From AI data centers to fleet electrification, facilities are facing unprecedented load growth and grid stress. U.S. electricity demand could grow 25% by 20301 and 78% by 2050, highlighting the growing operational and financial pressures on commercial facilities. For facility managers, those figures translate into real-world headaches, from higher bills and more volatility to greater operational risk.
Automated demand response (DR) provides a low-risk way to rise to these challenges, enabling your organization to reduce costs, maximize incentives, and improve operational visibility across your portfolio.
The first step to success: Understanding the ins and outs of DR programs and the range of organization benefits they’re poised to deliver.
What is demand response?
Demand response is the strategic reduction or shifting of energy use, typically during grid stress periods when reliability and pricing can be affected. Demand response can cover a vast range of commercial and industrial systems, including HVAC, lighting, boilers, EV charging, manufacturing and packaging lines, data center compute, and more.
As a strategy, DR comprises both load shifting, which moves energy use to off-peak hours, like pre-cooling buildings, and curtailment/load shedding, which temporarily reduces or stops load, like turning off the AC or pausing equipment during peak load.
For facility managers, DR delivers cost savings primarily through utility program incentives. Knock-on benefits include reduced peak demand charges, time-of-use rate arbitrage, and deeper visibility into energy consumption patterns, which can reveal additional efficiency opportunities.
While participating in traditional demand response can be manual, industrial and commercial users often automate the process through smart building systems, which makes it easier to participate and earn revenue, especially for commercial facilities that could have a pre-determined load shedding or load shifting plan that can be initiated when the utility sends out a DR event notification. DR systems can also be managed to automatically adjust load based on price signals, grid stress from high demand, or supply issues.
Ultimately, smart DR programs enable your buildings to respond efficiently during high-demand events without more time-consuming manual intervention. And, by reducing demand during peak, carbon-intensive hours, they could also help your organization meet its sustainability goals, while building operational flexibility to withstand grid stress and extreme weather.
What’s driving demand response adoption now
Demand response participation is growing across the U.S., and as the number of DR events each year increases, so too do the opportunities for facilities to further optimize their energy budgets.
Recent estimates put average enrollment around 6.5%2, with some regions achieving levels above 10%. 2025 had notable expansion in key markets, with Arizona, Utah, Texas, and the PJM territory (covering 13 states from Illinois to New Jersey) all experiencing growth, and California's CAISO market seeing strong increases in recent years, too.
Examples of adoption are everywhere: In Arizona3, Michigan4, Utah5, and more, commercial and industrial businesses can get paid to reduce electricity consumption during periods of demand.
According to FERC analysis6, businesses are leaping at the chance to participate. As of December 2025, retail DR programs had more than 30 GW of participating load — two-thirds of which were made up of C&I customers. Wholesale DR programs in the 7 major ISOs/RTOs added another 33 GW of participating load. Together, those 66 GW of combined DR load nationwide is greater than the overall peak annual electricity demand of any US state except for three: California (CAISO), Texas (ERCOT), or Florida.
Several forces are converging to accelerate this momentum.
- Rising load growth from domestic manufacturing growth and electrification, fleet electrification, AI data centers buildout, and other sources are creating higher electricity demand. In the PJM region alone, capacity prices jumped nearly 800% for 2025-26 due to generation retirements and surging demand.
- Smart building systems, IoT devices, and behind-the-meter storage are making DR participation more precise and automated, allowing facilities to shift flexible loads in response to price signals without disrupting operations.
- Policy momentum is building, too: in 2025, 45 states7 plus Washington, DC, and Puerto Rico advanced grid modernization initiatives, including 27 performance-based DR initiatives.
- Decades-old transmission systems combined with intensifying extreme weather are creating localized grid stress that DR can address without waiting years for infrastructure upgrades.
- Money talks. C&I customers are realizing this is an economic win-win: their DR participation helps the grid during times of stress, and that participation helps their facility bottom line in the form of energy cost reductions.
For example, in 2024, PJM paid customers more than $150M in DR revenue. The numbers are also large in ERCOT. Across PJM, ERCOT, and CAISO DR capacity payments to businesses are often on the order of $100k per MW-year. All this means a large corporation with 2 MW of curtailable load in a DR program could earn $200k just for participating, even outside of payments for actual DR events.
Five steps to build a successful demand response strategy
Demand response proffers a range of benefits to facilities in all sectors, and of all sizes. Every facility portfolio will need its own tailored strategy, but following are rules of thumb to follow along the way:
- Understand your DR opportunity. Compensation varies widely by region, program type, and facility capabilities. Before you commit, get a clear view of what’s available in the territories where your facilities sit, and how those regional variances fit with your broader energy strategy. This sets realistic expectations and helps you identify the highest-value programs in a single facility or across a complex portfolio.
- Assess eligibility and readiness. Different utilities and aggregators have different requirements8 — some programs need 50–100 kW minimum load commitments, while others accept smaller sites if they’re aggregated. Confirm whether your controls, interval metering, and communications equipment meet program standards; in many cases, utilities cover installation costs. Multi-site portfolios can strengthen participation by pooling loads.
- Integrate DR into daily operations. For traditional utility DR programs, this means developing a clear plan for which loads to shift or shed when the utility calls an event. Beyond these event-based programs, newer forms of DR — including price-based, continuous, and environmental signals — can integrate more seamlessly into everyday building operations. Focus on where load flexibility naturally exists without affecting comfort or mission-critical work, and build out playbooks that keep events smooth while enabling dynamic response to continuous market and grid signals.
- Use data to optimize performance over time. Every DR event generates granular performance data. Reviewing these insights regularly helps refine your curtailment strategy, improve equipment scheduling, and identify year-round efficiency opportunities — not just event-day savings.
- Connect DR participation to broader organizational goals. DR reduces emissions during the grid’s most carbon-intensive hours and signals leadership to occupants, tenants, investors, and ESG-focused stakeholders. Framing DR as part of your long-term sustainability plan strengthens internal alignment and builds momentum for future investments.
Ready to take control of your energy strategy?
Rising energy demand is a top-line challenge, but facility managers can leverage demand response to position their organization for success. Our experts help you identify automated DR programs that fit your facilities, from no-cost, low-risk options to more comprehensive solutions.
We act as your trusted advisors, helping you evaluate potential financial returns, automate load management where it makes sense, and turn DR performance into actionable insights for ongoing operational efficiency.
To discuss how demand response could support your broader energy strategy, reach out to a Mantis expert today.
Key Takeaways
- Demand response (DR) is gaining traction as a strategic way to cut facility energy costs and earn incentives by temporarily shifting or curtailing building loads during peak grid demand periods.
- U.S. electricity demand could grow 25% by 20301, making DR more valuable as grid stress increases and utility incentive programs expand across regions.
- Smart building automation typically enables DR in large commercial and industrial settings, ensuring HVAC, lighting, and other systems can respond automatically to utility and/or price signals.
- Facility managers (FMs) should evaluate local utility and aggregator programs now to capture near-term savings while supporting long-term sustainability goals.
FAQs
Q: What is commercial demand response?
A: Commercial demand response programs give businesses financial incentives to temporarily reduce or shift their electricity use during periods of high grid demand. They offer organizations a way to lower energy costs while supporting grid reliability, typically using automated systems that minimize operational disruption.
Q: How does commercial demand response work?
A: DR uses your existing building systems — like HVAC, lighting, and other controllable loads — along with smart controls or a building management system that can communicate with grid operators. During peak demand, these systems automatically make small adjustments (like shifting HVAC setpoints by 2-4°F for a few hours) to reduce your building's load. The changes are designed to be gradual and non-disruptive, often occurring during unoccupied periods, and you maintain override control if needed.
Q: What are the benefits of demand response for commercial buildings?
A: DR delivers multiple benefits: reduced peak demand charges, direct incentive payments for participation, deeper visibility into energy usage patterns that reveal efficiency opportunities, and support for sustainability goals by reducing grid stress during carbon-intensive peak hours.
