I think innovation at the consumption end is going to help a lot. On Technology Connections I saw an electric induction stove that could be powered from a regular socket. It had a battery that would trickle charge throughout the day and then use the batteries to power the induction cooktops, as well as a couple of plugs. If widely deployed and in other appliances, with a little smarts that could provide power leveling at the home level.
Another solution would be adding some intelligence to water heaters. Have a temperature control valve on the output where you set the temperature, and program the water heater get to 160-180°F when electricity is cheap. This would be a thermal battery that would easily level out demand for electricity for heating water.
Or you could do thermal storage by heating a house very warm/cold prior to a large cold snap/heat wave, and letting it coast down/up to a temperature instead of heating/cooling a lot during the cold/hot weather. He's got a video on this technique here