There’s a better way to use the electric grid—and cut power bills

When electricity demand is set to surge—say, from a new power-hungry data center—the default response from a utility is often to build a new (and expensive) power plant and other infrastructure.

A new report released by a cross-industry coalition called Utilize argues that we can make better use of existing power on the grid instead. Roughly half of the total capacity goes unused most of the time because the grid was built to meet spikes in demand. But as technology has shifted, it’s become easier to unlock that extra power.

Smart thermostats, for example, can pre-cool your house when demand is lower. EVs can charge at optimal hours (and, in some cases, send power back to the grid when it’s needed.) Networks of home batteries, being rolled out by startups like Base Power, can also store power when demand is low and then provide it later. Data centers and other large power users can use load flexibility, moving their power use to certain times of the day. Sensors, software, and other new tech can help transmission lines carry more power.

A mix of these solutions added together, along with others, can free up more power for new uses, from data centers and factories to millions of drivers charging new EVs. If new electric demand can be added without a major new investment in infrastructure—and more customers are actually sharing the same fixed costs—the cost of electricity can go down for everyone. The same solutions can also make the grid more resilient in extreme weather.

“We’ve heard a lot about affordability of electricity in the last year,” said Utilize executive director Ian Magruder at a press conference yesterday. (The group includes members like Google, Carrier, and Tesla.) “We think that there are a lot of solutions being proposed, but our view is that this solution of grid utilization is one of the only near-term solutions that can meaningfully reduce the cost of electricity at scale in short order.”

The report modeled what could happen at a typical midsized utility, and then calculated what the approach could mean nationally. By increasing grid utilization by 10% as electricity demand increases, the report says that consumers could save between $110 billion and $170 billion on electric bills over the next decade. That’s on top of savings that people could get from participating in specific utility programs that pay consumers to use appliances or charge EVs at certain times.

Virtual power plant programs already exist throughout the country, and there are a variety of ways that they can scale up. Base Power, for example, owns the batteries that it deploys at homes (consumers save on electric bills and have backup power if the grid goes down, while Base Power makes money by selling the power it stores back to utilities). Utilities lead other programs. Hyperscalers could also help.

“One interesting emerging model is referred to as the ‘bring your own distributed capacity’ model, where a hyperscaler like Google could come into a utility service territory where the hyperscaler is hoping to develop a new data center, and actually pay for these resources themselves,” says Ryan Hledik, a principal at the Brattle Group, a consultancy that partnered on the report. “For example, pay to expand the utility’s energy efficiency and demand response portfolio beyond what the utility was already planning to do. And then take credit for the new capacity that creates on the system.”

Utilize is advocating for new policies that can help grid utilization grow, such as a newly passed bill in Virginia that will require utilities to provide grid utilization metrics to regulators for the first time, and incorporate those metrics into planning. “We see this as an exciting first step, and we think that other states are already interested in following,” Magruder told Fast Company. “We’ve received a lot of inbound [interest] from red, blue, and purple states. This is not a partisan issue.”

The U.S. has been slower than some other countries to adopt grid utilization, but there’s more interest now. “I think the urgency hasn’t been there in the past,” says Magruder. “For 25 years, we had very stable load growth in this country. Electricity demand wasn’t meaningfully changing. The price of electricity that Americans pay was relatively stable. We’re in a very different environment now in the last couple of years, and that’s creating new political and economic pressures that are forcing us to think differently.”