Demand response is the practice of paying electricity users to adjust their consumption in response to grid conditions — cutting or shifting demand when power is scarce or expensive, so that demand flexes to match supply instead of supply forever chasing demand.
— Overview
Demand as a resource, not a given
For a century the grid worked one way: demand did whatever it wanted, and supply scrambled to match it, building expensive power plants for the few hours a year demand peaked. Demand response inverts that. It treats controllable demand as a resource the grid can call on, and pays for it.
This guide explains what demand response is, how it works, the main types and programs, who provides it, how much it pays, and how a new generation of fully interruptible, software-controlled loads is changing what demand response can do.
01 — Mechanics
Signal, reduce, verify, pay
A grid operator or utility signals participating customers to cut or shift load at specific times: during a demand peak, a supply shortfall, or a price spike. Participants reduce consumption by turning equipment down, shifting it to off-peak hours, or switching to on-site power, and they're paid for the reduction, measured against a baseline of what they'd otherwise have used.
In aggregate, that reduction substitutes for generation the grid would otherwise have to build or run.
02 — Value
Cheaper, faster, increasingly necessary
Three things make demand response valuable. It's cheaper than peaking plants: a megawatt of avoided demand costs a fraction of a gas plant that runs only a few hours a year. It's faster to deploy, because curtailment needs no new generation or transmission. And it's increasingly necessary, as variable wind and solar and surging AI-driven load force the grid to lean on demand that can move.
After Winter Storm Uri, Texas expanded interruptible-load programs rather than build an estimated $18 billion in idle peaker plants — a cost that would otherwise have landed on ratepayers.
03 — Categories
By trigger, speed, and sector
Demand response sorts three ways: by what triggers it, how fast it responds, and who provides it.
04 — Automation
From advantage to requirement
Automated demand response is demand response executed by software rather than by staff watching prices. When the grid signals, an automated system reduces or shifts load within seconds and verifies the reduction in real time.
As markets move to five-minute and faster settlement — ERCOT launched Real-Time Co-optimization plus Batteries in December 2025 — automation has shifted from an advantage to a requirement. Type 3's software-defined dispatch is automated demand response applied to fully interruptible compute loads across multiple grid markets at once.
05 — Economics
Availability, plus performance
Demand response programs pay two ways: a standing availability or capacity payment for committing to be on call, and a performance payment each time the load is actually curtailed. The totals scale with how much, how fast, and how reliably a participant can reduce.
In ERCOT, Riot Platforms reported $71.2 million in power curtailment credits in 2023, including $31.7 million in August alone.
06 — Providers
Aggregators, and one deterministic asset
Most demand response today flows through aggregators: companies such as Enel X, CPower, and Voltus that bundle many customers into a single resource bid into wholesale markets. The traditional aggregator model pools small, partly flexible loads and delivers a probabilistic reduction averaged across the fleet, which is hard to verify site by site.
Type 3 represents the other end of the spectrum. A single fully interruptible compute load is individually deterministic, curtails 100% on command, and is verified with grid-grade telemetry rather than estimated in aggregate. It's software-defined demand response built for the most flexible load on the grid.
Type 3 is the software-defined demand response infrastructure company that turns fully interruptible compute loads into a dispatchable, telemetry-verified grid resource. Read the Manifest →
08 — Coverage
Every operator, its own instrument
Each U.S. grid operator runs demand response through its own instrument. FERC Order 2222 ties them together by requiring every market to admit aggregated distributed resources.
The most mature interruptible-load market in the country.
Accredited through ELCC.
Runs demand response through its capacity market and recently raised its accreditation to 92% for around-the-clock resources.
Consolidated its programs into Load Modifying Resources and Demand Response Resources.
Ref — FAQ
Ref — Glossary
See the full glossary in the Manifest
Ref — Sources