INTRODUCTION The energy sector needs to experience a deep transformation worldwide and to achieve full decarbonisation. This is one of the main outcomes of the Paris Agreement, adopted in December 2015, in which parties agreed to take the appropriate measures to limit the increase in
global temperature to less than 2 degrees Celsius (°C), with efforts to limit it to less than 1.5°C. This
implies a complete decarbonisation of the energy sector. To achieve this, renewable energy has been identified as one of the key solutions. To meet the goals of the Paris Agreement, the share of renewable energy in global annual electricity generation will need to increase from 25% today to 86% in 2050 (IRENA, 2019a). From this 86%, around 70% will come from variable renewable energy (VRE) sources accounting for 60% of global annual electricity generation (IRENA, 2019a). Decarbonisation, however, comes with some challenges that must be overcome to achieve these sustainability goals. First, a high penetration of VRE sources, which are characterised by variability and uncertainty, poses a challenge to the power sector across different time scales, from the short to the long term. An example widely used in the literature is the “duck curve” that first appeared in California. The duck curve occurs in power systems with a high penetration of solar photovoltaics (PV), which results in very high net load ramping requirements given that the sun only shines during the day and not at night (CAISO, 2016). An example of the duck curve in the California Independent System Operator (CAISO) system is shown in Figure 1.

The second challenge is increasing electrification of end-use sectors, namely buildings, industry and transport. Electrification of end-use sectors is seen as a key solution to decarbonisation given the efficiency gain achieved by electrifying these sectors. Electrification, according to the REmap decarbonisation scenario of the International Renewable Energy Agency (IRENA), is expected
to increase the share of electricity in final energy consumption for all energy applications from 20%
today to 49% in 2050 (IRENA, 2019a).


Demand-side flexibility can be provided only by a set of technologies that, given their characteristics,
are suitable to be controllable and can be found in the industrial, commercial and residential sectors. In this analytical brief five solutions, each including different technologies, are identified. These are: power-to-heat, power-to-hydrogen, battery electric vehicles, domestic appliances and industrial demand response. This section provides an overview of each solution and maps its competitiveness or suitability in each sector (see Figure 4).


Based on mapping technologies by end-use sector and reviewing the current status of demand-side
flexibility, six real applications were selected. These real applications use one or more technologies from those presented in Section 2 and are applicable to one or more end-use sector (industrial, commercial and/or residential). Selected applications of demand-side flexibility will have an impact across different time scales and are characterised by different maturity levels. Figure 7 shows six
examples of applications, classified by time scale and maturity. Demand-side flexibility can impact all time frames from the very short term (e.g., ERCOT’s industrial demand response that can respond in subseconds) to the long term (e.g., storing hydrogen for seasonal demand flexibility in the monthly time frame). With regard to maturity, while some applications are still being tested (e.g., smart charging of EVs or hydrogen for seasonal demand flexibility) others like electric water heaters or industrial demand response have been used for a long time. In the sub-sections that follow, these real applications of demand-side flexibility, shown in Figure 7, are discussed in more detail. Note that electrolysers providing reserves and hydrogen for seasonal demand flexibility are both considered as a single case representing demand-side flexibility based on hydrogen.

Industrial demand response providing reserves ERCOT has allowed the participation of demand
in the ancillary services market since 2002. That year electricity markets in Texas were opened to
competition and large industrial customers were encouraged to participate in the ancillary services
market. ERCOT allowed up to 25% of load resources to participate in the responsive reserve service
(RRS).13 Since 2002 the maximum share for load participation in RRS has been increased several
times, to 50% in 2005 (VRE penetration was less than 2%) and 60% in 2018 (VRE penetration,
mostly wind, was around 19%). The RRS boosts VRE integration by helping to compensate for the
imbalances produced by these sources that would otherwise endanger system stability.

knowledge framework for transforming the power sector (IRENA, forthcoming-b) presents Denmark
as a major case study and uses real data from western Denmark to show how electric boilers react to price signals and provide demandside flexibility. Figure 14 shows that when wind penetration is high and market prices are low, electric boilers are almost at full capacity; however, when wind penetration decreases by the end of the day, market prices increase and electric boilers reduce their electricity consumption. In this case, heat would come from a CHP plant or from a thermal storage in which heat was stored when electricity prices were low.

Demand-side flexibility using hydrogen production (seasonal and short term)
Hydrogen is an energy carrier that could help decarbonise those energy sectors that would be otherwise difficult to decarbonise through electrification (IRENA, 2018b). Hydrogen could help decarbonise industry, buildings (through injection into the gas grid) and transport. Additionally, hydrogen can be produced from excess VRE generation and can be stored in existing natural gas networks or in specific hydrogen storage facilities, thus providing seasonal demand flexibility. Currently, no large-scale hydrogen projects are in operation; however, some feasibility studies and pilot projects such as H21 Leeds City Gate and H21 North of England have been initiated. The H21 Leeds City Gate project aims to determine the technical and economic feasibility of converting the natural gas network in Leeds to 100% hydrogen (Northern Gas Networks, 2017). The report concludes that current gas networks have adequate capacity for conversion, they can convert incrementally with minimal disruption to customers, and minimal new infrastructure will be required. The project will also include hydrogen storage that will enable inter-seasonal demand flexibility, which is difficult for sectors where direct electrification is considered (for example, the heat sector).


Note that this is only a toolbox of innovations that could be useful to guide policy makers in the implementation of solutions for a renewablepowered future (in this case, to enable demandside flexibility). However, identifying which would be the optimal pathway is a more complex topic that IRENA addressed in its Power sector transformation knowledge framework (IRENA, forthcoming-b), which maps existing measures in front-runner countries that could be replicated in others experiencing challenges to achieve high shares of renewable energy in the system.

CONCLUSIONS This brief has reviewed the concept of demandside flexibility as a follow-up to IRENA’s recent Innovation Landscape study, as well as another IRENA report, Power system flexibility for the energy transition. As an asset in the ongoing transformation of power systems, demand-side flexibility fulfils several important aims: It facilitates VRE integration by reshaping load profiles to match VRE generation; It facilitates system-wide electrification by reducing peak load and managing seasonality; and It reduces production costs by shifting load from periods with high price of supply to periods with lower prices. Various solutions already exist to provide demandside flexibility, namely power-to-heat, power-tohydrogen, EVs, smart appliances and industrial demand response. These solutions can be competitive or applicable in different end-use sectors (for example, powerto-hydrogen is only competitive to provide demand-side flexibility in the industrial sector via electrolysers) or in all of them (for example, power-to-heat can provide demand-side flexibility with heat pumps and thermal storage in the industrial, commercial and residential sectors), and at different time frames. To facilitate the implementation process of these solutions and unlock the full potential of demand-side flexibility,
a set of innovations should be considered. These are described in more detail in IRENA (2019b). The potential for demand-side flexibility, expressed as the sum of flexible load at each hour of the year, is high and, according to IEA (2018), is equal to 4 000 TWh (457 GW average) today and is expected to grow to 7 000 TWh (800 GW average) by 2040 due to the electrification of transport and buildings (mostly electrification of heat). While there are already parts of the world in which demand-side flexibility is being leveraged, there is still a long way to reach the full potential of this flexibility source. In this brief, six different demand-side flexibility applications were described. Testing and research must continue to provide a more complete understanding of this aspect of the global energy transformation.\


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