Each year, the importance of advancing a sustainable energy future becomes increasingly evident— and necessary. In 2024, we managed challenges from mitigating the potential for climate-related disruptions to energy infrastructure, to transitioning to renewable energy resources while managing grid integration, to rapidly increasing energy demand due to growth in electric vehicles, AI, data centers, and manufacturing. All while balancing the need for energy security and affordability nationwide. Over the course of this year, these are the trends that Uplight has our eyes on around electrification, grid flexibility, and the energy transition.
The Future is (still) Electric
While there may be less federal incentives for decarbonization over the next four years, electrification momentum is undeniable. Electric technologies perform better, have lower maintenance costs, and increase comfort, and consumers are noticing. Electric heat pumps and water heaters, two of the most effective tools for cutting residential carbon emissions, saw significant growth in 2024, with sales increasing by 27% and 23%, respectively. By 2030, over one in four new passenger cars sold will be an electric vehicle (EV).
Whether driven by consumer interest in efficiency, comfort, and lower costs, or by a desire to move away from fossil fuels, we will continue to see sustained electrification momentum in the years ahead. Along with it, growing electric demand will require a different approach to managing not just the new load, but also the grid itself. It will require new and better ways to engage consumers through utility demand flexibility programs, like demand response (DR) and virtual power plants (VPPs), so that the growing volume of distributed energy resources (DERs) can be integrated, managed, and monetized in grid beneficial ways. The key to harnessing this momentum will be not only bringing customers along for the journey but also ensuring we have the infrastructure, policies, and technologies in place to support an increasingly electrified future.
How the tables have turned: why utilities should pay their customers for power
With growing consumer DER adoption comes growing opportunities for customers to derive value from these devices in the form of energy and bill savings. What’s more, consumers can use these devices to generate and store their own electricity and make informed financial decisions about what to do with excess capacity. Traditional static seasonal performance incentives, such as annual demand response program participation payments, may no longer be sufficient to encourage customers to enroll their DERs in programs that benefit the grid. Instead, sophisticated consumers are likely to demand more dynamic, real-time and value-based incentives that accurately reflect their contributions. To adapt, utilities and regulators will need to rethink incentives structures to adopt more flexible, consumer-centric approaches to maintaining (and growing) customer participation that will ultimately strengthen grid reliability, stability, and efficiency.
Batteries to lead the charge in grid flexibility
With their ability to support real-time grid needs, batteries are one of the most flexible grid resources. And they’re on the rise. Vehicle-to-grid (V2G) capabilities, which enable utilities to leverage electric vehicles (EVs) as a flexible, distributed power source, expanded in 2024. Stationary battery storage will see the same momentum this year, serving as a critical part of the energy mix to enhance grid stability. Grid batteries— large-scale storage systems within the stationary battery category— are decreasing in cost, increasing in quality. In 2024, they were the the second-largest and fastest-growing source of clean power capacity in the U.S., adding 13 GW of capacity, nearly double what was added in 2023.
Batteries are also experiencing growth in the residential market, as consumers adopt them for back-up power, to take advantage of excess solar production, and to save money on time-of-use rates. This rapidly growing device class will enable utilities to make significant progress in stabilizing the grid during peak demand, enhancing grid reliability with an added layer of flexible energy storage.
Getting creative with AI-fueled load growth
AI is here to stay along with exponential growth in data centers to support AI’s computational power, storage and networking requirements. U.S. electricity demand from data centers is projected to grow by 67 GW over the next five years. The surge in demand is even more pronounced in data center hubs like Virginia and Texas, where five-year electric load has surged nearly fivefold in just two years, reaching a staggering 128 GW. The grid isn’t built to meet this new demand and capital investments in transmission and distribution infrastructure, which can take decades to complete, can’t keep up.
Grid operators and utilities must explore new strategies to enable grid connections and expand capacity. Innovative approaches such as siting on-site DERS, including storage to provide reliable supply and participating in demand response and virtual power plant (VPP) programs that reduce peaks and congestion become more important as they are quicker to come online.
VPPs go mainstream
Since their inception, utilities have had one overarching mandate: to deliver affordable, reliable electricity to customers. But it’s becoming more and more challenging to deliver— the Department of Energy estimates that the grid needs 200 GW of additional peak resources by 2030. The historical model of investing in utility-owned generation, transmission and distribution infrastructure just won’t cut it.
A natural evolution of utility DR, VPPs combine multiple distributed energy resource device classes and customer segments into a cohesive portfolio that is operated much like a conventional supply resource. In 2025, we will see utilities, regulators, and the clean energy ecosystem at large rally together to accelerate VPP deployment to unlock flexibility from multi-asset DERs, turning growing energy load into firm, clean capacity for the grid.
In 2025, we demand (stack)!
As an industry, we’ve successfully deployed demand-side management programs for decades, but today’s electrification surge, and the resulting grid impacts, demand a new approach. On their own, energy efficiency (EE), DR, and time-varying rates (TVR) programs have proven their worth— delivering 270 TWh energy savings and 25 GW of capacity in 2023. But operating these programs independently forces customers into binary program participation decisions and leaves significant value on the table.
Enter the Demand Stack. By reimagining demand-side management resources as components of an integrated “Demand Stack”, utilities will unlock their full grid flexibility potential. Acting as a cohesive, coordinated portfolio, the Demand Stack will improve the customer experience by meeting customers with personalized participation offers while enhancing grid flexibility and resilience by delivering the best fit resource to meet distinct demand patterns at every time of the day, day of the week, or season of the year.
Consumers take the wheel: driving action amid climate challenges
As 2025 marks a pivotal year— 25 years away from the widely-set 2050 Net Zero goals— the world is not on track to meet these targets. The UN Emissions Gap Report forecasts emissions to be 10-13% higher by 2030 than what is needed to reach net-zero by 2050. Recent climate disasters, such as the California wildfires and Hurricane Helene, which caused flash flooding, power outages, and numerous fatalities, have highlighted the growing impact of climate change on people’s lives. As a result, consumers are becoming more aware of the issue and taking action into their own hands. A 2024 Bain & Co. study shows that roughly 60% of consumers have become more concerned about climate change in the past two years. Driven by this growing worry and perhaps a desire for sustainability, consumers are embracing new, electrified technology. For instance, according to a Solar Energy Industries Association analysis, 7.6 gigawatts (GW) of community solar has been installed in the U.S. through Q3 2024. Energy technology is becoming more accessible, helping individuals contribute to sustainability goals despite the slowing pace of government action.
