The energy savings were sold by HD twice - once to the customer (who pays a premium for less energy usage, and may also have claimed federal tax credits), and once more to America Efficient (who sold them to the state / grid operator non-profits).
It's an interesting kind of subsidy arbitrage - since businesses can benefit from subsidies that consumers cannot, it creates an incentive to carve out the subsidy-granting-essence from consumers sales and sell them on in aggregate.
The whole thing sounds like late-stage capitalist hogwash. This all seems very inconsequential except to make a bunch of rich people richer.
If you lower the energy demand on the grid then you lower the price that the grid needs to pay by a lot.
Grids tend to take in bids from power companies of Volume + Price and then pick enough Volume (at the lowest Price first) until they get to the expected Volume and then payout to those winning bidders the Price of the last needed Volume. If you can decrease the Volume then the total price paid by the grid goes down.
If sharing some of that energy savings with another entity it's still a win-win because you're overall paying less.
It's like hiring a tax account where they get paid 50% of whatever taxes they save you. It's a win-win until they start committing tax fraud.
> American Efficient then used that sales data to calculate the energy savings from the anticipated use of the lighting and appliances, entering those projected savings into “capacity auctions.”
> At capacity auctions, grid operators pay for the ability of traditional power suppliers and utilities— as well as energy-efficiency aggregators like American Efficient—to produce power when needed.
The home depot example shows it more succinctly. How does American Efficient sending a small check to home depot mean that they get to bid for having produced capacity?
If I squint I can almost imagine the goal of this setup. If you want people to use less power you could definitely promote energy efficient appliances and lighting via market forces.
But doing so at capacity auctions seems ridiculous. If your power company wants it then they should cut checks directly to the consumer as a discount/subsidy on energy efficient appliances.
The original source for this was Matt Levine over at Bloomberg. His take is also quite good: https://www.bloomberg.com/opinion/newsletters/2026-04-30/sel...
-Joseph Heller, Catch-22
edit: maybe my story is the same as the alfalfa one
And then, yes: If you can make more money by not using your big resistor than actually using it, then economically you would be better off not using it. If you can make money by not using it, then someone is willing to pay you because they get value out of it or they can avert some damage. If you threatened to use your capacitor without obvious use other than destabilizing the grid, that might just look a little too much like blackmail...
If you believe in markets, then someone coming up with the means to improve grid stability (here: by overall less consumption) should somehow be able to turn it into a profit. The issue here seems to be, that American Efficient didn't actually give any guarantees that they could reduce consumption. So it rather looks like whoever admitted them to the auction didn't do their due diligence. The whole market thing breaks down when there is actual fraud or when the identical thing gets sold more than once (actually, energy savings could probably be sold once for grid stability and once for reduced emissions - I'd say they're disjoint to first order, but might be connected indirectly).
That being said, there should be limits to markets.The whole market thing breaks down when there is actual fraud, when a party/faction has a disproportionate amount of power or when there are externalized costs that are not accounted for in the pricing.
https://archive.ph/2026.05.02-224747/https://www.bloomberg.c...
His take on this, crypto, all things Elon Musk, and the current 'predictions market' are funny and insightful.
