Image courtesy 123rf
To fully harness demand-side flexibility in easing surging power demand, energy players must prioritise user adoption, writes Antti Hämmäinen of Synergi.
DSF is no longer a futuristic concept. We are seeing a massive adoption wave of household electrified assets like electric vehicles, heat pumps, solar panels, and home batteries, which present enormous untapped flexibility for our energy systems. This is a present-day opportunity for energy companies and grid operators as energy demand becomes more difficult to control.
Yet, one major challenge when scaling DSF remains under-discussed: user adoption. Research by ESIG reports that the average nationwide participation level for DSF in the US is 6.5%. Despite the technical progress, getting end-users to actively participate in flexibility schemes is one of the most complex barriers for suppliers experimenting with DSF solutions. The core issue often lies in how utilities communicate, promote, and onboard customers into these programmes.
DSF is at an inflection point
Europe’s 2024 Market Monitor by SmartEn and LCP Delta, covering 30 markets, highlights that DSF is at a critical inflection point, mentioning growing grid volatility and the urgent need to scale flexible demand to enable a smoother clean energy transition.
However, demand-side flexibility (DSF) needs vary widely. In the US, where energy companies are vertically integrated (handling both supply and distribution), the DSF market is growing rapidly. Current challenges include peak load reduction and better grid congestion management.
In contrast, across much of Europe, where energy markets are liberalised and energy suppliers and distribution operators function independently—companies are individually addressing these challenges. For instance, the UK’s National Grid aims to increase flexible demand fivefold by 2030 to meet clean energy targets, while countries like Spain are racing to pilot flexibility projects that make their electricity systems more adaptable to evolving needs.
But making demand-side flexibility (DSF) programmes truly scalable remains a challenge for most players. How can these initiatives gain traction when needs are diverse and adoption is often slow? A few proven strategies to lower barrier of entry (for energy players and consumers) include starting with small-scale pilots to demonstrate programme feasibility and enable user adoption testing and learning, trialing different incentive models, and offering opt-in and opt-out options to build user trust and participation.
Piloting DSF solutions to prove programme feasibility
Large-scale pilots have been the avenue for energy suppliers to tap into demand-side flexibility.
Across Europe, numerous pilot deployments are underway. For example, Helen Electricity Network and Fingrid have opened tenders in the FinFlex market. In this initiative, Fingrid uses the national-level (400 kV) congestion management market with other methods to address grid congestion. Meanwhile, Helen Sähköverkko manages 110 kV bottlenecks in the Helsinki area through the same market, alongside other grid development solutions.
In the UK, DSF has been a hot topic in recent years. Both grid operators, such as National Grid, and energy suppliers, like Octopus Energy, have launched their own programmes. For example, Octopus Energy introduced its Agile tariff and ‘Saving Sessions‘, to incentivise households to shift their energy use to low cost and low grid congestion periods.
In the US, one recent flexibility pilot has been led by Vermont Electric Cooperative, where they will use electric cars for peak management and energy arbitrage to save millions on grid expansion on the next decade.
Using incentives to encourage participation
Households need a clear reason and motivation to participate in DSF programmes—most won’t do so out of goodwill. In countries where dynamic tariffs are more common, such as in the Nordics, households have an implicit incentive to use energy smartly, as they benefit financially.
However, in many countries with modern energy grids, consumers still pay a flat rate for every kilowatt-hour they consume. In these cases, users need an explicit reason to join a programme and adopt sustainable energy habits. By introducing the right incentives, companies can influence behaviour.
Incentives come in many forms. Sonoma Clean Power, for example, published a reward programme that gives consumers $25 when enrolling, and then $2 for every kilowatt-hour saved during designated ‘energy alert’ periods. Quite generous —and goes to show that the topic is extremely important for utilities.
Another example is Grid Rewards by Tibber. Customers can participate with their own electric cars or home battery and earn rewards for helping stabilise the grid. By letting Tibber momentarily pause or start charging, users contribute to balancing energy demand.
Another important aspect of increasing DSF participation is consumer education. The concept is still very new to most households, and by improving user awareness and understanding, participation rates and programme success can increase significantly.
Opt-in or opt-out?
The question of whether DSF programmes should be built as opt-in or opt-out creates division—especially when considering market and country nuances.
Opt-in means that when a flexibility event happens, participation is optional. This model is popular in the US, where flexibility programmes typically notify users in advance and how they should reduce/adjust consumption.
Opt-out means that consumers are expected to participate in reducing or adjusting their energy consumption unless they explicitly choose not to take part. This model is more common in Europe and in the Nordics, where demand response and programme participation is built into smart features, such as electric car smart charging. In these cases, the adjustments happen in the background without the consumer noticing it.
A key difference between these two models is that, in the opt-out model, consumers gain savings continuously by using the service through automated demand-shifting, thus giving them a reason to stay in the programme. In this case, the sign up ‘incentives’ serve as an additional bonus on top of the savings already being accumulated. In the US, however, there are typically no dynamic tariffs or other pricing structures that could incentivise consumers to participate regularly.
Selecting the best approach depends on the market and pricing dynamics. However, it’s imperative that operators understand the differences between these models to ensure sufficient participation and flexibility when it’s truly needed.
DSF services must be accessible to all electrified households.
What Europe requires are energy players eager to make households active participants in energy flexibility, with conviction to bet on this space and help shape a more sustainable and reliable energy system for all.
About the author
Antti Hämmäinen is the CEO & co-founder of Synergi. A seasoned expert in utility companies, energy markets, and regulatory environments, Hämmäinen has a deep understanding of DSOs and TSOs. Hämmäinen holds a Master’s degree in Finance from Aalto University and is also part of World Energy Council’s Future Energy Leaders programme.
