Orchestrating the future of flexible demand in Europe

Pamela Largue (0:12)

What could Europe's demand-side flexibility landscape look like a decade from now? And how can we make sure we head towards a future where flexibility creates value for consumers while supporting a more efficient electricity system? In this episode of the Energy Transitions Podcast, I'm joined by Michael Villa, Executive Director of SmartEn, and Riley Behrens, Climate and Energy Flexibility Researcher at LCP Delta to answer these questions and explore the future of demand-side flexibility through the lens of a recently released report. The report, entitled Reflecting on the Future, Medium Term Evolutions Impacting the Development of Flexible Demand, unpacks three possible futures for Europe's flexible demand landscape, from fragmented, non-market-based approaches to a more coordinated scenario, in which functioning markets unlock greater value. The report paints a complex picture, but one that could have significant implications for policy makers, system operators, and businesses preparing for Europe's increasingly electrified future.

Michael and Riley argue that Europe needs to shape the right conditions now to achieve the best-case scenario. The message is clear, flexibility is essential, but how it is orchestrated will determine its value. I'm Pamela Largue, and this is the Energy Transitions Podcast.

Riley, Michael, thank you so much for joining me today. We're talking about LCP Delta's recently released report, looking at the future evolution of demand-side flexibility. Why is it that this report needed to be released now?

Michael Villa (2:00)

Thanks for your question, Pamela, and very nice to be here with you. Well, actually, we are evolving. The energy system in Europe is evolving towards an increase in electrification. There has been indeed a recent push from the European Commission to have a 46% electrification scenario or direction or push in 2040, so in a bit less than 15 years. So what does it mean if demand is going to be more electrified? And if this demand that is electrified is flexible, what will be the signals? How should the consumer behave in that scenario? How many mechanisms consumers will be subject to?

And what will be the contradiction? And what will be the orchestration to ensure that the consumers are activating their flexibility in a way that is supporting both the system and the consumers? This is the crucial question that we wanted to put ourselves, because at the moment, consumers, if they are lucky, they are subject to one single signal to be flexible. But in the future, where, indeed, consumers will be much more electrified and will be exposed to many more signals to steer their consumption in a flexible way, what will be the scenario in order to make that an efficient one?

Riley Behrens (3:33)

It's also, as you've said, Michael, it's new, right? It's something that the EU has been pushing towards, maybe for the last seven years or so.

But there's so much complexity, right? There's political will, there's legal complexities, there's infrastructural barriers.

And it can be really challenging to introduce, especially demand side flexibility into a system that wasn't necessarily designed to work that way. We really need it. But we also need to acknowledge that it might not all go our way. It's going to be really challenging. It is really challenging. You know, I don't want it to be a negative thing necessarily this challenge. But I think we have to acknowledge it in order to hopefully avoid it.

Michael Villa (4:21)

And maybe to complement also, I would say sorry, Pamela, but the very good starting point is that we have a very clear EU legislative framework that is going that direction. But the implementation, the actual translation in multiple business models in multiple markets is still not realized yet. So we are positioning ourselves in that kind of scenario where European legislation is actually implemented. And if it is implemented and it is transposed, what will be the different interaction between the business models? What will be the interlinkages between all the mechanisms and markets? Because at the moment, yes, European legislation is very good, but is having a silo approach. It's still not looking at all the interconnection. And our reflection paper is looking at that scenario and starting a reflection on whether eventually some modification of the EU framework are needed in order to avoid challenges or costs to be increasing.

Pamela Largue (5:32)

Well, this is what I was thinking because Riley, you mentioned that political will, which is obviously a key pillar to driving this forward. And as you say, Michael, too, there is the political will. We are seeing the legislation and the policy in place, but there's a certain element of, well, how do we practically make this happen? And while your report was rather complex, I won't lie to you for someone who's not an expert, it does seem as if you are trying to get down to, okay, how do we make this happen?