Demand Side Response
Sources of Value and Potential Business Strategies
Demand Side Response (‘DSR’) will be a major feature of tomorrow’s electricity markets and could represent a €50 billion/year market by 2030 across the EU. Whilst attracting significant interest from existing players and new entrants, no business model has yet to emerge as a key winner.
The utility industry is at a critical juncture, as traditional business models are challenged through an ever increasing focus on customer engagement and the need to reduce demand. DSR is one key dimension of active consumer response in electricity markets, and raises technological, regulatory and strategic issues. Various analyses demonstrate a significant potential for DSR in European power markets – in the most mature DSR markets, such as PJM in the Eastern US, DSR represents up to 10% of capacity. But the development of this technical potential hinges on the development of a supportive regulatory framework and successful business models.
In this article, we answer the following questions: “What business models currently exist?”; “How do they make money?”; and ultimately, “Who is best positioned to capture the benefits from the growing DSR market?”