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Demand Response Market Snapshot: US vs. Europe

The past years have seen the demand response market grow worldwide – a trend that is expected to continue and accelerate. Global research firms expect the demand response market to grow to $9.7 billion by 2023, with the “enabling technologies” market projected to reach $475 million by 2020. In terms of capacity (GW), the forecasted DR market shows exponential predicted growth beyond 2020:

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NORTH AMERICA 

At the time of writing, the United States has the most developed DR market in the world. This dominance is due in part to a recent Supreme Court ruling that paved the way for players of all sizes to participate in wholesale electricity markets, which cover 60% of US power supply. 

Even though it has a higher rate of residential participation (around 90%), commercial and industrial customers make up the largest market share in terms of flexibility, incentives and savings. California is the most active state in US DR markets with 20% of the total Demand Response customers in the United States and contributing 20% of the total peak demand savings.

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 EUROPE

Though underdeveloped compared to the US market, Europe is on the cusp of a Demand Response breakthrough, partly thanks to R&D projects like RESPOND. In 2014, the total DR resource capacity in the EU stood at 2 GW, yet the European Commission’s winter package, Clean Energy for All Europeans, places the potential of activated demand response at 100GW. 

According to the Smart Energy Demand Coalition (SEDC), significant progress has been made in opening markets to demand-side resources. Currently, the most active DR participants within the EU are England and Switzerland, with expanding DR markets in France and Finland. 

According to a 2015 study by Sia Partners, the total DR potential in Europe amounts to 52.35 GW: 42% from residential applications, 31% from industry and 27% from the tertiary sector (HVAC and commercial refrigeration). 

The European countries that currently provide the most conducive framework for the further development of Demand Response have been identified as Switzerland, France, Belgium, Finland, Great Britain, and Ireland. Of these, only France and Switzerland have commercially active, agreements in place for independent aggregation, including standardised roles and responsibilities of market participants.