Interview: Practitioners on Energy Efficiency & Demand Response — Value Pools and Sector Comparison with Benchmark KPIs

The European Union's demand response market is projected to reach €8.2 billion by 2030, yet practitioners across the continent report that fewer than 35% of eligible industrial facilities currently participate in structured demand flexibility programs. This disconnect between potential and deployment represents both a systemic challenge and an extraordinary opportunity—one that energy managers, grid operators, and policy architects are racing to address as the EU pursues its Fit for 55 targets.

In conversations with practitioners across six EU member states, a consistent theme emerges: the value pools in energy efficiency and demand response are substantial but unevenly distributed across sectors. Understanding where these pools concentrate—and which benchmark KPIs separate high performers from laggards—has become essential knowledge for organizations navigating the energy transition.

Why It Matters

The urgency of energy efficiency and demand response cannot be overstated in the current European context. According to the European Commission's 2024 Energy Efficiency Report, buildings alone account for 40% of total EU energy consumption and 36% of energy-related greenhouse gas emissions. The REPowerEU plan, accelerated following the 2022 energy crisis, has set binding targets requiring member states to reduce final energy consumption by 11.7% by 2030 compared to 2020 projections.

"What we're seeing in 2024-2025 is a fundamental shift in how organizations perceive demand response," explains Dr. Helena Virtanen, Senior Energy Analyst at the Finnish Energy Authority. "It's no longer viewed as an emergency measure or grid stability tool—it's become a core revenue stream and competitive differentiator."

The numbers support this observation. The European Network of Transmission System Operators for Electricity (ENTSO-E) reported that demand-side flexibility capacity in the EU grew by 28% between 2023 and 2024, reaching approximately 39 GW of controllable load. More significantly, the average revenue per MW of flexible capacity increased by 15% year-over-year as wholesale electricity price volatility created new arbitrage opportunities.

For industrial facilities, the stakes are particularly high. Energy-intensive industries—including steel, chemicals, cement, and aluminum—face carbon border adjustment mechanism (CBAM) compliance costs that make efficiency improvements directly tied to competitiveness. A 2024 analysis by the European Environment Agency found that facilities in the top quartile for energy efficiency metrics achieved carbon intensity levels 40-60% below sector averages.

Key Concepts

Carbon Intensity refers to the amount of CO2 equivalent emissions produced per unit of output—typically measured as kgCO2e per MWh for energy systems or per ton of product in manufacturing. In the EU context, carbon intensity benchmarking has become critical under the Emissions Trading System (ETS), where facilities exceeding sector benchmarks face escalating costs. The 2024 ETS reform reduced free allocation by an additional 4.3% annually, intensifying pressure on high-intensity operators.

Demand Response Certification encompasses the formal validation processes by which facilities qualify to participate in flexibility markets. The EU's Clean Energy Package mandated that all member states establish certification frameworks by 2024, though implementation varies significantly. Certified facilities gain access to capacity markets, ancillary services, and aggregator platforms—typically commanding premiums of €5-15/kW-year above non-certified participants.

Energy Management Standards (particularly ISO 50001) provide systematic frameworks for continuous improvement in energy performance. As of 2025, over 47,000 EU organizations hold ISO 50001 certification, representing a 23% increase since 2022. Practitioners consistently report that certified organizations achieve 10-15% greater energy savings than non-certified peers implementing similar technologies.

Grid Flexibility Value represents the monetizable worth of load-shifting capability to transmission and distribution system operators. This value varies dramatically across EU markets—from €8/kW-year in regions with abundant renewable capacity to over €45/kW-year in constrained networks experiencing congestion.

Sector-Specific Benchmarks are the standardized performance thresholds established under EU regulations for comparing facilities within industries. The European Commission's Best Available Techniques (BAT) reference documents define efficiency benchmarks for over 30 industrial categories, with top-performing facilities designated as "benchmark leaders" receiving enhanced free allocation under ETS.

What's Working and What Isn't

What's Working

Aggregator Platforms Democratizing Participation: The emergence of sophisticated aggregation platforms has enabled small and medium enterprises to access demand response markets previously reserved for large industrial consumers. Companies like Flexcity (Veolia), Next Kraftwerke (now Shell), and Voltalis have enrolled over 2.1 million distributed assets across the EU, creating virtual power plants that compete alongside traditional generation. "Three years ago, a 200 kW commercial facility couldn't economically participate in flexibility markets," notes Marco Pellegrini, Head of Flexibility Operations at Enel X. "Today, through aggregation, these smaller players collectively capture approximately €340 million annually in flexibility revenues across European markets."

Real-Time Dynamic Pricing Adoption: Several EU markets have implemented or expanded real-time pricing mechanisms that reward demand flexibility. Spain's hourly pricing scheme, expanded in 2024, has driven measurable load-shifting behavior, with off-peak consumption increasing by 12% among enrolled households. The Nordic countries continue to lead, with over 80% of Finnish industrial consumers now operating under some form of dynamic tariff structure. Studies by the Council of European Energy Regulators indicate that dynamic pricing participants reduce peak consumption by 15-25% compared to flat-rate consumers.

Industrial Symbiosis Networks: Cross-sector collaboration on energy and material flows has produced compelling efficiency gains. The Kalundborg Symbiosis in Denmark—often cited as the archetypal model—has expanded to include demand response coordination among its 12 member organizations. Participants report 18% reductions in collective peak demand through synchronized scheduling of energy-intensive processes. Similar networks have emerged in Rotterdam's industrial port complex and the Antwerp chemical cluster.

What Isn't Working

Fragmented Regulatory Frameworks: Despite EU-level directives, implementation across member states remains inconsistent, creating barriers for pan-European flexibility operations. "We operate in seven EU countries, and each has different prequalification requirements, settlement rules, and baseline methodologies," explains Sarah Lindström, Director of European Markets at Enel X. "Harmonization exists on paper but not in practice." The lack of interoperability adds significant transaction costs—practitioners estimate 20-30% of project development expenses stem from navigating regulatory heterogeneity.

Baseline Calculation Controversies: Determining what consumption "would have been" absent demand response intervention remains contentious. Different baseline methodologies can produce valuations varying by 40% or more for identical flexibility events. This uncertainty discourages investment, particularly in sectors with variable production patterns. The aluminum sector, where production scheduling depends on complex factors including metal prices and logistics, has been particularly affected by baseline disputes.

Insufficient Grid Infrastructure Investments: Even when demand-side flexibility is available, transmission and distribution infrastructure constraints limit its utilization in many regions. Southern Italy, parts of Spain, and several Eastern European countries experience network congestion that prevents full monetization of available flexibility. ENTSO-E's 2024 Ten-Year Network Development Plan identifies €67 billion in necessary grid investments to fully integrate distributed flexibility resources—funding that remains uncertain.

Sector Comparison: Benchmark KPIs

The following table presents benchmark KPIs across key sectors for energy efficiency and demand response performance in the EU market (2024-2025 data):

Sector	Energy Intensity (kWh/€ output)	Demand Response Participation Rate	Average Flexibility Value (€/kW-year)	Top Quartile Carbon Intensity	Bottom Quartile Carbon Intensity
Steel (EAF)	0.42-0.58	67%	€28-42	<0.4 tCO2/t steel	>0.9 tCO2/t steel
Chemicals	0.31-0.47	52%	€18-35	<0.25 tCO2/t product	>0.55 tCO2/t product
Cement	0.85-1.12	41%	€15-28	<0.58 tCO2/t clinker	>0.75 tCO2/t clinker
Aluminum	0.72-0.95	78%	€35-55	<1.8 tCO2/t Al	>3.2 tCO2/t Al
Commercial Buildings	0.08-0.15	28%	€8-18	<25 kgCO2/m²/year	>65 kgCO2/m²/year
Data Centers	0.22-0.38	34%	€22-40	PUE <1.2	PUE >1.8

Key Players

Established Leaders

Schneider Electric (France) dominates the EU energy management software market with its EcoStruxure platform, serving over 12,000 industrial facilities across Europe. Their demand response solutions integrate building automation, industrial control systems, and grid interfaces, achieving documented savings averaging 23% for enterprise clients.

Siemens (Germany) offers comprehensive industrial energy management through its Xcelerator portfolio, with particular strength in process industries. Their demand response implementations in German manufacturing have demonstrated 30-40 MW of flexible capacity per major installation, with validated response times under 5 minutes.

Enel X (Italy) operates one of Europe's largest demand response portfolios, aggregating over 8.5 GW of flexible capacity across 12 countries. Their proprietary algorithms optimize dispatch across wholesale markets, capacity mechanisms, and ancillary services, generating average returns of €35-50/kW-year for enrolled assets.

ABB (Switzerland/Sweden) provides industrial automation and energy management solutions with deep penetration in heavy industry. Their AbilityTM Energy Management platform connects over 50,000 industrial assets in Europe, enabling coordinated demand response across multi-site operations.

Centrica Business Solutions (UK/Ireland) has built significant presence in the EU flexibility market through acquisitions and organic growth, managing approximately 2.3 GW of distributed energy resources including behind-the-meter generation, storage, and controllable loads.

Emerging Startups

Sympower (Netherlands) has emerged as a leading independent aggregator, enrolling over 1,500 MW of industrial and commercial flexibility across 8 European markets. Their asset-light model and focus on customer experience have driven 85% annual growth since 2022.

Tibber (Norway) combines consumer-facing retail with sophisticated demand optimization, using AI to schedule household consumption around renewable generation patterns. With over 1.5 million customers across Nordic countries, Germany, and the Netherlands, they represent a new paradigm in residential demand response.

GridBeyond (Ireland) specializes in industrial demand response, using machine learning to identify flexibility in manufacturing processes without disrupting production. Their technology has been deployed in over 300 industrial sites, achieving average capacity factors above 70% for enrolled flexibility.

Tiko (Switzerland) focuses on residential heating electrification with integrated demand response, managing virtual power plants composed of over 100,000 heat pumps and water heaters across Europe. Their approach captures flexibility value while reducing customer heating costs by 15-25%.

Flexcity (Belgium, owned by Veolia) has rapidly scaled aggregation services in Belgium, France, and the Netherlands, enrolling industrial and commercial customers with a focus on water and waste management facilities where flexibility potential is often overlooked.

Key Investors & Funders

European Investment Bank has committed over €2.5 billion to energy efficiency and demand-side infrastructure through its Climate Bank Roadmap, with specific facilities targeting SME participation in flexibility markets.

Breakthrough Energy Ventures (founded by Bill Gates) has invested in multiple EU-focused demand response and grid flexibility companies, including GridBeyond and Tibber, catalyzing Series B and C rounds.

SET Ventures (Netherlands) focuses exclusively on energy transition investments, with a portfolio including demand response aggregators and energy management software providers. Their €250 million fourth fund includes significant allocation to flexibility technologies.

Demeter Investment Managers (France) manages over €1.8 billion focused on energy transition, with active investments in demand response platforms and industrial efficiency projects across France, Germany, and Southern Europe.

ETF Partners (UK) has backed multiple demand response and energy management companies, emphasizing business models that combine environmental impact with commercial scalability.

Examples

1. BASF Ludwigshafen Chemical Complex, Germany: The world's largest integrated chemical site has implemented comprehensive demand response across its 2,000+ production units. Through coordination with grid operator TransnetBW, BASF can shift up to 200 MW of load within 15-minute intervals while maintaining production targets. In 2024, flexibility participation generated approximately €8.3 million in ancillary service revenues while reducing the site's carbon intensity by 7% through optimized scheduling around renewable generation peaks. The project required €45 million in automation investments with a documented payback period of 5.4 years.

2. Carrefour Retail Portfolio, France: The supermarket chain implemented AI-driven HVAC and refrigeration optimization across 1,200 stores in France, enrolling the aggregated flexibility with RTE (the French TSO). The system automatically adjusts cooling setpoints and defrost cycles in response to grid signals, delivering 85 MW of reliable demand response capacity. Annual flexibility revenues exceed €2.8 million, while energy consumption has decreased by 18% across participating stores. Carbon intensity per square meter of retail space decreased from 42 to 31 kgCO2/m²/year.

3. Aurubis Copper Smelting, Hamburg: Europe's largest copper producer has integrated its electrolysis operations with demand response markets, leveraging the inherent storage capacity of the copper production process. By modulating electrolysis current within quality parameters, Aurubis provides approximately 120 MW of flexibility to the German market. This capability, combined with on-site heat recovery, has positioned the facility among the top 10% for carbon intensity in global copper production at 0.32 tCO2 per ton of cathode copper—substantially below the sector benchmark of 0.48 tCO2/t.

Action Checklist

FAQ

Q: What is the typical payback period for demand response infrastructure investments in EU industrial facilities? A: Payback periods vary significantly by sector and existing infrastructure, but practitioners report ranges of 2-5 years for most industrial applications. Facilities with modern SCADA systems and existing sub-metering often achieve payback under 2 years, as marginal investments focus primarily on control logic and market integration. Greenfield implementations requiring comprehensive automation typically require 4-6 years. The EU Taxonomy's technical screening criteria for sustainable activities increasingly recognize demand response investments, potentially improving access to green financing that can accelerate returns.

Q: How do demand response participation rates differ between centralized and distributed assets? A: Centralized large-load industrial assets demonstrate participation rates of 60-80% where markets exist and revenue opportunities are transparent. Distributed assets—commercial buildings, small industry, residential—show participation rates of 20-35%, constrained by aggregation costs, customer awareness, and split incentive problems between building owners and tenants. The gap is narrowing as aggregation platforms reduce transaction costs and regulatory reforms mandate landlords to pass efficiency benefits to tenants. By 2030, practitioners expect distributed participation rates to reach 45-55% in leading markets.

Q: What baseline methodologies are most commonly accepted across EU flexibility markets? A: Four baseline approaches predominate: (1) historical average (typically 10-day rolling average of comparable periods), used in approximately 40% of programs; (2) regression-based models incorporating weather and production variables, favored in industrial applications; (3) control group comparison, common in residential aggregation; and (4) meter-before-meter-after for predictable processes. The EU's recently proposed Electricity Market Design reform includes provisions for harmonizing baseline methodologies, but full implementation remains 2-3 years away. Practitioners recommend designing flexibility projects to qualify under multiple methodologies to maintain optionality.

Q: How are carbon border adjustment mechanism (CBAM) requirements affecting demand response investment decisions? A: CBAM has materially accelerated demand response adoption in energy-intensive industries, particularly among EU exporters concerned about competitiveness. Facilities are increasingly viewing flexibility not merely as a revenue opportunity but as a strategic tool for reducing carbon intensity—and thus CBAM exposure for their customers. Steel, aluminum, and cement producers report that CBAM considerations have elevated energy efficiency investments from operational improvements to board-level strategic priorities. The transitional reporting phase (2023-2025) has prompted comprehensive energy audits that frequently identify previously overlooked flexibility potential.

Q: What role do energy storage systems play in enhancing demand response value capture? A: Battery energy storage systems (BESS) are increasingly deployed alongside demand response to enhance flexibility value and reduce operational risk. Storage provides the buffer enabling more aggressive load curtailment without production disruption—effectively converting load-shedding to load-shifting. In EU markets with high renewable penetration, the combination of demand response and storage captures premium arbitrage opportunities, with some facilities reporting flexibility revenues 40-60% higher than demand response alone. However, storage adds capital costs and introduces additional optimization complexity; practitioners recommend storage integration primarily for facilities seeking to access fast-frequency response markets (requiring sub-second response) or those with highly variable underlying demand patterns.

Sources

European Commission. (2024). EU Energy Efficiency Progress Report 2024. Publications Office of the European Union.
ENTSO-E. (2024). System Adequacy Outlook and Flexibility Assessment. Brussels: European Network of Transmission System Operators for Electricity.
Council of European Energy Regulators. (2024). Demand-Side Flexibility in European Electricity Markets: Status Review. CEER Report C24-ES-101-03.
European Environment Agency. (2024). Trends and Projections in Europe 2024: Tracking Progress Towards Climate and Energy Targets. EEA Report No. 13/2024.
Joint Research Centre. (2024). Best Available Techniques Reference Documents for Energy Efficiency. European Integrated Pollution Prevention and Control Bureau.
International Energy Agency. (2024). Energy Efficiency 2024: Europe Market Report. Paris: IEA Publications.
ACER. (2024). Annual Report on the Results of Monitoring the Internal Electricity Market. European Union Agency for the Cooperation of Energy Regulators.

Interview: practitioners on energy efficiency & demand response (angle 4)