The electrical grid is designed to cover the highest load (typically the hottest hour of the year; A/C drives peak load).
Most of the grid is a fixed cost. The transmission lines, distribution lines and the power plants recover enormous investments whether they are used or not.
The marginal costs are surprisingly low. Marginal costs of fueled (fossil or nuclear) power plants are typically < $0.05/kWh.
Peak load is what drives capacity expansion -- both in wires (transmission and distribution) but also generation. Building all of this capacity to only run for < 1% of the year incurs tremendous cost.
By flattening the (demand) curve (through either generation or load reduction) there are tremendous savings for society.
However, electric utilities are natural monopolies, so investor owned utilities (contrasted with munis or coops) must substantiate investment to their regulators who in turn allow them to make a rate of return on their investments. So, these utilities only increase profit by increasing investment.
There are some other interesting use cases for smarter energy consuming devices, what they call Cold Load Pickup, where a section of the grid loses power during a blackout, and power comes back. that initial spike kills equipmenton the transmission side, if you are able to delay start some equipment, you spread the load and reduce strain on the grid.
Most of the grid is a fixed cost. The transmission lines, distribution lines and the power plants recover enormous investments whether they are used or not.
The marginal costs are surprisingly low. Marginal costs of fueled (fossil or nuclear) power plants are typically < $0.05/kWh.
Peak load is what drives capacity expansion -- both in wires (transmission and distribution) but also generation. Building all of this capacity to only run for < 1% of the year incurs tremendous cost.
By flattening the (demand) curve (through either generation or load reduction) there are tremendous savings for society.
However, electric utilities are natural monopolies, so investor owned utilities (contrasted with munis or coops) must substantiate investment to their regulators who in turn allow them to make a rate of return on their investments. So, these utilities only increase profit by increasing investment.