If we are trying to make the energy system smart, shouldn't the power companies be the ones trying to add smarts to the system? (e.g. better energy storage for peak usage, etc)
This is going to become more important as electric cars become mainstream—without some incentive for consumers to delay charging their vehicles during extreme peaks, we're going to be paying for some fairly hefty upgrades to keep electric grids stable.
Focusing on demand saves everyone money, because it means we can do more with existing infrastructure. In my case, if I'm willing to react to price spikes, I can reduce my annual energy cost by literally hundreds of dollars. For me, it just means occasionally delaying use of the dishwasher or dryer by an hour or so. And by occasionally I mean a handful of times every year.
It's far less onerous than the regular peak/off peak pricing I've dealt with in prior decades.
It makes sense to target both the supply and demand sides of energy consumption.