Demand-side flexibility (DSF) can be defined as the capacity to change electricity usage by end-use customers (including residential) from their normal or current consumption patterns in response to market signals, such as time-variable electricity prices or incentive payments, or in response to acceptance of the consumer's bid, alone or through aggregation, to sell demand reduction/increase at a price in electricity markets or for internal portfolio optimisation.
The valuation of DSF can be done either explicitly or implicitly:
- explicit DSF is sold as a product on a market (it appears explicitly on the market), and therefore requires a specific control (ex-ante and/or ex-post check based on baseline etc.),
- implicit DSF on the other hand does not need such a process since it is not sold to anyone and remains only for the benefit of the final consumer and the corresponding retailer or the Balance Responsible Party (BRP) as an optimisation respectively of its sourcing costs or imbalances (Scoping of flexible response, CEER discussion paper, Ref: C16-FTF-08-04, 3 May 2016, p. 5).