RESEARCH REPORT

In brief

In brief

  • Accenture explores the growing need for flexibility in the European electricity system and how consumers can unlock new sources of flexibility.
  • The greater need for flexibility creates a variety of new opportunities for energy providers.
  • Crafting flexibility business models requires understanding consumer values and preferences.
  • Strategic moves are needed to embrace the flexibility opportunity.


Significant shifts are under way in how electricity is produced and consumed in Europe. On the demand side, adoption of electric vehicles (EVs) and the switch to electricity for heating and cooling of residential and commercial buildings are gaining momentum. On the supply side, wind and solar power are accounting for a growing share of electricity generated in Europe. The net impact of these shifts will be higher demand peaks, but of shorter duration. The industry is being challenged to find new ways to match supply and demand.

Flexibility is the ability to manage variability and volatility to balance supply and demand, within constraints of infrastructure. This Accenture report quantifies the growing need for flexibility in the European electricity system and discusses how new sources of flexibility can be unlocked from consumers to contribute to meeting this need.

10%

Percentage of the time situations of oversupply could occur in 2030.

30%

Percentage of EV sales in the EU projected to grow annually between 2020 and 2030.

Current flexibility sources can only partly fill the emerging gaps, so unlocking additional sources is essential. This is an opportunity for energy providers and new players to create value from new flexibility solutions in power markets.

Energy consumers hold substantial potential to provide additional flexibility at scale through demand-response programs. The potential to source flexibility from residential and commercial demand response will grow steadily over the next decade with wider adoption of electric heating systems, EVs and smart appliances that can be controlled remotely.

Flex and balances: Unlocking value from demand-side flexibility in the European power system

RELATED: Energy consumers to help flex the European power system

Success in demand flexibility services starts with understanding the energy consumer. This requires deep understanding of needs, preferences and obstacles to participation of various types of consumers to be able to develop adequate flexibility value propositions.

To create compelling propositions for energy consumers, it is critical to understand the differences among the consumer groups.

Service providers must carefully decide which business models are best suited to their situation and build the necessary capabilities. Players in the ecosystem will need to consider their own strengths as well as the benefits of partnerships, recognize the physical limitations of infrastructure when delivering digital flexibility services and engage in an open and constructive dialogue with stakeholders to help define a supportive regulatory environment.

Successful propositions for demand flexibility require very different capabilities than needed for traditional energy supply business. We have identified six capabilities for consumer-centric, digitally enabled business models.

  1. Adopt human-centered design and a design-oriented culture to understand consumer journeys and overcome behavioral challenges to joining flexible electricity schemes.
  2. Invest in advanced analytics capabilities to gain a deep understanding of consumer usage patterns, determine the most effective ways to get consumers to modify energy usage, and accurately predict at what point consumers will react to price signals.
  3. Build in-depth consumer insights and knowledge of energy use and operating processes among C&I consumers.
  4. Differentiate through smart orchestration, managing a large portfolio of flexible assets and trading across markets.
  5. Bolster digital trust with strong data privacy and cybersecurity measures to protect business operations and give consumers confidence and peace of mind.
  6. Develop seamless installation and maintenance services, including set-up of communication and control capabilities at consumer premises.
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