Each year, more than 20% of electricity generated in the United States is consumed for meeting the thermal demands (e.g., space cooling, space heating, and water heating) in residential and commercial buildings. Integrating thermal energy storage (TES) with building’s HVAC systems has the potential to reshape the electric load profile of the building and mitigate the mismatch between the renewable generation and the demand of buildings. A novel ground source heat pump (GSHP) system integrated with underground thermal energy storage (UTES) has been proposed to level the electric demand of buildings while still satisfying their thermal demands. This study assessed the potential impacts of the proposed system with a bottom-up approach. The impacts on the electricity demand in various electricity markets were quantified. The results show that, within the capacity of the existing electric grids, the maximum penetration rate of the proposed system in different wholesale markets could range from 51% to 100%. Overall, about 46 million single-family detached houses can be retrofitted into the proposed system without increasing the annual peak demand of the corresponding markets. By implementing the proposed system at its maximum penetration rate, the grid-level summer peak demand can be reduced by 9.1% to 18.2%. Meanwhile, at the grid level, the annual electricity consumption would change by −12% to 2%. The nationwide total electricity consumption would be reduced by 9%.