Ahead of this week’s European Council discussion on energy affordability, President von der
Leyen, in her letter of 16 March, gave an important political endorsement to what smartEn
has long argued: Europe should accelerate low-carbon, home-grown energy, move forward
on system flexibility ‘including the demand side’, and ensure grid users have the right
incentives to make optimal use of existing infrastructure. As publicly recapped by smartEn,
that language creates a clear opening to place demand-side flexibility (DSF) and demand
response firmly in the debate on electricity prices.
Europe is right to defend the existing electricity market design, including marginal pricing,
while focusing on the real solutions to affordability. The European Council has now
reinforced that direction by linking the energy transition to structurally lower prices, while
also calling for measures to lower electricity prices, address short-term volatility and
preserve long-term investment signals.
At the same time, affordability will not be delivered by supply-side action alone. Europe also
needs to make much smarter use of the electricity system through demand-side flexibility.
DSF must be part of the affordability response. When consumers, buildings, vehicles and
industrial processes can adjust their electricity use in line with market conditions, they help
reduce peak prices, lower system costs, integrate more renewables and limit reliance on
expensive fossil-fuel-based generation.
