants (VPPs) could power 80-160 GW of projected peak load by 2030, this leaves a lot of room for growth. Yet despite these achievements, these initiatives operate well below their potential, with enrollment and participation rates in the single digits.
This underperformance isn’t due to customer disinterest––over 80% actively purchase energy-efficient appliances, and more than half have invested or plan to invest in distributed energy resources. Over three-quarters of customers have expressed concern about rising energy costs and intend to take action.
The problem has its roots in program fragmentation. Utilities traditionally develop, fund, implement, and evaluate energy efficiency (EE), demand response (DR), and time varying rate (TVR) programs in isolation, often through different teams, vendors, and budgetary cycles. This siloed approach creates conflict and customer confusion that limit program potential.
The Demand Stack Framework
The Demand Stack reconceptualizes EE, DR, and TVR as a unified system where individual initiatives work in concert to achieve overall capacity and energy goals, similar to how utilities optimize their generation supply stack by taking advantages of complementary characteristics among different resources. Instead of designing and deploying each program independently, a Demand Stack approach calls for harmonizing program rules, implementation, and most importantly, the customer experience. In this framework, customers are guided through a single channel to enroll in the program(s) that are most relevant for them. For utilities, the programs are integrated into a cohesive resource where:
Energy efficiency functions as baseload power, persistently lowering the overall demand curve throughout the day. EE measures require upfront investment but deliver steady energy savings for the life of the measure at low or no marginal cost.
Time-varying rates operate as mid-merit resources, modifying load shapes on a daily basis. TVRs permanently alter consumption patterns and can be designed to reflect the changing costs of producing and delivering electricity across time and place.
Demand response serves as a peaking resource, providing targeted relief during critical periods. DR programs can ramp quickly and deliver precision grid services, though they incur higher short-run costs through customer incentives and potential fatigue.
DR vs VPP — Demand response can include traditional DR behavioral, smart thermostat, and other device-based programs as well as virtual power plants (VPPs). VPPs are distinct in that they involve multiple assets and resource types and multiple customer segments and programs while supporting several grid services other than peak load reduction. VPPs are typically operated year round while DR is more seasonal, with the objective of reaching a MW target rather than calling events.
“Instead of designing and deploying each program independently, a Demand Stack approach calls for harmonizing program rules, implementation, and most importantly, the customer experience.”
The Synergy Between Rates and Demand Response
Time-varying rates play a pivotal yet often undervalued role in this stack, and are in fact, synergistic. Unlike traditional flat rates, TVRs communicate that electricity costs vary dramatically throughout the day and year––enabling customers to reshape energy usage patterns. Any concerns that TVRs might “cannibalize” demand response programs reflect the siloed thinking of the traditional DSM mindset. Within an integrated Demand Stack, this interaction isn’t a bug but a feature––TVRs create a new baseline of daily load shifting, while DR programs can then provide additional capacity during critical events through higher incentives or automation.
To give more concrete examples, TOU rates with a peak time rebate or critical peak pricing are essentially adding the DR capability (behavioral or direct load control) to a rate, increasing the potential load shift. An EV rate can also be paired with an EV managed charging program to not only better align charging behavior, but also shift even more usage out of peak times. What ultimately counts for a utility is how the combined interventions perform compared to historical benchmarks. And with this approach, customers also experience a more coordinated experience from their utility.
Getting Started with Rates and DR in the Demand Stack
Each utility’s’ Demand Stack will be unique to their needs. Implementing an effective Demand Stack with TVRs as a cornerstone requires three key steps:
1. Define the needs that the Demand Stack should serve. Utilities must identify exactly where and when grid flexibility matters most, which will be specific to each utility. This means moving beyond system-wide peak reduction to understand: How do energy needs vary hourly, daily, and seasonally? Which substations, feeders, or neighborhoods face constraints? Which needs are recurring versus exceptional?
2. Design complementary TVR and DR programs. Instead of viewing TVRs as competing with DR programs, utilities should design them to work together by leveraging:
3. Create a cohesive customer journey
Your customer is a critical component of Demand Stack participation. A fragmented customer experience represents one of the greatest barriers to customer program success. Seamless enrollment across multiple programs should be prioritized, enabling customers to easily navigate between offerings as their needs, capabilities, and preferences evolve over time. This approach begins by introducing customers to a single program where they can experience quick wins and build confidence before expanding their participation to complementary offerings. Critical to this strategy is framing all Demand Stack programs under a cohesive, unified energy management brand––helping customers understand how different programs work together to maximize their benefits while simplifying their overall experience.
The Demand Stack Path Forward
The siloed approach to load flexibility is standing in the way of meeting upcoming load growth. By reimagining time-varying rates as a central component of a unified Demand Stack, utilities can maximize the value of each program while creating a more intuitive customer experience.
As the electricity system becomes increasingly dynamic, the static approaches of the past must give way to a more coordinated strategy. The Demand Stack can help maximize customer participation, maintain reliability, and take advantage of distributed energy resources while keeping costs affordable.
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