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4Q 2022

Commercial and Industrial Demand Response and Flexibility Markets

Flexible C&I DER Capacity, Implementation Spending, and Revenue Forecasts in World Markets: 2022-2031

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. At the same time, utilities and grid operators are looking to transition away from fossil fuel generation sources. The convergence of these trends presents an opportunity for flexible C&I DER capacity to serve customer needs and provide essential grid services through flexibility markets.

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. Limited utility visibility into behind-the-meter resource operation and issues with customer engagement and education remain some of the barriers to more widespread adoption of flexible C&I DER.

This Guidehouse Insights report examines the flexible C&I DER market, including DR and VPPs, that could be made available on flexibility markets. Regional level forecasts for capacity, implementation spending, and revenue are presented across five major geographic regions from 2022-2031 with capacity forecasts segmented by technology type. While total flexible C&I DER capacity is forecast to be the largest in Europe, it is projected to grow most quickly in Latin America and the Middle East & Africa.

Pages 46
Tables | Charts | Figures 33
  • What are flexibility markets?
  • What is the role of flexible C&I DER capacity in the energy transition?
  • How do the types of flexible DER capacity differ?
  • What is driving the use of flexible C&I DER capacity in grid operations?
  • What is hindering further use of flexible C&I DER capacity?
  • What can C&I customers do to increase their DR and VPP capacity?
  • How can technology vendors and aggregators facilitate DR and VPP adoption?
  • How does revenue from flexible C&I DER capacity vary by region?
  • Commercial and industrial energy users
  • VPP providers
  • Demand response providers
  • IoT vendors
  • Solar developers
  • Energy storage developers
  • Utilities and grid operators
  • Regulators and policymakers

1. Executive Summary

1.1    Introduction

1.2    Market Drivers

1.3    Market Barriers

1.4    Industry Value Chain Margin Distribution Analysis

1.5    Market Overview

2. Market Issues

2.1    Market Drivers

2.1.1   Increasing Renewable Energy Capacity on Grids

2.1.2   Development of Open Energy Markets and New DER Regulations

2.1.3   Capacity Constraints and Aging Infrastructure

2.1.3.1    Case Study: UK Power Networks and National Grid Electricity Distribution Flexibility Markets

2.1.4   Customer Desire to Increase DER Adoption and Optimize Across Assets

2.1.4.1    Reliability and Resiliency

2.1.4.2    Sustainability Targets

2.1.4.3   Managed Charging and Vehicle-to-Grid

2.2    Market Barriers

2.2.1   Limited Utility Visibility into BTM Resources

2.2.2   Failure to Compensate Available Capacity

2.2.2.1    Case Study: Recurve’s Load Impact Analysis of OhmConnect’s DR Event in August 2020

2.2.3   Customer Outreach and Education

2.3    Industry Value Chain Margin Distribution Analysis

3. Market Forecasts

3.1    Assumptions Guiding This Forecast

3.1.1   A Note on Report Scope and Market Sizing

3.2    Global C&I DER Flexibility Market

3.3    Regional Forecasts

3.3.1   North America

3.3.1.1    Canada

3.3.1.2    United States

3.3.2   Europe

3.3.2.1    France

3.3.2.2    Germany

3.3.2.3   United Kingdom

3.3.3   Asia Pacific

3.3.3.1    Australia

3.3.3.2    China

3.3.3.3   Japan

3.3.4   Latin America

3.3.4.1    Brazil

3.3.4.2    Mexico

3.3.5   Middle East & Africa

3.3.5.1    United Arab Emirates

4. Conclusions and Recommendations

4.1    Large Energy Consumers in the C&I Sector

4.2    DER Vendors, DR Aggregators, VPP Operators, and Flexibility Software Providers

4.3    Utilities and Grid Operators

5. Acronym and Abbreviation List

6. Table of Contents

7. Table of Charts and Figures

8. Scope of Study, Sources and Methodology, Notes

  • Cumulative Flexible C&I DER Capacity by Region, World Markets: 2022-2031
  • "Cumulative Flexible C&I DER Capacity, Implementation Spending, and Revenue, World Markets: 2022-2031"
  • Cumulative Flexible C&I DER Capacity and Implementation Spending, North America: 2022-2031
  • Flexible C&I DER Revenue, North America: 2022-2031
  • Cumulative Flexible C&I DER Capacity and Implementation Spending, Europe: 2022-2031
  • Flexible C&I DER Revenue, Europe: 2022-2031
  • "Cumulative Flexible C&I DER Capacity and Implementation Spending, Asia Pacific: 2022-2031"
  • Flexible C&I DER Revenue, Asia Pacific: 2022-2031
  • Cumulative Flexible C&I DER Capacity and Implementation Spending, Latin America: 2022-2031
  • Flexible C&I DER Revenue, Latin America: 2022-2031
  • Cumulative Flexible C&I DER Capacity and Implementation Spending, Middle East & Africa: 2022-2031
  • Flexible C&I DER Revenue, Middle East & Africa: 2022-2031
  • Cash Flows in a DER Aggregation-Enabled Market
  • Flexible C&I DER Capacity by Region, World Markets: 2022-2031
  • Flexible C&I DER Revenue by Region, World Markets: 2022-2031
  • Flexible C&I DER Implementation Spending by Region, World Markets: 2022-2031
  • Cumulative Flexible C&I DER Capacity, North America: 2022-2031
  • Flexible C&I DER Revenue, North America: 2022-2031
  • Flexible C&I DER Implementation Spending, North America: 2022-2031
  • Cumulative Flexible C&I DER Capacity, Europe: 2022-2031
  • Flexible C&I DER Revenue, Europe: 2022-2031
  • Flexible C&I DER Implementation Spending, Europe: 2022-2031
  • Cumulative Flexible C&I DER Capacity, Asia Pacific: 2022-2031
  • Flexible C&I DER Revenue, Asia Pacific: 2022-2031
  • Flexible C&I DER Implementation Spending, Asia Pacific: 2022-2031
  • Cumulative Flexible C&I DER Capacity, Latin America: 2022-2031
  • Flexible C&I DER Revenue, Latin America: 2022-2031
  • Flexible C&I DER Implementation Spending, Latin America: 2022-2031
  • Cumulative Flexible C&I DER Capacity, Middle East & Africa: 2022-2031
  • Flexible C&I DER Revenue, Middle East & Africa: 2022-2031
  • Flexible C&I DER Implementation Spending, Middle East & Africa: 2022-2031
  • Service Provider Share of Market Revenue
  • DER Management Software Platform Pricing Information
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