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Glossary · Energy industry & energy transition

Flexibility marketing

flexibility marketing flexibility Aggregator storage Demand response balancing energy

Flexibility marketing refers to the commercial use of the ability to change generation, consumption or storage over time. A plant, a consumer or a storage unit does not merely supply or absorb energy. What is offered is a controllable change relative to an expected profile. This change can be remunerated in various ways: on electricity markets, in balancing energy markets, in intraday trading, towards transmission or distribution system operators, via aggregators or through bilateral contracts.

The technical basis is flexibility. However, what is marketed is not the abstract property of being flexible. What is sold is a concretely measurable capacity at a specific point in time, with a defined duration, response time, availability and dispatch logic. Examples: A battery can provide power very quickly for a short time. A heat pump can shift its consumption within certain limits. An electrolyser can respond to electricity prices. An industrial company can relocate individual processes if production, quality and work procedures allow it. Flexibility marketing translates such technical possibilities into contracts, market bids, schedules, call-offs and settlements.

Which quantity is marketed?

Flexibility is usually described in terms of power, i.e. in kilowatts or megawatts. Anyone who can reduce 5 megawatts of load offers a change in power. The amount of energy shifted or provided as a result is measured in kilowatt hours or megawatt hours. The two quantities must be kept separate. An example: A battery storage system with 10 megawatts of power and 20 megawatt hours of capacity can, in calculation, deliver its full power for two hours. In practice it is somewhat less, because efficiency losses and state-of-charge limits come into play. For some markets, fast response is more valuable than duration. For others, what counts is the amount of energy available over several hours.

Besides power and energy quantity, other properties matter: activation time, minimum duration, ramp rate, technical minimum load, recharging needs, forecast quality and the frequency of possible call-offs. A cold store, an aluminium smelter, a battery storage system and a charging fleet can offer the same power. Even so, they are not equivalent sources of flexibility, because their constraints differ. For storage, the state of charge is the limit; for an industrial load, it is the production risk. For a building, a comfort range must be maintained; for electric vehicles, the mobility need.

The time resolution of the markets also plays a role. Since delivery day 1 October 2025, the European coupled day-ahead auction (SDAC) has traded in 15-minute intervals instead of hourly blocks, i.e. with 96 instead of 24 products per day. Ireland is excepted and remains at 30 minutes. This allows short-term ramps, for example in the morning and evening in photovoltaic generation, to be priced already on the previous day. Fast-responding flexibility is thus valued more finely.

Distinction from flexibility, direct marketing, balancing energy and demand response

Flexibility marketing is not identical to flexibility. Flexibility describes a technical or organisational capability. Flexibility marketing describes the process of making this capability economically usable. This includes metering, control, forecasting, market participation, contract design, settlement and responsibility for deviations.

There is also a difference from direct marketing. In the narrower sense, direct marketing means the marketing of electricity from generation plants, in Germany mainly from renewable plants, via a direct marketer or the exchange. Flexibility marketing can be part of such a strategy, for example when a biogas plant shifts its electricity production into expensive hours. But it can equally concern consumption facilities, storage or controllable charging points that generate nothing at all.

Balancing energy is an important but narrower use case. Here, capacity is held in reserve so that transmission system operators can offset short-term imbalances between generation and consumption and keep the frequency stable. Flexibility marketing goes beyond this. It also includes price arbitrage on the spot market, intraday optimisation, grid-serving control in distribution networks, portfolio optimisation and contractual flexibility products for suppliers or balance responsible parties.

Demand response refers to the adjustment of electricity demand to prices or call-offs. EU law speaks of demand response (Laststeuerung). This describes one part of flexibility marketing, but not the whole. Storage and flexible generation do not shift demand. However, they often appear in the same markets with similar products.

Why flexibility marketing is becoming more relevant

An electricity system with a high share of wind and photovoltaics has different balancing tasks from one that relies predominantly on dispatchable power plants. Generation follows the weather more closely. Consumption patterns, grid capacities and market rules must nevertheless be respected. The residual load, i.e. the electricity demand that remains after deducting feed-in from wind and sun, fluctuates more strongly. This creates periods with low or negative prices, phases of high scarcity and local grid congestion. The need for short-term adjustment grows.

Flexibility marketing makes such adjustments economically addressable. A battery storage system charges at low prices and discharges at higher ones. An industrial company shifts consumption from an expensive quarter-hour to a cheaper one. A supplier reduces its risk of imbalance energy costs if it can control flexible consumers in its portfolio. A grid operator can, under the rules applicable in each case, use a load reduction or a change in feed-in to avoid congestion.

Flexible plants can reduce the need for peaking power plants, dampen price spikes, reduce the curtailment of renewable energy and support grid operation. Whether this benefit actually arises depends on the rules. A battery that only exploits price differences on the wholesale market does not automatically help with local grid congestion. Heat pumps that respond to low exchange prices can even place additional strain on a weak distribution network if many devices start at the same time. Marketing must therefore match the respective system function.

Markets, responsibilities and call-off logics

Flexibility marketing takes place in different institutional spaces. On the day-ahead and intraday markets, flexible plants respond to prices. The operator or aggregator optimises schedules, buys or sells electricity and bears the risk that forecasts do not materialise. Balancing energy has its own requirements: prequalification, product time slices, minimum bid sizes, technical evidence and call-off signals from the transmission system operators. In the balancing group, what counts is whether actual feed-in and withdrawals match the registered schedule. Deviations cause imbalance energy costs.

In distribution networks, the issues are often local congestion, voltage maintenance or the controllability of consumption facilities. Controllable heat pumps, charging facilities and battery storage systems can benefit the grid if call-offs match the grid problem in place and time. A nationwide uniform electricity price does not reflect this local situation. For this reason, three types of flexibility are distinguished:

  • Market-serving: The plant responds to wholesale price signals.

  • System-serving: The plant acts on the overall supply situation or on frequency maintenance, for example via balancing energy.

  • Grid-serving: The plant relieves specific network assets at a particular location.

Conflicts can arise between these levels. A plant may want to take up electricity because the price is low, while the local grid section is already heavily loaded. Conversely, a grid call-off can change a market position and trigger balancing group deviations. Flexibility marketing therefore needs clear rules on priority, compensation, data access, metering and responsibility. Without such rules, flexibility is technically present but practically uncertain.

Legal framework in the EU and Germany (as of November 2026)

At EU level, Article 17 of the Electricity Market Directive (EU) 2019/944 obliges Member States to permit and promote demand response through aggregation. Final customers must be able to participate in all electricity markets on an equal footing with generators, including via aggregators. Independent aggregators may enter the markets without the consent of other market participants. At the same time, they bear financial responsibility for the imbalances they cause: they are either balance responsible themselves or delegate this responsibility.

In Germany, § 14c EnWG (Energy Industry Act) governs the market-based procurement of flexibility services in the electricity distribution network. If a distribution system operator procures such services in order to make the operation and expansion of its network more efficient, this must be done in a transparent, non-discriminatory and market-based manner. The specifications and standardised products are developed by the network operators. They are approved by the Bundesnetzagentur (Federal Network Agency), which can also lay down exemptions for certain services. The instruments under §§ 13, 13a EnWG, which include redispatch, as well as § 14a EnWG remain expressly unaffected. In Germany, redispatch is therefore not a free flexibility market but a regulated procedure of the network operators.

Since 1 January 2024, nationwide uniform determinations by the Bundesnetzagentur on § 14a EnWG have applied. New controllable consumption devices with more than 4.2 kilowatts of grid connection capacity, such as heat pumps, private charging points or battery storage systems, must allow themselves to be throttled by the network operator. In return, they receive reduced network charges. Complete shutdowns are no longer permitted. Transitional rules exist for existing installations. § 14a is not a flexibility market but a mandatory grid-oriented control instrument. However, it limits the room for manoeuvre that the same devices can use on the market and must therefore be taken into account in marketing models.

Aggregators and the pooling of small flexibilities

Many flexible plants are individually too small, too irregular or organisationally too burdensome for direct market participation. An aggregator pools them into a portfolio. It takes on forecasting, control, bid submission, communication with markets and settlement with the plant operators. A virtual power plant is a technical and commercial form of this pooling. It combines decentralised generators, storage and consumers in such a way that they appear externally as a larger controllable unit.

The role of the aggregator is often underestimated. It does not sell an arbitrary sum of small devices, but a reliable capacity with defined behaviour. To do so, it must know which plant is available, which constraints exist and which baseline applies, i.e. what consumption would have been expected without a call-off. It must also assess how a call-off affects later periods. If a charging fleet charges less this evening, it may have to recharge later. If a building temporarily switches off its heat pump, it cools down and afterwards needs more heat. This catch-up effect must be priced into the marketing or limited technically.

Typical misinterpretations

A widespread misunderstanding is that every controllable plant is automatically an economically usable source of flexibility. Between technical controllability and marketable flexibility lie costs and risks. Required are metering infrastructure, communication and control technology, contracts, market processes, good data and staff or service providers. For small plants, transaction costs can exceed revenue. Depending on the plant, further costs arise: for batteries, ageing through additional cycles; for industrial processes, opportunity costs; for households, limits of acceptance and comfort.

High price fluctuations also do not guarantee high revenues. If many storage units exploit the same price difference, it becomes smaller. If many new providers enter balancing energy markets, capacity prices often fall. Revenue models based only on past price spreads therefore often overestimate the future. Viable marketing combines several revenue sources and takes into account how they constrain one another. A storage unit cannot reserve the same capacity fully at the same time for intraday trading, balancing energy and local congestion management. Multiple use is possible, but only with clean prioritisation and proof that all commitments remain fulfillable.

A further oversimplification is to treat flexibility marketing as a substitute for grid expansion. Flexible plants can reduce congestion and postpone investments. They do not replace sufficient grid infrastructure if there are permanently high transport needs or if new consumption centres emerge. A fair comparison looks at the total system costs: procurement and control of the flexibility, forgone market revenues, additional losses, operational security and investment costs. Only then can it be judged whether flexibility is cheaper than grid expansion or whether both must be combined.

What the term makes visible

Flexibility marketing shows that a climate-neutral electricity system cannot be described by installed generation capacity alone. It is just as important whether consumption, storage and generation can respond to scarcity, surplus and grid situations. The term links technical controllability with market rules and responsibilities. Flexibility only becomes reliable when it can be measured, remunerated, coordinated and sanctioned in the event of non-performance.

Flexibility marketing thus goes beyond a mere appeal for more flexibility. It asks about the concrete capacity, the location, the duration, the reason for call-off, the counterparty and the settlement. A flexible kilowatt hour is not worth the same everywhere. Its value depends on the situation: whether it reduces a scarcity, relieves congestion, avoids imbalance energy or makes renewable generation usable. Flexibility marketing is therefore not a niche market for special technical cases. It is an ordering mechanism for an electricity system in which time, location and controllability increasingly decide costs and security of supply.

Sources

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Edited by eCMS on 12.11.2026 05:05

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