The benefits of demand response are clear, however regulatory barriers stretch across EU member states. Is the EU working on it?
Since 2000, the EU28 final energy intensity has decreased by 16% at an annual average rate of 2%/year, with a significant decrease for each sector. Energy Intensity is measured by the quantity of energy required per unit output or activity, so that using less energy to produce a product reduces the intensity. Besides, final energy consumption has decreased by 7.0% between 2006 and 2013 .
Yet, final consumption of electrical energy increased by 28.5% between 1990 and 2013. Peak demand had a steeper growth nearly at 2% per year in the early 2000s . The peak demand is expected to grow in hand with electricity consumption at about 1.8% per year for EU-27 by 2020, calling for additional demand response services from the market.
The global demand response market was valued at more than $8 billion (US) in 2015 and is expected to reach more than $50 billion by 2025, growing at a compound annual rate of 21.6% from 2014 to 2025. The European market faces the same challenges to keep up with the need for managing peak load and capacity, and for managing the growing shares of intermittent wind and solar power.
The value and necessity of demand response as a flexibility means has been widely recognised among stakeholders and policy makers in Europe. Regulatory barriers stretching across EU member states exist, but the Energy Efficiency Directive of the European Commission has asked member states to put a number of the conditions in place to facilitate demand response, and the EU is converging towards a regulated and commercially viable market.