ERCOT demand response reaches 2.5%, far below Texas goal

The Electric Reliability Council of Texas is far from meeting its goals for residential demand response, barely making a dent in the total reduction regulators had hoped the program would achieve. 

The statewide grid operator told the Public Utility Commission that it achieved only a sliver of the sought-after 20% reduction from customers who have given their utility the ability to reduce their usage during “rush hour” periods of peak demand. The reality was a 2.5% average reduction — just 10% of what the commission sought.  

Grid experts have said such programs can cut costs by reducing the need for construction of new generation and transmission infrastructure as demand soars.

The demand response effort fell short despite efforts like CPS Energy’s WiFi Thermostat Rewards and Austin Energy’s Power Partners programs to reduce residential demand. It comes as ERCOT, which is projecting demand growth to quadruple by 2032, braces for an influx in demand driven by industry and residential growth and increasingly severe weather. 

The goal of a 20% reduction was set in 2023 by state lawmakers as part of legislation aiming to increase grid reliability while reducing costs for consumers.

In January 2025, the grid operator began tracking demand response participation and its deployment during peak demand periods to evaluate the programs’ statewide effectiveness. 

Ramya Ramaswamy, the PUC’s director of energy efficiency, told commissioners that ERCOT’s failure to meet the demand reduction goal was due to the relatively short study period, the novelty of such programs in many parts of the state, overlapping initiatives and the effects of lower wholesale market prices. 

She also emphasized the need to “take a comprehensive look at demand response as a whole, of which residential demand response is a portion.”

Though residential demand continues to expand, Ramaswamy said, it accounts for only for a fraction of the expected demand. Most of the growth forecast is driven by power-hungry data centers, cryptocurrency miners and industrial sectors including hydrogen and e-fuel producers and the oil and gas industry, which is rapidly electrifying.

Energy company Vistra Corp., in its feedback on ERCOT’s demand response program, also said its load growth is not driven by residential load.

The inaugural report from ERCOT to its state regulator, evaluated granular data provided by retail electricity providers in the 11 months through November 2025. 

It analyzed 334 daily peak demand periods in that period and found that 85% of the days saw fewer than 100 deployments from participating homes and service locations.

The grid operator said it needs at least 1,000 unique service locations deployed during a given hour to have enough data to accurately measure results. There were only 34 days in which it met the minimum participation threshold, according to a memorandum filed June 30. 

Wholesale market prices may play a role in the lack of participation, as energy prices are lower on average than previous years. ERCOT’s average wholesale market rate was just under $180 in 2021 but had fallen to $36.94 by 2025. The lower energy prices could diminish the demand response incentives that will save residential customers on their monthly bills, the grid operator said. 

The overall reduction across the 11-month period equated to a 3.02% reduction of 197 megawatts. That is enough energy to power 49,250 homes during a hot, summer day. 

Chris Brown, an economist and program manager for data analysis for the PUC, said participation and megawatt reduction were growing toward the end of the study period. When it began in winter, there were on average 3,759 home or electric meters deployed. By fall, that number exceeded 25,600.

“We do see that we’re closer,” Brown said. “We’re still not meeting the goal at a seasonal level, but it is improving over time.”

Ramaswamy said data will continue to be gathered and evaluated over a longer period of time “to ensure that demand response programs are designed and deployed in a manner that maximizes grid efficiency and economic efficiency.”