Demand side flexibility in Europe – some progress but more required

We are not yet where we need to be to fully exploit the benefits of demand side flexibility, smartEn reports in its 2021 Market Monitor.

The new annual update reviews 30 European markets to find that participation of demand side flexibility is developing in the region but significant progress is still required.

Moreover, participation is dominated by industrial and commercial loads with residential and local flexibility still nascent.

The report finds that some countries have open and accessible markets, but the majority still need significant improvement to meet the obligations set out in the Clean Energy Package.

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Another finding is that the five largest markets – Spain, France, Great Britain, Germany and Italy – account for around 60% of the total value of flexibility.

Among these, Italy and Spain have open markets but limited participation while Germany has additional regulatory barriers. Nevertheless, the German market and those in France and Great Britain are likely to grow further due to the countries’ high renewables targets.

Among emerging flexibility markets, Greece and Poland are highlighted as countries to watch as their market open up, while Romania is another prominent emerging market. Others opening are Ireland, Slovenia and Switzerland.

“Developments in many countries are being driven by the Clean Energy Package, but implementation is behind target, frequently inconsistent and sometimes reflects the dominant market position of existing participants,” Michael Villa, Executive Director of smartEn, comments in the foreword.

“If we are to achieve the 2030 targets set out in the EU’s Fit for 55 package and the climate neutrality goal cost-effectively, a much bigger role for flexibility, whether from electric vehicles, the electrification of heat, batteries or commercial and industrial buildings will be required.”

The report, prepared together with Delta-EE, is based on interviews with industry players across the sector and market and other data.

Other highlights include that local flexibility is still an emerging space, with pilots and trials ongoing even in the most advanced countries.

Great Britain and the Netherlands are found to be the only markets with commercial distribution system flexibility, while a further eleven have trials, including large scale trials in the Nordics, France, Germany and Sweden.