04
Flexible consumption

04 Opportunities of flexible consumption

Introduction

Anticipating and seizing the opportunities of consumption flexibility

Flexibility is expanding beyond traditional upstream services, creating new roles for storage operators, renewable producers, and aggregators on both sides of the meter.
Behind-the-meter flexibility is unlocking economic and regulatory transformation, requiring dynamic pricing models, new contractual frameworks (e.g., sleeving), and updated consumer - supplier relationships.
To scale these models, regulatory adaptation, international benchmarking, and structured stakeholder engagement (including legal tools and market incentives) are essential.

The energy transition is accelerating across Europe and beyond, driven by the need to decarbonize power systems and integrate growing shares of variable renewables. In this context, system flexibility - the real-time ability to adjust electricity generation and use - has become central to energy policy and grid stability. While the focus has historically been on front-of-the-meter (FTM) or supply-side flexibility, demand-side flexibility is now emerging as a critical and underutilized lever.

Consumption-side flexibility includes actions such as shifting usage in response to price signals, storing electricity off-peak, or participating in grid balancing. These services involve a wide range of actors - from industrial users and households to aggregators and storage operators - and increasingly take place behind the meter (BTM), where digitalization and new technologies are transforming energy use. This shift is prompting suppliers, regulators, and consumers to rethink their roles in the energy system.

Authors : Christine le Bihan-Graf & Laure Rosenblieh, Partners in the energy transition department at Hogan Lovells LLP Paris. Maxime Gardellin & Edouard Olson, senior associates of the team, also contributed.

04 Opportunities of flexible consumption

What we are seeing

International markets show growing divergence in the pace and scale of flexibility deployment - especially behind the meter. Countries like the UK, Germany, the Netherlands, and the USA are leading with supportive regulation, targeted storage incentives, and digital infrastructure enabling real-time grid interaction. These frontrunners are also integrating distributed energy resources (DERs) into wholesale markets and testing innovative tariffs to activate consumer-side flexibility.

In France, progress is underway, notably through RTE and Enedis initiatives to define the value of services like frequency regulation and demand response. Article 175 of the 2025 Finance Law reflects a shift toward linking renewable support schemes to flexibility participation. However, France still lags behind top performers in downstream flexibility. Key barriers include tariff design (e.g., dynamic pricing), limited aggregator access, and the incomplete contractual integration of BTM assets.

04 Opportunities of flexible consumption

New opportunities in flexibility

Enhancing upstream flexibility services

Traditional flexibility services, such as primary and secondary frequency control (FCR, aFRR), are now increasingly provided by a wider range of market participants. Once dominated by large centralized generators, these services now include battery energy storage systems (BESS), renewable producers, and aggregators, diversifying the grid’s balancing resources.

BESS offer fast response and modularity, making them well-suited for short-duration balancing. Their integration is supported through auctions and standardized contracts, offering day-ahead flexibility or multi-year visibility. Aggregators play a key role by pooling smaller flexible assets and enabling their access to balancing markets.

Capacity markets have also adapted, rewarding flexible assets not just for energy delivery but for their peak availability, with remuneration tied to certified capacity. Still, the legal framework must continue evolving - to guarantee technology-neutral access, clarify certification, and align rules across borders. Without this, flexibility potential risks being underused.

Developing downstream flexibility services

Behind-the-meter (BTM) flexibility is emerging as a game-changer. Once limited to industrial sites, it now extends to households, commercial buildings, and energy communities. Consumers are increasingly installing batteries, EV chargers, and energy management systems (EMS) to respond dynamically to price signals and grid conditions. Flexibility services like time-shifting, peak shaving, and self-consumption optimization help reduce energy bills and monetize flexibility. These models gain value when paired with dynamic tariffs, real-time metering, and smart technologies. New actors - aggregators, storage-as-a-service providers, and energy service companies - are stepping in to manage assets for end-users.

BESS are central to this model, enabling multiple revenue streams: system services (FCR, aFRR, mFRR), intraday trading, capacity payments, congestion relief, and enhanced self-consumption. The value of each stream depends on technical configuration (BTM vs. FTM) and market design.

Capturing this value requires advanced EMS capable of real-time arbitrage. As flexible assets scale up, their coordination through standardized platforms will be key to achieving system-wide impact.

04 Opportunities of flexible consumption

Deployment trends across Europe

Battery storage deployment in Europe is progressing across both front-of-the-meter (FTM) and behind-the-meter (BTM) segments, each shaped by distinct drivers, project scales, and maturity levels.

By the end of 2022, around 4.5 GW of BESS capacity had been installed across Europe, with nearly 70% deployed in FTM applications. These systems —typically ranging from 5 to 200 MW - support grid services such as frequency regulation and balancing or are co-located with renewables to manage curtailment and price volatility.

BTM deployments, while currently representing a smaller share, are now accelerating, driven by consumer-facing incentives and the electrification of end uses. Though individually smaller - from 5 kW to 20 MW - they are rapidly scaling due to their distributed nature.

Their value lies in reducing supply costs and enhancing energy independence, particularly in segments where dynamic pricing and digital control systems are widely available.

Together, these deployment trends illustrate how BESS is being deployed across multiple levels of the energy system - from utility-scale grid support to decentralized consumer empowerment.

04 Opportunities of flexible consumption

International benchmark: Lessons from advanced markets

Several countries are moving decisively to unlock consumer-side flexibility, offering valuable insights for France.

The United Kingdom: The UK has built an advanced framework for residential flexibility. Nearly universal smart meter deployment, along with the Smart Export Guarantee (SEG) and the Capacity Market, allows households and aggregators to access grid services. DSOs have also launched local flexibility markets to monetize demand-side resources.
Germany: Germany has been a pioneer in integrating decentralized energy systems, particularly hybrid PV + storage installations. Ongoing reforms aim to align grid tariffs with time-based energy value, encouraging off-peak consumption. Flexibility is also promoted to ease congestion in high-renewable zones.
The Netherlands: The Dutch government has embraced digitalization and administrative simplification through tools like the "All-in-One Permit" - a unified platform designed to fast-track the approval of distributed energy projects. Combined with dynamic tariffs and demand response pilots, this approach supports rapid rollout of consumer flexibility.
USA: Under FERC Order No. 2222, distributed energy resources (DERs) - including storage, demand response, and solar-plus-storage - can participate directly in wholesale markets across several U.S. regional transmission organizations (RTOs). Programs like SolarAPP+ streamline permitting for rooftop solar and storage, while Time-of-Use (TOU) pricing and demand flexibility programs have been widely adopted by utilities in states such as California, Texas, and New York.

Germany has been a pioneer in integrating decentralized energy systems, particularly hybrid PV + storage installations.”

04 Opportunities of flexible consumption

International benchmark: Lessons from advanced markets

Key success factors observed

Regulatory clarity and openness: Simple, technology-neutral frameworks that reduce barriers to entry.
Market access: Inclusion of DERs and aggregators in capacity and balancing markets.
Economic incentives: Targeted support mechanisms for storage deployment, grid digitalization, and local flexibility.
Proactive system operators: DSOs and TSOs actively developing local flexibility markets and congestion management platforms.

These international benchmarks show that clear rules, digital tools, and well-designed incentives are essential to unlocking flexibility at scale. France can draw from these examples to accelerate deployment, especially in the residential and commercial sectors where potential remains underutilized.

04 Opportunities of flexible consumption

BESS capacity outlook in Europe and France

Battery energy storage capacity in Europe is expected to grow rapidly, from around 4.5 GW installed in 2022 to ~51 GW by 2030, and ~98 GW by 2050 (sources: SolarPower Europe and Aurora Energy Research).

These projections reflect the accelerating deployment of variable renewable energy, rising electrification, and the growing need for short-term flexibility and grid stability. Both front-of-the-meter (FTM) and behind-the-meter (BTM) storage solutions will contribute, supported by improved profitability and evolving market mechanisms.

France accounts for only 4% of installed BESS capacity in Europe (as of 2022), while the UK and Germany together represent nearly 70% of the market. However, a catch-up dynamic is expected, with France projected to reach approximately 20% of the European market by 2050. This progression will be driven by a combination of system needs and economic signals.

Two key factors underpin this acceleration:

The rising share of intermittent renewables, which increases the need for storage to ensure grid stability; and
The strong profitability demonstrated by early BESS projects, which is expected to attract further investment and scale deployment in the years ahead.

This deployment is also enabled by capacity remuneration mechanisms, targeted tenders, and regulatory incentives that facilitate both large-scale and distributed storage integration.

France currently accounts for only 4% of installed BESS capacity in Europe (as of 2022), while the UK and Germany together represent nearly 70% of the market."

04 Opportunities of flexible consumption

Legal and regulatory levers for enhancing flexibility

The evolving regulatory framework in France

A supportive legal framework is key to scaling flexibility - both upstream and behind the meter - in a fair and sustainable way. Today, most renewable producers lack incentives to contribute to grid flexibility, as feed-in tariffs and top-up payments shield them from price signals like negative market prices.

A turning point came with Article 175 of France’s 2025 Finance Law, which allows supported renewable producers to be curtailed under specific conditions. This reform ties public subsidies to system needs, requiring producers above a certain capacity (e.g., 10 MW) to offer flexibility as part of their support package. It signals a shift toward performance-based models that better integrate intermittent renewables.

Looking ahead, additional legal tools could include:

Bonus-malus schemes rewarding responsiveness;
Mandatory flexibility participation for large RES in capacity or reserve markets;
Hybrid support models bundling energy delivery and flexibility readiness.

Data access and interoperability

Access to real-time consumption, pricing, and network data is essential for effective flexibility services. Legal mandates ensuring data sharing between suppliers, network operators, and third parties - with strong privacy and cybersecurity safeguards - are needed to enable innovation and maintain trust. A neutral data hub or similar infrastructure could help deliver this interoperability.

04 Opportunities of flexible consumption

Client story:

We advised a leading European operator of electric vehicle charging infrastructure, managing over 3,000 sites across the continent in partnership with major retail chains.

How we see this market / issue

The operator wanted to explore a strategic shift in their business model: moving from a pure EV charging player to a multi-service energy partner.

What we are doing

We conducted a comprehensive legal analysis covering French and EU energy law to assess the regulatory feasibility and constraints of these models.

Our work included a detailed review of licensing requirements, balancing responsibilities, participation in the French capacity mechanism (MECAPA), and the legal conditions for implementing sleeving and aggregation models.

We also advised on the structuring of energy contracts, data access rights, and compliance with French legal rules prohibiting unauthorized private grid connections.

04 Opportunities of flexible consumption

Client story: NW

How we see this market / issue

A consortium of lenders led by Santander CIB and Rabobank approached us to legally structure and de-risk a €430 million financing package to support NW’s second-generation JBox® systems across France and Finland.

What we are doing

We advised the consortium of lenders on the legal structuring of one of the largest private storage financings in Europe. The financing enabled NW to deploy more than 2 GWh of storage capacity by 2025, reinforcing its leadership in flexibility services.

Our role included a full legal and regulatory due diligence of NW’s BESS activities in France and Finland, with a focus on electricity market participation, licensing requirements, compliance with EU energy law, and regulatory treatment of storage revenues.

We also assisted in drafting and negotiating the financing agreements.

NW is a French energy transition company and the national leader in battery electricity storage. Through its patented JBox® units, NW develops and operates large-scale storage infrastructure that supports grid stability in rural and peri-urban areas.

04 Opportunities of flexible consumption

Contractual levers for enhancing flexibility

On the contractual side, new models are emerging to structure flexibility participation:

Sleeving agreements, allowing third-party services to operate within a supplier’s balancing perimeter without changing supply contracts.
Aggregation contracts, pooling flexible assets into a unified offer in wholesale or balancing markets.
Performance-based or shared-savings models, linking remuneration to measured results, particularly in commercial and industrial settings.

To scale these models, standardized templates, regulatory approval, and legal recognition of services like flexibility-as-a-service are essential. The UK and Germany offer useful precedents, notably in aggregator-supplier rules and minimum transparency standards.

Public procurement and capacity mechanisms can also stimulate flexibility. Tenders with flexibility criteria or contracts-for-difference rewarding dispatchability would attract investment. Combined with time and location-sensitive tariffs, they would send clearer system-aligned price signals.

In sum, enabling flexibility requires not only market access but legal certainty, ensuring that all stakeholders, from prosumers to grid operators, can engage with clarity, confidence, and a shared understanding of rights and responsibilities.

04 Opportunities of flexible consumption

The central role of grid operators

Transmission and distribution operators as active flexibility facilitators

One key factor in unlocking the value of consumption-side flexibility lies in the evolving role of grid operators — both transmission (RTE) and distribution (Enedis). While market participants and legal instruments are essential, flexibility also depends on how system needs are identified, signaled, and coordinated.

TSOs like RTE are taking on more dynamic roles. For instance, RTE has launched pilots testing geographically targeted flexibility incentives, guiding storage and flexible loads to areas with high solar output or grid congestion. These are early steps toward using flexibility as a localized grid management tool, not just a market mechanism.

DSOs like Enedis face increasing challenges from distributed generation and local grid stress. Yet, current regulations lack the mandates or tools to let DSOs procure or manage flexibility directly. Realizing this potential means creating local flexibility markets, empowering DSOs to contract services based on local needs, and clarifying their coordination with aggregators and suppliers.

Enabling tools: signals, platforms, and regulatory mandates

Grid operators are well placed to deliver granular, time and location specific signals - critical for guiding investment in flexibility assets. With smarter tariffs, transparent procurement platforms, and standardized data-sharing, TSOs and DSOs can become key enablers of a decentralized, resilient energy system.

But this requires strong regulatory support: clear mandates to procure flexibility when cost-effective, real-time asset visibility, and the ability to coordinate with aggregators and flexibility providers. Scaling flexibility won’t depend solely on consumers or suppliers, but also on empowering grid operators.

Strengthening their role is essential to complete the value chain and ensure flexibility delivers both system-wide and local benefits.

04 Opportunities of flexible consumption

Our convictions

1

Flexibility behind the meter must be fully recognized and integrated into market mechanisms.

2

Legal and regulatory frameworks must evolve to support hybrid actors and clearly define the roles of aggregators, storage operators, and consumers.

3

Creative contractual models - such as sleeving, aggregation, and dynamic pricing agreements - are key to unlocking new business models.

4

Market design must reward flexibility fairly, across energy, capacity, and ancillary service markets.

5

Digitalization and advanced EMS platforms are essential to orchestrating distributed resources effectively.

6

Anticipating flexibility means not just enabling the energy transition but making it economically viable, socially inclusive, and systemically resilient.