Side-by-Side Comparison
| Program | Upfront Cost | Typical Annual Value | What You Give Up |
|---|---|---|---|
| Demand Response (AC/thermostat) | $0 | $25-$160/yr | A few degrees warmer during a handful of summer afternoons |
| Demand Response (battery/EV enrolled) | $0 beyond hardware already owned | $200-$575/yr | Utility can draw on your battery/charger during events |
| Time-of-Use rate | $0 to switch | $200-$400/yr if you shift usage; can cost more if you can't | Requires active effort to shift laundry, dishwasher, EV charging to off-peak hours |
| Solar + battery | $15,000-$35,000+ before incentives | $500-$2,000+/yr | Large upfront investment, 7-15 year payback |
The clearest pattern: cost to start and annual payoff move together. Demand response requires nothing and pays the least. Solar+battery requires the most and pays the most, assuming you stay in the home long enough to reach payback (see our solar panel ROI calculator and battery storage calculator for your specific numbers). Time-of-use sits in between — it's free to switch to, but the payoff depends entirely on your ability to actually move usage to off-peak hours, and can backfire if your heaviest usage happens to fall during peak windows and you can't change that.
Demand Response: The No-Cost Starting Point
Demand response is the only option on this list that requires no purchase and no rate change — you keep your existing plan and simply opt your central AC or smart thermostat into a program that briefly cycles it during a small number of peak summer events. See our full demand response programs guide and savings estimator for realistic payout ranges. It's the right starting point for nearly every homeowner regardless of what else you decide to do, simply because there's no downside beyond a few degrees of comfort during specific events.
Time-of-Use: Free to Switch, But Requires Behavior Change
Time-of-use (TOU) rates charge more during peak hours (typically 4-9pm on weekdays) and less overnight and on weekends. Unlike demand response, TOU isn't a program you enroll extra devices in — it's a different way your entire bill is calculated. The savings potential is real for households that can shift laundry, dishwashing, and EV charging to off-peak hours, but TOU is rate-neutral or even costly for households that can't change their usage patterns (for example, families who are home and running AC heavily during peak afternoon hours with no flexibility). Check your utility's specific TOU rate structure before switching — some utilities require an opt-in, others use it as the default rate today.
Solar+Battery: The Biggest Investment, The Biggest Payoff
Solar panels reduce the grid electricity you buy at any rate structure, and a battery lets you store that solar power to use during expensive peak hours instead of selling it back at a lower rate — effectively doing your own version of time-of-use arbitrage without needing a special plan. A battery-equipped home can also often enroll in a separate, higher-paying demand response program (see the comparison table above), stacking benefits on top of the base solar+battery savings. The tradeoff is the largest upfront cost by far, and the federal 30% tax credit for residential solar and battery purchases expired December 31, 2025 — see our renewable energy subsidies guide for what incentives remain at the state level.
Can You Combine All Three?
Yes, and doing so is increasingly common. A household on a time-of-use rate, with solar panels and a battery, that also enrolls its central AC or thermostat in demand response is stacking every available layer of grid-interaction value: TOU rewards shifting usage, solar+battery reduces and reshapes what you buy from the grid at all, and demand response adds a small additional annual credit for allowing brief AC/thermostat adjustments during peak events. None of these programs are mutually exclusive, and enrolling in one doesn't disqualify you from the others.