Many consumers are willing to change their heaviest electricity use to save money but only a quarter of a million households have signed up to voluntary programs with their energy retailer.
In a research report released on Tuesday, energy expert Gabrielle Kuiper has called for the federal government to follow the US, the UK and Europe and bring in new standards for smart air-conditioning.
Heating and cooling accounts for about 40 per cent of energy use in an average Australian home.
Demand on the power grid is expected to rise with more extreme temperatures and as gas systems are replaced with electric appliances.
"We're moving to a world where the vast majority of supply comes from variable renewables and so, as we get weather-dependent on the electricity supply, we need greater flexibility with our demand," Dr Kuiper told AAP.
She said energy use needed to "flex" more to meet available supply, rewarding households for switching off appliances - whether manually or automated - when prices spiked.
"But it requires a major change in the government mindset because they're used to regulating for energy efficiency and this is expanding that to include flexibility as well," Dr Kuiper said.
She called these potential savings the "low-hanging electrons" because they did not require major or expensive changes.
For example, many existing air-con units could be managed remotely by adding a relatively inexpensive smart thermostat, she said.
While energy companies could take advantage of big fluctuations in prices, she said most households could not move their energy use and gain a reward in the same way.
Dr Kuiper found AGL and Origin offered "demand response" options for households with smart meters, while 30,000 Amber Electric customers were on plans that encouraged them to turn appliances on or off as prices fluctuated.
Making it so dynamic might be new but the concept of matching demand and supply was not, she said, with ripple control of hot water introduced more than 70 years ago to manage peak demand on coal-fired plants.
"It is far cheaper to flex household appliances than a coal-fired power station," Dr Kuiper said.
As more appliances with flexibility entered the system, a bigger pool of resources would be available for companies to compete by making various offers to consumers.
"So consumers get more choice ... and, hopefully, a greater financial reward," she said.
"We need lots of storage in the system, lots of electric vehicles in the system but we need all the flexible appliance use - both household and business - that we can get as well."
