Updated: 11/03/2025
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.
The European Union Agency for the Cooperation of Energy Regulators (ACER) has therefore submitted its proposal for a new network code on demand response to the European Commission, to help more distributed energy resources (DERs) to participate and get connected.
This guide on the draft network code covers:
- What is demand response?
- What is the demand response network code?
- 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 ensure power system security?
- How will the code help make competition fairer for DERs in the internal electricity market?
- How will the code affect flexibility service providers (FSPs)?
- What is the status of the draft network code?
- When will the network code for demand response come into force?
- Where can you learn more?
What is demand 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.
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 demand response network code?
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.
How will the code help integrate more renewable energy sources with the grid?
The new rules will help encourage more flexible DER owners or aggregators (or flexibility service providers (FSPs)) of renewable energy to participate in electricity markets, making it easier for them to get involved.
To enable this, the proposed code will:
- Help integrate technology-neutral demand-side flexibility
- Set principles for the development of harmonised rules across the EU
- Define market-based processes for selecting the most cost-efficient resources
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 code help ensure power system security?
The code will help make sure energy is available at the right time and place. Local markets will ensure system operators use that electricity most effectively, to maintain stable grid operation.
System operators will therefore be able to choose between more markets and market-based services to help ease congestion, according to certain effectiveness and efficiency criteria, in a transparent and coordinated way.
The proposed code also suggests a system for digitalisation following secure data procedures. This will give system operators the tools they need to balance supply and demand in a rapidly changing grid and network.
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.
How will the network code affect flexibility service providers (FSPs)?
The code aims to provide increased opportunities for flexibility service providers, facilitating value stacking, market coordination, and efficient trading volumes.
The rules to participate will be streamlined, including pre-qualification and grid qualification, with financial and ICT requirements.
For storage providers, the code clarifies where public consultation may be required to help boost participation from existing energy storage facilities.
What is the status of the draft network code?
The European Union Agency for the Cooperation of Energy Regulators (ACER) submitted a final version of the code to the European Commission, in March 2025.
The Directorate-General for Energy (DG ENER) will review and consult on the code. Electron will contribute to the consultation alongside SmartEn, particularly relating to the rules, roles, and procedures for market-based procurement of flexibility services in local flexibility markets.
When will the network code for demand response come into force?
National enforcement is expected to be in March 2027, pending issues.
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.
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.
