ACER to consult on removing the barriers to electricity demand response

The recent energy crisis showed how shifting and reducing electricity demand plays a crucial role when electricity supply is scarce or at risk. Furthermore, Europe’s ambition to be a carbon neutral continent by 2050 also means that more flexibility in the power system is needed. Electricity flexibility is the ability of energy resources and consumers to change or adjust their consumption or production in response to price signals, or to provide services to system operators. Increased flexibility in the EU power system presents key opportunities for consumers to be part of the clean energy transition. One important solution to achieve electricity flexibility is enhanced demand response.

What is electricity demand response?

Electricity demand response occurs when consumers (or aggregators on their behalf) adjust their consumption or production, in response to price signals.

What’s holding electricity consumers back? In all Member States, many barriers to demand response persist. These impact consumers, new entrants, and small players in electricity markets. Examples of these barriers are:

• the lack of a (or limited) legal framework to allow distributed energy resources (e.g. consumers, small wind generation, roof-top solar) access the electricity markets and provide services to electricity grids operators,
• the unavailability or lack of incentives to provide flexibility,
• restrictive requirements,
• limited competition in the retail market,
• public interventions to fix the retail electricity price.  

ACER reports annually on the barriers to demand response, as part of its Market Monitoring Report series. This year’s report, to be published in mid-December, identifies several key barriers to the participation of distributed energy resources (i.e., demand response, energy storage and distributed generation) in the wholesale electricity markets and system operation services in the EU-27 Member States plus Norway. Furthermore, it presents key findings and specific recommendations per country.

What are ACER’s next steps?

From 15 December 2023 to 26 January 2024, ACER will run a public consultation on the removal of barriers to electricity demand response. The objective is to gather stakeholders' inputs on prioritising strategies for overcoming these barriers.

On 19 January 2024, ACER will also organise a webinar to present its report on monitoring the barriers to electricity demand response and discuss its findings.

Based on the findings of the report and the inputs gathered from stakeholders, ACER will focus its 2024 market monitoring work on the most relevant barriers.