25/02/2025

smartEn and LCP Delta Report Urges Acceleration in Demand-Side Flexibility to Tackle Future Challenges

Brussels, 18 February 2025: smartEn in collaboration with LCP Delta has launched the 2024 Market Monitor for demand-side flexibility (DSF). This flagship publication provides a high-level summary of demand-side flexibility participation across 30 European markets, benchmarking their progress in enabling flexible demand in a market-based way.

This year’s edition expands in content and for the first time highlights the development in dynamic tariffs exposed to wholesale markets, and more generally speaking the role of implicit DSF in Europe, showcasing that DSF has the potential to enhance the affordability for consumers while increasing competitiveness in industries that rely on energy intensive processes. However, while flexibility is critical to balancing an increasingly electrified energy system, its use has not kept pace with the rapid changes in the generation mix. The report underlines that, despite some advancements, most European markets still face significant barriers to DSF participation.

Key findings include:

• With few exceptions, such as Poland, there has been little progress in improving DSF access to ancillary services. However, despite existing barriers, 2024 saw a significant rise in residential assets engaging in ancillary services, particularly in Sweden, Great Britain, and France.
• Explicit access to wholesale markets is developing slowly, mostly due to a lack of a framework that enables the direct trading of demand in Day Ahead and Intraday markets.
• Residential consumers increasingly benefit from implicit flexibility, or the ability to save on their energy bill by adapting their demand based on price signals from wholesale markets.
• Limited growth in local flexibility markets that don’t go beyond pilot projects and are very localised, due to the lack of incentives for DSOs to procure non-wire alternatives to cover their flexibility needs.

Commenting on the outcome of the report, Michael Villa, smartEn Executive Director stated: ‘’After decades of stagnation, electricity demand rose 1.2% (31TWh) between 2023 and 2024. Electrification must continue, but in a smart, flexible way—otherwise, decarbonisation will come at the cost of affordability and competitiveness. The 2024 Market Monitor for Demand-Side Flexibility warns that a smart, flexible electrification of demand is not happening, at the speed needed to tackle the challenges ahead.’’

Jon Ferris, Head of Flexibility and Storage at LCP Delta added: “Today, the need for electricity system flexibility is more urgent than ever. While demand for flexibility grows with the electrification of our economy, progress has been too slow. To keep up, we need independent access for trading flexibility in wholesale markets, with better coordination between retailers and aggregators.”

With European institutions prioritising competitiveness, affordability, security, and innovation, now is the time to establish the right market and regulatory conditions for DSF to scale. The 2024 Market Monitor provides crucial insights to support policymakers, industry stakeholders, and DSF providers in shaping a more flexible, efficient, and sustainable energy future.

The full report is available for download.

The smartEn/LCP Delta 2024 Market Monitor on demand-side flexibility will be presented live at The Distributed Energy Show on 12 March 2025, 14:30 – 16:00! Don’t miss it!