Negawatt power is a theoretical unit of power representing an amount of electrical power (measured in watts) saved. The energy saved is a direct result of energy conservation or increased energy efficiency. A Negawatt market can be thought of as a secondary market, in which electricity is allocated from one consumer to another consumer within the energy market. In this market, Negawatts could be treated as a commodity. Commodities have the ability to be traded, which would allow Negawatts to be incorporated in the international trading system. Roughly 10% of all U.S. electrical generating capacity is in place to meet the last 1% of demand and there is where the immediate efficiency opportunity exists.
On March 15, 2011, the Federal Energy Regulatory Commission (FERC), the agency that regulates the U.S. electrical grid, approved a rule establishing the approach to compensation for demand response resources (DER) intended to benefit customers and help improve the operation and competitiveness of organized wholesale energy markets. This means that Negawatts produced by reducing electrical use can demand the same market prices as real megawatts of generated electricity.