Command and control: A systematic approach to demand-side flexibility

This policy note presents a case for shifting demand-side flexibility (DSF) policy from a market-based, individualist approach to a system-level, command-and-control framework. DSF could play a crucial role in maintaining grid stability, integrating variable renewable energy sources, and reducing infrastructure costs. The prevailing framework for fostering DSF overwhelmingly relies on price signals and assumes that consumers are rational, price-responsive agents who are both willing and able to optimize electricity use. Empirical evidence suggests that this approach has yielded limited results. The proposed model emphasizes centralized flexibility management, regulatory mandates, and automation to ensure reliability and scalability. Central to this model is the establishment of a Flexibility Coordinator responsible for two primary tasks: coordination—identifying system-wide grid needs, mapping users’ flexibility potential, and aligning these to generate an effective set of target measures; and execution—applying a set of targeted regulatory measures focused on mandating and “embedding” flexibility across the grid while minimizing user disruption and safeguarding comfort and preferences. These measures could include mandating automated demand-response functionality for residential heat pumps and EV chargers, requiring supermarkets to couple cooling loads with automated controls, and enforcing waste heat recovery in industrial processes. By adopting a more assertive and systematic approach, a range of flexibility measures—potentially imperceptible to users—can be effectively implemented, creating a more reliable, adaptable, and scalable DSF model that is essential for a successful energy transition.