Updated: 17/09/2025
The EU network code on demand response is a regulatory framework initially proposed by the European Union Agency for the Cooperation of Energy Regulators (ACER) to the European Commission in March 2025. It will establish harmonised rules for integrating demand-side flexibility resources into European electricity markets.
Across Europe, there’s an understanding that more demand-side resources need to be integrated into the power grid to enable the renewable energy transition and facilitate more demand response events. This is not yet happening at pace – and that means those resources are missing out on new opportunities.
With national enforcement anticipated by 2027, this code will fundamentally change how distributed energy resources participate in grid balancing across Europe.
This guide on the draft network code covers:
- What is demand response or demand-side response?
- What is the EU network code on demand response?
- ACER’s role in the network code for demand response
- When will the network code for demand response come into force?
- How prepared are EU countries for the network code?
- How will the code affect flexibility providers?
- How will the code help integrate more renewable energy sources with the grid?
- How could system operators be encouraged to procure flexibility?
- How will the code help make competition fairer for DERs in the internal electricity market?
- Where can you learn more?
What is demand response or demand-side response?
Demand response is a form of energy flexibility, where demand-side energy resources are rewarded to turn up or down energy use. This is to help balance the grid and avoid congestion on the electricity network.
Demand-side response meaning
The terms “demand response” and “demand-side response” are essentially interchangeable. Both refer to consumers adjusting their electricity consumption in response to grid signals or price incentives. The network code uses “demand response” as the standard terminology.
This activity is vital to help integrate new demand-side electricity loads and renewable energy generators in the grid, in a cost-effective way.
Read our guide to the different types of flexibility market, including demand response
What is the EU network code on demand response?
Network codes give network or system operators a system of rules to follow.
The proposed network code on demand response aims aims to contribute to market integration, non-discrimination, effective competition, and the efficient functioning of the market.
The code would apply to all system operators, at both transmission and distribution levels, across the EU. Those system operators will need to coordinate plans and exchange necessary data.
Alongside the code itself, EU DSO Entity and ENTSO-E have proposed amendments to existing legal frameworks, including the “Electricity Balancing Regulation”, the “System Operation Regulation”, and the “Demand Connection Regulation”, to ensure consistency.
ACER’s role in the network code for demand response
The European Union Agency for the Cooperation of Energy Regulators (ACER) has played a central role in developing the network code on demand response:
- May 2024: ACER received the joint proposal from EU DSO Entity and ENTSO-E
- Autumn 2024: ACER conducted public consultation on the draft code
- 7 March 2025: ACER submitted its final proposal to the European Commission
ACER’s proposal includes both the network code itself and amendments to three related electricity regulations to ensure consistency across the regulatory framework.
When will the network code for demand response come into force?
National enforcement is expected to be in 2027, pending issues, assuming an implementation of late 2025.
A two-year implementation period is a common timeframe stipulated for EU regulations and directives to ensure member states have sufficient time to incorporate the new rules into their national laws and regulatory frameworks.
This period is standard for allowing adequate adaptation, planning, and coordination at both national and regional levels.
However, the regulation or directive text once published will confirm the exact implementation period for the network code on demand response.
How prepared are EU countries for the network code?
According to SmartEn’s 2024 Market Monitor for Demand Side Flexibility, which assesses 30 European markets, flexibility readiness varies across Europe.
Leading markets
Great Britain and France are the only countries where residential assets can participate in markets without Balance Responsible Party approval, demonstrating advanced regulatory frameworks already aligned with the network code’s objectives.
Example developing markets
- Germany: Strong industrial demand response with potential savings of €300 million by 2030 through TSO-DSO coordination, though aggregation frameworks are still developing
- Spain: Rapid growth from 497 MW (2022) to 1,148 MW (2025), but limited to large consumers (≥1 MW) with aggregation not yet legal
The network code aims to harmonise these different approaches, ensuring all member states enable the market-based flexibility procurement that leaders like Great Britain and France have already implemented.
How will the network code affect flexibility service providers?
The code aims to provide increased opportunities for flexible DER owners or aggregators – acting as flexibility service providers – facilitating value stacking, market coordination, and efficient trading volumes.
Key changes for flexibility providers under the network code
- Streamlined participation: Rules to participate will be streamlined, including pre-qualification and grid qualification
- Standardised requirements: Financial and ICT requirements will be harmonised across the EU
- Multiple market access: Providers will be able to participate across wholesale, balancing, and local flexibility markets
- Value stacking opportunities: Providers will be able to provide multiple services and stack revenues
For storage providers, the code clarifies where public consultation may be required to help boost participation from existing energy storage facilities.
How will the code help integrate more renewable energy sources with the grid?
The new rules will help encourage more flexibility providers of renewable energy to participate in electricity markets, making it easier for them to get involved.
System operators will need to coordinate to provide efficient congestion and voltage options. That coordination will also help address the integration of new generation, storage, and loads from renewable sources cost-efficiently.
Renewable energy resources will therefore be able to connect and provide their flexibility services to the grid more easily.
All solutions will need to be assessed to connect more customers within national rules.
How will system operators be encouraged to procure flexibility?
Within the proposed network code, articles (29-39) focus on market-based procurement.
Notably, for resolving congestion and voltage issues, systems operators will be mandated to choose the most “effective and economically efficient option”. This can include the procurement and activation of local flexibility services, if that is the most economical solution.
System operators will also need to conduct regular assessments to determine whether they can procure local flexibility services more efficiently through market setups. This implies that if market-based procurement is more effective, system operators must choose this option.
System operators can then deploy a market platform, such as ElectronConnect, to help launch, coordinate, and scale those markets for flexibility procurement.
How will the network code help make competition fairer for DERs in the internal electricity market?
EU-wide standards – covering data infrastructure, markets, platforms – are essential for unlocking the full potential of those flexibility markets. These standards can help create more liquid markets, which will help reduce friction through asset conflicts.
The draft network code includes common rules to facilitate aggregation of resources, demand response rules, and energy storage across the European Union.
As the code will focus on interoperability and standardisation, it aims to ensure technological neutrality. The code would apply to all distributed energy resources (DERs), including load, storage, and generation – whether or not they’re aggregated.
This means more flexibility service providers can participate, helping them access all applicable electricity markets. That includes wholesale markets, from balancing and local services to day-ahead market and the intra-day markets.
Where can you learn more?
- You can find the consultation documents relating to the draft network code on ACER’s website
- ACER ran a webinar in October 2024 to present the code, its objectives, and the next steps in the process
- European Commission consultation portal for stakeholder input
- SmartEn Market Monitor 2024 – comprehensive assessment of flexibility readiness across 30 European markets
- EU DSO Entity position papers on network code implementation
