Developing demand response in industry and the commercial sector serves two distinct purposes. For the power system, it supplies flexibility and helps control peak load. For companies, it diversifies revenue and improves energy performance. Our study quantifies that potential sector by sector, separating what is technically feasible from what is economically reachable.
A technical potential of 6.5 to 9.5 GW
The technical potential for demand response through process modulation, for short activations of thirty uninterrupted minutes, stands between 6.5 and 9.5 GW across industry and the commercial sectors analysed.
Industry holds most of it, around 70 %, or 4.5 to 6.5 GW. Four sectors alone account for three quarters of the industrial potential: metals, manufacturing, chemicals and paper. Within that industrial potential, 40 % comes from thermal processes, mainly furnaces, and around 30 % from motor loads such as grinding, rolling and compressed air.
The commercial sectors studied, offices, food retail, cold storage, the water sector and data centres, represent 2 to 3 GW, some 30 % of the total. Here too thermal processes, cooling, heating and air conditioning, make up around 40 %.
Economic potential depends directly on price
Technical potential is not the right indicator for an operator. What matters is the capacity mobilisable at a given level of remuneration, and the gap is substantial.
- At €30/kW/year or below, accessible capacity stands between 1.5 and 3.6 GW.
- At €60/kW/year or below, it rises to between 2 and 5 GW.
The most economically accessible potential is concentrated in metals, chemicals and paper, in other words on sites with high unit load. Conversely, the diffuse potential, small commercial sites and small industry, is largely reachable only above €60/kW/year. Low unit load cannot absorb the human and financial costs of implementation.
The barriers are no longer regulatory
This is perhaps the study’s most useful finding. Residual regulatory and technical barriers are now limited. France has a full set of mechanisms integrating demand response across every time horizon, and our international benchmark, covering the UK, Japan and the US with PJM and CAISO, shows a French framework generally more advanced than those of the other countries studied.
The barriers are now economic and organisational. Accessible remuneration remains low relative to the costs and constraints of implementation, particularly on diffuse sites.
Four levers, essentially non-technical
- Step up communication and awareness among consumers on demand response, still poorly understood by industrial management teams.
- Pool investment in the commercial sector, by encouraging sites to be made smart grid ready during renovation and new build rather than retrofitted later.
- Provide greater stability and visibility in valuation rules and mechanisms, since instability is itself a cost to the investor.
- Address the reliability question for demand response capacity, a precondition for treating it as a resource comparable to generation.
To go further, download our full analysis below or contact our experts.
