Only 20% of smart thermostat households participate in demand response, leaving gigawatts of flexible load untapped during grid emergencies

Despite smart thermostat adoption reaching 16% of U.S. internet-connected households, only about 20% of those households participate in a demand response (DR) program. In the Southeast (Kentucky, Tennessee, Alabama, Mississippi), 59% of customers say they are unaware of or lack access to DR programs. Among non-participants, 34% cite comfort concerns, 29% object to external thermostat control, and 16% say incentive payments are too low. Why it matters: Every non-participating smart thermostat represents 1-3 kW of flexible load that could be shifted during peak demand, so millions of collectively untapped devices equal several gigawatts of virtual capacity that grid operators cannot call upon during emergencies. Without that flexible demand, grid operators must rely on expensive natural gas peaker plants that cost $100-300/MWh to dispatch, so wholesale electricity prices spike during heat waves and cold snaps. Price spikes flow through to ratepayer bills within months, so customers who refused to participate in DR to avoid minor thermostat adjustments end up paying far more through higher base rates. Higher rates especially burden the 59% of Southeast customers who were never even offered the choice, so the people most likely to face energy poverty are also the most excluded from programs that could lower their bills. The failure to unlock residential flexibility means utilities must build more generation capacity to cover peaks, so ratepayers fund billions in new power plants that run only a few hundred hours per year. The structural root cause is that demand response programs are designed and marketed by utilities whose core business model rewards selling more electricity, not less. Utilities earn regulated returns on capital expenditure (building power plants), not on demand reduction, creating a structural disincentive to aggressively recruit DR participants. Additionally, DR program enrollment is opt-in, buried in utility websites, and requires customers to navigate confusing terms -- the opposite of how consumer technology companies drive adoption.