Commercial and Industrial Demand Response and Flexibility Markets Estimated to Grow to 268 GW in 2031 at a Compound Annual Growth Rate of 15%

Market drivers include corporate sustainability targets, increasing renewable energy capacity on grids, development of open energy markets and new DER regulations

Dec 13, 2022

Commercial and industrial (C&I) demand response (DR) and virtual power plant (VPP) capacity is increasing as more customers install distributed energy resources (DER) on site and electrify end uses to lower their utility bills and reduce emissions from their operations. A new report from Guidehouse Insights offers a global analysis for the CIDR and DER flexibility markets through 2031.

According to the report, total flexible DER capacity, revenue, and implementation spending in the C&I sectors is expected to experience moderate growth through the outlook period. By the end of 2022, Guidehouse Insights projects nearly 78 GW of total flexible C&I DER capacity. This is expected to grow by an average compound annual growth rate (CAGR) of 14.7% to 268.4 GW by 2031.

“Flexibility markets, whether at the distribution or transmission level, allow utilities and grid operators to acquire available flexible capacity from DER, for which customers are compensated, to relieve grid strain when required,” says Dan Power, research analyst with Guidehouse Insights. “Optimizing C&I DER through flexibility markets can improve grid stability by engaging a relatively small number of facilities.”

Helping drive an increase in flexible C&I DER capacity are corporate sustainability targets and a desire for enhanced reliability and resilience in the wake of increasingly frequent natural disasters. Increased renewable energy capacity and constraints on aging grid infrastructure are driving a need for flexibility on power grids, while new energy market regulations are enabling non-utility resources to be compensated for providing flexibility, according to the report.

The report, Commercial and Industrial Demand Response and Flexibility Markets, examines the flexible C&I DER market, including DR and VPPs, that could be made available on flexibility markets. Regional level analyses for capacity, implementation spending, and revenue are presented across five major geographic regions from 2022-2031 with capacity analyses segmented by technology type. While total flexible C&I DER capacity is expected to be the largest in Europe, it is projected to grow most quickly in Latin America and the Middle East & Africa. An executive summary of the report is available for free download on the Guidehouse Insights website.


*The information contained in this press release concerning the report, Commercial and Industrial Demand Response and Flexibility Markets, summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.