Three ways to maximize the value of demand response

Demand-side resources are critical to a modern grid. Technologies like electric vehicles, rooftop solar, and smart thermostats can all provide flexibility to the grid when needed, but many utilities still struggle to fully capture their value—particularly in long-term planning, short-term congestion relief, and market participation.

As electrification accelerates and large new loads like data centers emerge, traditional planning approaches often underestimate the potential of demand response and other flexible resources. This undervaluation leads to missed opportunities for cost savings, emissions reductions, and reliability improvements.

To meet growing electricity demand, utilities need new approaches that quantify and integrate demand-side flexibility into resource planning and treat it as a core component of a reliable, cost-effective grid.

Why measuring the value of demand response is so challenging

Unlike traditional generation assets, demand-side resources and demand response programs don’t produce energy. Instead, they reduce the need for generation. This makes them inherently harder to measure and integrate into long-term resource planning, short-term wholesale market participation, and congestion relief opportunities.

Common challenges include:

• Organizational misalignment. Planning teams and customer program leaders often work in silos, making it difficult to connect demand response initiatives to wholesale procurement strategies.
• Analytical limitations. Conventional resource planning tools were built for supply-side assets. They often lack the data and modeling sophistication needed to capture the time-varying nature of demand-side resources—how their load can increase, decrease, or shift over time in response to grid needs.
• Operational gaps. Utilities often lack tools with advanced automation—like distributed energy resource management systems (DERMS) and advanced distribution management systems (ADMS)—and the dedicated resources needed to configure and optimize these tools. This makes it difficult to move from static programs to flexible, dispatchable resources.

Organizational, analytical, and operational solutions

The good news is that many utilities are closing these gaps with new strategies, better analytics, and improved integration across teams and systems. Here are the industry-leading practices utilities are using to unlock the full value of demand response.

1. Breaking down silos with “grid of the future” teams

Forward-looking utilities are forming cross-functional teams to bring together planning, design, and operations. Tools like ICF’s Holistic Energy Resource Optimization (HERO) platform support this integration by unifying separate domains—generation, transmission, distribution, and demand management—into a cohesive framework. These collaborative teams are aligning procurement strategies with demand-side program design, ensuring that flexible load is valued as a core grid resource, not an afterthought.

2. Leveraging advanced analytics for true resource valuation

To fully integrate demand response into long-term integrated resource planning, utilities need granular, hour-by-hour modeling that accounts for participation rates, cost assumptions, equipment turnover, and uncertainty.

ICF’s Sightline® platform makes this possible. Powered by a simulation engine, it provides predictive modeling of energy and capacity impacts, allowing utilities to run comprehensive demand response studies for market participation, short-term demand flexibility impact, and long-term integrated resource planning. Already deployed by over 90 utilities, Sightline has simulated demand response technologies for more than 10 million buildings across North America, demonstrating measurable impact at scale.

3. Operationalizing flexibility as a virtual power plant

Demand response can provide reliability and economic value to the grid by aggregating small-scale energy resources and functioning as a virtual power plant. With advanced forecasting and machine learning, Sightline enables utilities to predict participant response to dispatch signals and segment customers into cohorts to optimize performance. Post-event analysis continually refines forecasts, and integration with DERMS and ADMS platforms enables near-real-time operations supporting wholesale market participation and grid congestion relief.

The bottom line

Demand response is no longer a “nice-to-have” program—it’s a critical tool for meeting growing demand, integrating renewables, and managing costs. But to unlock its full value, utilities must treat it like any other grid resource: plan for it, model it, and operate it at scale.

With the right organizational structures, analytics, and technologies in place, demand-side flexibility can deliver the reliability and cost benefits utilities need to thrive in a rapidly changing energy landscape.