According to the Smart Energy Demand Coalition (SEDC), policy makers and energy stakeholders in Europe agree that demand response (DR) is critical to achieving reliable and sustainable grid networks at affordable prices.
SEDC says DR is now widely recognised by utility firms as a platform to enable security of energy supply, improve renewable energy integration, improve market competition and consumer empowerment.
The organisation says the importance of DR as a grid initiative/asset is shown by its inclusion in the European Energy Efficiency Directive and Network Codes in recent years.
Through DR, consumers are empowered to manage their energy consumption to reduce their energy bills and help in sustaining the reliability of their grid network during peak periods.
At the same time, DR programmes allow consumers to earn extra revenue by receiving financial incentives for reducing their energy consumption during peak periods and by also selling energy which they generate on-site, in the case programmes they participate in equip them with solar pvs and storage systems.
SEDC says there is need for Europe to maximise its existing portfolios of both explicit and implicit demand response as well as introduce new consumer flexibility programmes for the region to achieve a sustainable grid network.
SEDC issued a whitepaper analysing the rate at which the demand response market has grown in Europe. The paper highlights factors impacting the market growth.
According to the organisation, the information in the whitepaper was gathered through desk research and interviews with regulators, technology firms, energy retailers, aggregators and transmission and distribution operators.
The research findings show that there has been an increase in the drafting and implementation of policies on demand response programmes over the past decade.
For instance, there has been drafting and implementation of laws in countries such as Estonia, Spain and Italy where demand response previously did not exist.
“The European countries that currently provide the most conducive framework for the development of Demand Response are Switzerland, France, Belgium, Finland, Great Britain, and Ireland.”
European countries whose demand response markets had grown ahead of others continue to improve their policies on the sector.
For instance, Ireland is set to implement its ‘Integrated Single Electricity Market’ together with its DS3 programme to expand the country’s balancing demand response market.
The UK also continues to expand its market as it allowed third party aggregators to direct engagement with consumers and offer them ancillary services and capacity products.
Although the implementation of regulatory frameworks has positively impacted on the demand response market in Europe, SEDC says there is still need for the region to improve its regulatory frameworks impacting on the sector.in order to address issues such as consumer access and product requirements still hindering the growth of the sector.
Findings of the whitepaper highlight factors such as consumer access to demand response programmes and third-party demand response service providers is still negatively affecting the sector. and product requirements still hindering the growth of the sector. [New report finds consumer flexibility remains low in Europe].
Standards under adoption so far are hugely limiting an increase in participation of demand response products and services hence the need for regulatory interference in developing standards which allow the incorporation of a wide range of services and products into the region's demand response landscape.
The SEDC concludes that:
- The regulatory framework in Europe for Demand Response is progressing, but further regulatory improvements are needed.
- Significant progress has been made in opening balancing markets to demand-side resources.
- The wholesale market must be further opened to demand-side resources.
- Local System Services are not yet commercially tradeable in European countries.
The SEDC calls on the European Parliament, the Member States and Commission to promote the approval, specification and implementation of the overarching rules and detailed regulations necessary to create a viable market framework for Demand Response across Europe.