EURELECTRIC publishes proposals for a fair market design for demand response aggregation

Demand response (DR) – i.e. customers changing their electricity consumption in response to price signals or specific requests– will play an increasing role in future electricity markets, as recognised in the Commission’s recent Energy Union communication. It will empower customers by allowing them to benefit from being flexible: through greater choice, more control over their electricity consumption, as well as financial savings or rewards. A new EURELECTRIC paper published today sets out the principles needed to ensure that demand response, including “aggregated” demand response, can help customers reap these benefits.

While phasing out regulated retail prices and rolling out smart meters continue to be key prerequisites to advance demand response further, the report emphasises the need for a robust, transparent and fair market design for demand response aggregation. A clear definition of the roles and responsibilities of the different actors is crucial in order to provide a level playing field for all demand response providers. This will allow customers to make the most of their flexible consumption and protect them from undue costs.

EURELECTRIC Secretary General Hans ten Berge said: “Suppliers have long been key players in the field of demand-side flexibility, and EURELECTRIC believes that they are best positioned to offer the competitive, efficient and simple demand response services that customers deserve. New demand response actors are entering the European electricity markets, and we see that different models for demand side response aggregation exist. With this paper, EURELECTRIC sets out key principles to ensure fair competition – a system that makes demand response a win-win solution for customers and the electricity system.”

In particular, the paper recommends:

• Ensuring that demand response is market-based in order to avoid extra costs for the system, customers and other actors;
• Implementing adequate communication between all players, including information exchange with network operators;
• Ensuring an equitable system in which players bear the full costs of their actions in demand response. 

The full paper is available here.