Flexibility in the Energy Sector

Flexibility needs in European energy systems are projected to double by 2030, and triple by 2050. The case for understanding what it means, its challenges and how to reach it, has never been more critical. Prof. Chloé Le Coq, Dr. Anna Rita Bennato, Dr. Daniel Duma, and Prof. Ewa Lazarczyk respond to this call in CERRE’s latest Report, “Flexibility in the Energy Sector”. 

The case studies from Denmark, Germany, the United States (California), Australia, Sweden (and the Nordic region), Italy, Canada (Quebec), Spain, and the United Kingdom connect theoretical concepts with real-world examples. It also evaluates the EU regulatory framework and concludes that it is adequate to support flexibility-enhancing behaviour, technologies and market functions, but suffers from very unequal implementation in the EU member states. The research adopts a whole-system perspective that encompasses all energy carriers, including gases, offering a holistic view of the challenges involved in enabling flexibility across the energy system. 

The report outlines five enablers of flexibility: 

• energy grids, emphasising cooperation between TSOs and DSOs; 

• aggregators who manage distributed resources through various contract types; 

• local flexibility markets that facilitate the participation of distributed energy resources;  

• collective self-consumption through prosumer networks and energy communities; 

• and digitalisation, which enhances system optimisation across multiple timeframes. 

Finally, the authors identify six policy recommendations: 

1. Ensure an integrated, whole-system approach to flexibility planning across energy carriers: Coordinate electricity, gas, and heat sectors to enhance system flexibility, building on existing EU strategies with a stronger focus on integration. 
2. Enable effective price signals at different levels: Use dynamic pricing and adaptive tariffs to drive flexible energy use, ensuring fair compensation for flexibility services across all markets. 
3. Accelerate demand response, aggregation, and DER participation: Remove barriers for small-scale resources and promote aggregation to fully leverage demand response in flexibility markets. 
4. Boost digitalisation at key nodes for flexibility: Expand smart grids and data systems to enable real-time supply-demand adjustments, ensuring scalability and consumer participation. 
5. Keep options open for new technologies: Support pilots and regulatory sandboxes to test emerging flexibility solutions, avoiding early technology lock-ins. 
6. Adaptive regulation for hydrogen integration: Promote hydrogen’s role in flexibility through adaptive policies, continuous R&D, and pilot projects to guide future strategies.