We often come across news about electricity, the grid, and demand response. But how many of us really understand the basics? We sat down with our CEO, Madis Uuemaa, to help explain why electricity grids work the way they do, the critical role they play, and the complex challenges hidden underneath the surface.
Our society uses many types of grids to transport things: natural gas, water, wastewater, and, of course, electricity. We even transport energy sources like oil and gas via trucks and tankers.
But electricity is unique among energy sources. Unlike oil or gas, you can't store electricity efficiently on a large scale. That one key difference changes everything.
You can store gas in tanks, or oil in barrels, and use them later. But electricity? Once it's produced, it must be used immediately. That means the amount of electricity being generated has to match the amount being consumed at any given moment. And that's where the grid comes in. The grid doesn't store electricity; it's a vast transport system that moves it instantly from where it's generated to where it's needed.
Every time you flip a switch and turn on a light or a TV, or plug in your phone, you're consuming electricity. But here’s the fascinating part: somewhere in a power plant, at that very same moment, more electricity must be produced to meet your demand.
That is the fundamental challenge of electricity grids. Since electricity can't be stored in meaningful quantities, production and consumption must always be in balance. If they fall out of sync, the whole system can become unstable.
When talking about electricity grid, remember that this balance is managed through demand response and the whole Grid frequency is the outcome of that balancing. The more balanced the system, more closer to 50hertz frequency is in Europe. If there's too much electricity being produced, the frequency rises. Too little, and it drops. In both cases, if the imbalance is large enough or lasts too long, the grid can collapse, causing blackouts. This is essentially what happened in Spain in April 2025.
All devices and infrastructure connected to the grid are built to operate at that stable frequency. That’s why the electricity grid is both incredibly fascinating and immensely complex. As Madis puts it, building and maintaining a stable grid at today’s scale is one of the biggest engineering challenges of our time.
As if the challenge wasn’t already complicated enough, humanity decided to take it one step further: we started integrating renewable energy sources like solar and wind into the grid.
The issue with renewables is that we can't control when they produce electricity. The sun shines when it shines. The wind blows when it blows. So in addition to tracking electricity consumption in real time, grid operators now also have to account for unpredictable electricity production.
"Renewables are messing up our real-time balancing act," Madis says with a smile.
This means grid operators now have to constantly monitor both sides of the equation: how much electricity people want to use and how much is being generated by sources we can’t directly control.
The balancing act now requires adjustments every second, every minute. It’s a dynamic, ever-changing equation.
Electric utility companies are continuously working to maintain this delicate balance. They invest in systems and strategies to respond in real-time.
One major approach is to pay electricity producers to be flexible—to ramp up or down production quickly. Another is to pay consumers who can reduce or increase their usage when needed. These flexible resources are vital.
For example, if there’s too much electricity being generated and not enough consumption, utilities might either reduce production or find ways to quickly increase consumption. If there's too little electricity, the reverse is done: increase production (often via fossil fuels) or reduce consumption.
"We often take it for granted that lights turn on and phones charge instantly. But there’s an invisible dance of technology, innovation, and human effort working behind the scenes to keep the grid balanced every single second." Madis says.
The entire electricity grid relies on prediction. Grid operators forecast tomorrow's electricity consumption and estimate how much renewable electricity will be available. By comparing the two, they calculate how much additional electricity must be supplied by controllable sources, like traditional power plants.
This forecasting is done for every hour, minute, and second. The most affordable power plants are selected first to cover the gap. If demand exceeds the forecast or renewables fall short, adjustments are made in real time through intraday balancing markets.
In these secondary markets, operators buy or reduce generation as needed. Sometimes, they pay consumers to adjust their usage up or down, helping restore equilibrium. That, Madis explains, is how real-time balancing happens every day.
Balancing is not where the complications with the grid and electricity ends, we also need to transport the electricity from point A to point B. And there we meet new kinds of physical limits that we must take into account. There’s only so much electricity a grid can carry at any given time.
"It’s a bit like traffic," Madis says. "If you have narrow roads, only a few cars can pass at once. During rush hour, it clogs. Same with electricity. A limited grid can only handle so much."
Building wider “electric highways” is possible, but it comes with high costs. You wouldn’t build a 50-lane highway between two villages with five cars a day. Grid investments must be smart and proportional.
Sometimes the grid is underused—like at night—while at peak hours, it’s overwhelmed. This creates local bottlenecks, and solving it involves two options: build bigger infrastructure or optimize existing usage.
A practical solution is load shifting. By moving some consumption to off-peak hours, we reduce stress during peak times. Electric cars, for example, don’t need to charge at 6 p.m. if they can wait until midnight.
"There are a lot of companies developing technologies to do it in a smart way and this is something we need to scale up fast," Madis emphasizes. "That way we avoid overspending on unnecessary infrastructure."
As mentioned, much of today’s grid balancing still relies on fossil fuel-based power plants. But there's a better, smarter way: using flexible assets.
Madis explains that the grid already contains countless flexible assets we could use—chief among them, direct electric heating systems. These include radiators and floor heaters, installed in homes and buildings across the world.
"There are about 400 million of these globally," he says. "They’re fast, flexible, and already in place."
Why are they ideal? Because they can respond in under a second and have enough thermal capacity to maintain comfort even if they're switched off for a few minutes. Unlike TVs or computers, turning heaters on and off won’t disturb anyone.
"If tens of thousands of heaters in a region switch on or off together for five minutes, the effect is huge," Madis says. "That’s exactly why we built Themo."
Themo was founded to help the world move away from fossil fuels by optimizing energy consumption. We want to use these smart, distributed assets—like electrical heaters—to achieve this.
Today, every Themo Smart Thermostat connected to our service has capability to grid balancing as a built in. In Finland, over 2,000 electric bathroom floor heaters are already helping balance the grid daily.
"We're trading on the energy market for 11 hours a day," Madis says. "Our heaters have been activated multiple times to help stabilize frequency in the Finnish grid. That’s real impact."
Themo now manages nearly 40,000 heating systems in Finland, Norway and the Baltics, totalling over 15 megawatts of flexible power. The goal? In 5–10 years, 90% of Themo thermostats worldwide will contribute to grid balancing.
"We started with 2,000 thermostats and one megawatt," Madis reflects. "We're still developing the technology, but the rollout is happening."
Themo’s first focus is on B2B clients—hotels, rental apartments, nursing homes, and others. Grid operators pay to use these assets, and we share the revenue with our clients. It’s a win-win.
"The best part? Our clients save even more on electricity bills," Madis smiles. "Themo already reduces bills for our B2B clients by 50% on average, and with demand response, savings increase further."
Using heaters controlled by Themo is also far cheaper for utilities than relying on fossil fuels. As demand response scales, balancing costs drop—and that benefit trickles down to everyone.
"If we can lower balancing costs, our electricity bills will either drop or grow more slowly," Madis notes. "That’s a win for every household."
The plan is clear: start with businesses, then expand to consumers.
"Personally," Madis adds, "I love the idea that my home heating system, which used to just cost me money, now earns money for me—automatically, without affecting my comfort."
Themo is already scaling up beyond floor heaters, testing smart controls for radiators and water boilers. The grid-balancing problem is global, and Themo wants to be part of the global solution.
Madis sometimes reflects on the journey that began a decade ago, when he started his doctoral studies in power engineering.
"Back then, it was already known in theory that small loads could help balance the grid. Everyone agreed it made sense. But no one was doing it at scale."
Fast forward ten years, and Themo is now controlling tens of thousands of small heaters.
"It’s no longer just a theoretical paper. It’s real," he says.
And the results are visible. If tens of thousands of heaters can help, why not millions? At scale, this could have a measurable impact on global CO2 emissions.
"It’s exciting to see an idea turn into reality. And it’s not just Themo. It's a global collaboration—advances in IoT, falling tech costs, and shared goals. Everyone's working toward a cleaner, more sustainable future. I'm proud Themo is doing its part," Madis concludes.