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 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...

> 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.

“If you have a certain sort of mind, you might think ‘no, people respond to incentives; if the grid paid for every efficient lightbulb, we’d save more electricity.’ If you have a certain, not unrelated, sort of mind, you might think ‘well, if nobody is getting paid for installing these lightbulbs, maybe I should get the money.’”