A new report from LCP Delta and smartEn has shown that while progress is being made in European demand side flexibility (DSF) markets, the pace of progress must speed up in order to cope with the challenges of the future.
The sixth edition of the Market Monitor for Demand-Side Flexibility, released today (19 February), examines 30 European markets and marks their progress in DSF market growth.
Great Britain ranks highly among the European nations examined, scoring on all six factors considered: accessibility of DSF in ancillary services, accessibility of DSF in Demand System Operator markets, accessibility of DSF in wholesale markets, accessibility of DSF in capacity markets, presence of residential implicit tariffs, and the potential for future development of DSF.
Britain was particularly praised for its rollout of the Quick Reserve and Balancing Reserve services, both of which were launched in 2024, alongside having a capacity market that is open to DSF, and also for leading Europe in the range of dynamically priced electricity tariffs it offers. Furthermore, Great Britain was also highlighted for having all six of its distribution system operators (DSOs) agree on a universal entry requirement for DSF assets, which, alongside a move towards day-ahead procurement for DSO markets, allows easier access to DSF.
Jon Ferris, head of flexibility at LCP Delta, commented: “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.”
Michael Villa, executive director at smartEn, added: “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.’’
Ofgem urged to consider ‘critical’ role of flexibility
This report comes less than a month after Elexon, which manages the balancing and settlement code in the UK, urged energy regulator Ofgem to pay more attention to the importance of flexibility in our modern grid. In its response to Ofgem’s consultation on the electricity distribution price control (ED3) framework, Elexon called for the regulator to better articulate the value of flexibility in the modern electricity network, noting that it “believes there is an opportunity for Ofgem to enhance the strategic messaging around […] the critical role of flexibility as emphasised in the government’s Clean Power 2030 action plan is equally recognised.”
