Next-generation energy management systems (EMS) have reached sufficient operational maturity for commercial buildings to participate directly in wholesale grid services, shifting their role from passive energy consumers to dispatchable grid assets. Accelerating policy mandates, widened utility program access, and early financial returns are driving adoption across North American and European markets in 2025 and 2026.
Background
The concept of the grid-interactive efficient building (GEB) has been in development for over a decade, but real-world deployments at scale have been limited by fragmented communication standards, cybersecurity concerns, and unclear financial frameworks for property managers. That barrier is eroding. Energy management is shifting from large industrial pioneers to a new generation of intelligent commercial and residential buildings that function as dynamic grid resources, treating HVACR systems and EVs as assets capable of balancing supply and demand.
Buildings account for approximately 75% of total electricity demand and up to 80% of peak demand in the United States, making their flexible loads among the most consequential untapped grid resources. Utilities increasingly recognize flexible, efficient buildings as one of the lowest-cost energy resources, directing billions of dollars annually toward energy efficiency programs in smart buildings and communities.
Regulatory action is reinforcing market signals. California's demand response ecosystem - widely regarded as the most complex in the country - now requires automated demand response capability in new commercial construction, and regulators have mandated OpenADR 2.0-certified products for automated demand response participation.1A Survey of Commercial and Industrial Demand Response Flexibility with Energy Storage Systems and Renewable Energy Texas Senate Bill 6, signed into law in 2025, mandates the creation of a demand response program specifically for large loads, signaling continued policy investment in commercial building participation.2Optimizing commercial building participation in energy and ancillary service markets - ScienceDirect In the United Kingdom, PAS 1878 and PAS 1879, published in 2021, set requirements for energy smart appliances. PAS 1878 incorporates OpenADR as a mandatory criterion, while PAS 1879 addresses demand-side response operation.
Details
On the market infrastructure side, PJM Interconnection's demand response market has grown to nearly 8 GW under contract, according to industry reporting. Beginning with the 2027/2028 delivery year, following FERC approval in May 2025, PJM widened the availability window for demand response resources to 24 hours a day - a reform that increased the capacity value of DR resources and boosted DR megawatts clearing the capacity auction. RTO-wide capacity prices in the 2026/2027 Base Residual Auction reached the FERC-approved cap of $329.17/MW-day.
The financial case for property managers is becoming quantifiable. Through PJM's Emergency Load Response Program, businesses may earn between $98,000 and $170,000 per megawatt per year, depending on market outcomes, program rules, location, and performance. A facility with 2 MW of curtailable load could earn an estimated $200,000 to $340,000 annually. For large commercial and industrial energy users, capacity charges already account for 20% to 30% of the total electric supply bill, making load-shedding capability as much a cost-avoidance tool as a revenue source.
EMS platform vendors are moving to meet these requirements directly. Edo, a demand flexibility solutions provider, secured OpenADR 2.0b certification for its cloud-based platform, enabling utilities to optimize the dispatch of grid-interactive efficient buildings as dynamic grid assets and improve the responsiveness of virtual power plants (VPPs). Edo's AI-driven technology optimizes thousands of buildings and aggregates distributed energy resources for utility partners.
Interoperability between building automation systems and utility control infrastructure remains a central technical challenge. OpenADR (Open Automated Demand Response) provides a standardized protocol for utilities and grid operators to send signals - including price and event notifications - to buildings, and for building energy management systems (BEMS) to trigger automated load adjustments. Without reliable, standardized communication, dynamic interaction remains limited to manual or rudimentary responses. Industry standards such as OpenADR and CTA-2045 facilitate interoperability and drive innovation in smart appliances and EMS.
Beyond demand response, EMS-enabled buildings are beginning to participate in ancillary services markets. Battery energy storage systems and EVs equipped with vehicle-to-grid (V2G) technology can actively interact with the electric grid, dynamically adjusting consumption or supply - flexibility that enables participation in energy markets and the provision of ancillary services contributing to power system stability. Predictive analytics powered by AI and digital twins are also being deployed to forecast demand and quantify available building flexibility.
Cybersecurity has emerged as a prerequisite for utility acceptance of building-side control. As EMS platforms receive and act on real-time grid signals, the attack surface of building automation systems expands. Standardization bodies and federal programs - including those referenced in prior DOE Grid-Interactive Efficient Buildings pilots - have identified cybersecurity protocols and data-sharing governance as critical preconditions for wider deployment. See also our earlier coverage of Federal Grid-Interactive Buildings Pilots Accelerate Commercial Adoption for context on DOE's regulatory roadmap.
Outlook
Capacity auctions conducted in 2025 secured resources to meet the projected power needs of more than 67 million people across 13 states. Both the 2026/2027 and 2027/2028 delivery year auctions reflect a continuing trend of tightening supply and demand outpacing new generation. This supply constraint is expected to sustain high capacity pricing and strengthen financial incentives for commercial building DR participation. Regulatory standardization around metering accuracy, data privacy, and performance measurement - already advancing in California, Texas, and the UK - will likely define the terms under which the broader commercial real estate sector can access these markets at scale.
