In November 2022, OpenAI launched ChatGPT. Within just five days, it had more than a million users. Today, ChatGPT users submit approximately 2.5 billion prompts every day. Each one is processed and stored in data centers that consume vast amounts of electricity.
AI data centers aren’t the only factor driving up demand. Expanding manufacturing, rapid population growth, wider use of electric vehicles, and building electrification are all pushing electricity consumption higher. Over the past decade, demand in the U.S. grew by about 0.5% each year. Looking ahead, analysts now project that growth could rise to around 2.5% per year through 2035. That trajectory adds up to an increase of 25% by 2030 and 75% by 2050.
That level of growth presents challenges for a grid already facing strain from aging infrastructure and more frequent extreme weather events. Building new power plants and transmission lines is part of the solution, but it’s costly and time-intensive. A faster, flexible approach is to make better use of the resources we already have — through demand response.
What is demand response?
Demand response, sometimes called demand-side response, is a way for electricity users to help keep the grid stable by temporarily adjusting their consumption during peak times.
What do we mean by “the grid”? The electric grid is the interconnected system of power plants, substations, transformers, and transmission lines that generates and delivers electricity to homes and businesses. It works in real time, constantly balancing how much electricity is being produced with how much people are using. This network forms the backbone of modern life, making sure power is available whenever and wherever it’s needed.
Picture a summer heat wave. If everyone in your neighborhood runs their air conditioning at the same time, the grid could be pushed to its limits. To help prevent outages, utilities have programs where customers agree to temporarily reduce their electricity use during these peak periods. Participants might turn their thermostat up a few degrees or wait to run appliances until later in the day. In return, they receive rewards such as bill credits, payments, or a virtual prepaid gift card.
These programs are called demand response. By coordinating small changes across many homes and businesses, they reduce stress on the grid and keep electricity flowing reliably for everyone.
Types of demand response programs
Demand response programs generally work in two ways: some let you shift your energy use to times that work best for you, and others make small adjustments automatically on your behalf.
Active demand response programs put the control in your hands. The most common example is a Time-of-Use (TOU) program. In these programs, electricity costs less during “off-peak” hours — times when fewer people are using power. For example, if most people charge their electric vehicles between 5–8p.m., for instance, the utility might offer cheaper rates for customers who charge overnight or early in the morning. To save money, you could decide to shift your usage to those lower-cost hours.
Passive demand response programs work behind the scenes. A common example is a smart thermostat program. Once you enroll, your utility can make slight, temporary adjustments to your thermostat during periods of high demand. These changes are small enough that you’re unlikely to notice, and they automatically return to normal once the event ends.
Both active and passive programs ease pressure on the grid, reduce the risk of blackouts, and make it easier to integrate renewable energy like solar and wind, which aren’t always available at the same time people are using electricity.
How do smart thermostat programs work?
Smart thermostat programs are one of the easiest ways to participate in demand response, since everything happens automatically after you enroll. Here’s what usually happens during a demand response “event”:
- Electricity demand starts to spike and the grid is under stress.
- Your utility sends a signal to your thermostat, raising it slightly in the summer (or lowering it in the winter).
- This adjustment lasts only for the duration of the event, usually a few hours or less.
- Once the event ends, your thermostat returns to its preferred setting.
- You receive rewards for your participation.
When thousands of thermostats adjust at the same time, the combined effect keeps the grid stable and avoids the need to run additional, costly power plants.
What are the benefits of demand response?
Demand response programs create value at every level: for utilities, households, and entire communities.
For utility companies
- Improved reliability: By lowering demand during peak periods, utilities reduce the risk of blackouts and strain on infrastructure.
- Cost savings: Instead of running expensive “peaker” plants or building new capacity, utilities can rely on demand response as a cost-effective alternative.
- Price stability: Cutting peak demand helps shield utilities — and their customers — from spikes in energy prices and transmission costs.
For households
- Financial rewards: Participants often receive bill credits, payments, or discounts for reducing electricity use during demand response events.
- Energy awareness: Taking part helps families see how and when they use electricity, leading to smarter choices over time.
- Community contribution: Households play an active role in supporting grid reliability and sustainability, which can reduce costs for everyone.
For communities
- Cleaner environment: Reducing the need for fossil fuel power plants lowers greenhouse gas emissions and air pollution.
- Greater energy equity: By easing system costs, demand response can help keep electricity more affordable and accessible.
- Grid resilience: Collectively managing demand makes communities better prepared for extreme weather and other disruptions.
Curious how utilities keep the grid reliable while adding more renewable energy? Learn more in our article on grid flexibility, resiliency, and reliability.
How do you sign up for a demand response program?
Getting started will vary by program, but usually takes just a few minutes:
- Check your utility’s website (or platforms like GreaterGrid) for availability in your area.
- Confirm your eligibility. Many programs require a smart thermostat or similar device.
- Enroll online and set up your technology.
- Get notified of events and start earning rewards.
Demand response vs. Virtual Power Plants (VPPs)
Shifting electricity use with demand response is powerful on its own, but utilities are starting to think bigger. Instead of looking at homes, businesses, or devices individually, they can connect thousands of small energy resources — like rooftop solar panels, home batteries, electric vehicles, and smart thermostats — and operate them together as if they were one large power plant. This coordinated network is called a Virtual Power Plant (VPP).
Here’s how they compare to demand response programs:
- Demand response focuses on reducing electricity use when the grid is under stress.
- VPPs bring together many distributed resources and manage them as a group, which means they can both reduce demand and add supply.
In other words, demand response is one of the building blocks that makes a Virtual Power Plant possible.
For more information on VPPs, check out our article “What are Virtual Power Plants, and why do they matter?”
The big picture
Electricity demand is climbing faster than expected, and traditional solutions like building new power plants take years to deliver. Demand response offers a practical, people-powered alternative. By making small, temporary changes in homes and businesses, we can ease stress on the grid, avoid blackouts, and create space for cleaner energy sources like wind and solar.
The impact may feel minor at the individual level — a thermostat adjusted a few degrees, or a dishwasher run at a different time — but together, these actions add up. When thousands of households and businesses participate, demand response becomes a powerful tool for keeping electricity reliable, affordable, and sustainable.
It’s a reminder that when communities act collectively, small shifts can drive big change.