The Value of DemandFlexibility Benefits beyond balancing INTERNATIONAL ENERGYAGENCY The IEA examines the fullspectrumof energy issuesincluding oil, gas andcoal supply anddemand, renewableenergy technologies,electricity markets,energy efficiency,access to energy,demand sidemanagement and muchmore. Through its work,the IEA advocatespolicies that will enhancethe reliability,affordability andsustainability of energyin its32Member countries,13Association countriesand beyond. IEAAssociationcountries: IEAMembercountries: AustraliaAustriaBelgiumCanadaCzech RepublicDenmarkEstoniaFinlandFranceGermanyGreeceHungaryIrelandItalyJapanKoreaLatviaLithuaniaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandRepublic of TürkiyeUnited KingdomUnited States ArgentinaBrazilChinaEgyptIndiaIndonesiaKenyaMoroccoSenegalSingaporeSouth AfricaThailandUkraine This publication and any mapincluded herein are withoutprejudice to the status of orsovereignty over any territory,to the delimitation ofinternational frontiers andboundaries and to the nameof any territory, city or area. The EuropeanCommission alsoparticipates in thework of the IEA Source: IEA.International Energy AgencyWebsite: www.iea.org Abstract This policy brief, developed under the International Energy Agency’s DigitalDemand-Driven Electricity Networks (3DEN) Initiative, examines the value ofdemand flexibility as a core component of modern electricity systems, with a strongemphasis on its role in improving energy efficiency. As electricity demand growsand power systems become more electrified, decentralised and renewable-rich,managing when and how electricity is used is increasingly as important asexpanding supply. The brief sets out a clear framework for understanding demand flexibility andhighlights its contribution to an efficiency-first approach to power system planningand operation. By shifting or adjusting electricity use in response to systemconditions, demand flexibility improves the utilisation of existing generation andnetwork assets, reduces peak stress, lowers losses and curtailment, and supportsmore efficient integration of clean energy. It also delivers wider benefits, includingenhanced energy security, lower system and consumer costs, and reducedemissions, when appropriately enabled and valued. The policy brief identifies key trends driving the need for flexibility, the mainbarriers limiting its uptake, and priority areas for policy action. It concludes thatintegrating demand flexibility alongside energy efficiency within regulatory, marketand planning frameworks is essential to delivering secure, affordable and efficientpower systems, while maximising the value of existing and future investments. Acknowledgements The International Energy Agency (IEA) gratefully acknowledges the Italian Ministryof Environment and Energy Security for its support of this project as part of itscontributions to the IEA’s Digital Demand-Driven Electricity Networks Initiative(3DEN) on electricity grid modernisation and digitalisation, as well as its CleanEnergy Transitions Programme.Special thanks go to Alessandro Guerri, FedericaFricano, Annalidia Pansini, Alessandra Fidanza, and Emanuela Vignola.The IEAalso thanks the Italian Ministry of Foreign Affairs and International Cooperation forits strategic guidance and collaboration, particularly Valeria Piazza. This report was developed by the IEA’s Office of Energy Efficiency and InclusiveTransitionsin the Directorate of Energy Markets and Security.BrendanReidenbach led and co-ordinated the analysis and production of the report. It wasauthoredby Namhyuk Kim,with key contributions from Fabian Voswinkel,Chris Matthew,Alexandre Langlois-Meurinne,and Doriane Senat.KeisukeSadamori, Director of the Energy Markets and Security Division; Brian Motherway,Head of the Office of Energy Efficiency and Inclusive Transitions; and JérômeBilodeau, Senior Programme Manager, provided support and strategic direction.Dennis Hessling, Head of Gas, Coal and Power Markets, provided valuablecomments and input. TheIEA would like to thank the following experts who provided valuablecontributions, review, and encouragement (in alphabetical order): Fran Benson(Octopus Energy), Juan David Molina Castro (Colombia Inteligente), Tim Chapelle(UK Department for Energy Security and Net Zero), Serena Cianotti (Enel Grids),Mark Dyson (Rocky Mountain Institute), Craig Frazer (UK Department for EnergySecurity and Net Zero), Martha Maria Frysztacki (Open Energy Transition), AlexLowe(Octopus Energy),Reiko Matsuda-Dunn(National Renewable EnergyLaboratory), Carolina Merighi (UNEP), Vincent Minier (Schneider SustainabilityResearch Institute), Gracious Otoo (Octopus Energy), Vito Ponzo (Enel Grids),Silvia Saddi (Enel), Aarth Saraph (UNEP), Myriem Touhami Kadri (UNEP), AmberWoodward (Centre for Net Zero), and Da Yan (Tsinghua University). Thanks also go to the IEA Communications and Digital Office (CDO) for itsassistance i