As we transition towards a renewable-based energy system, both energy production and consumption must transform. Adapting demand to grid conditions is essential for integrating variable renewable sources such as wind and solar power.

Traditionally, electricity demand — which directly influenced hourly electricity prices — followed what is known as the “duck curve.” This curve reflects higher demand in the morning, a dip around midday (when solar generation peaks), and a sharp increase again in the evening. With the rise in photovoltaic generation, this pattern has become more pronounced and is evolving into what is now being called the “canyon curve” or “cliff.” The contrast between low and high demand periods is becoming even more extreme, causing electricity prices to clearly split between very low during solar hours and very high when solar energy is unavailable.

In this new paradigm, consumers must become active agents in the system, with the opportunity to participate in the market by leveraging demand flexibility. Although mechanisms already exist to monetize this flexibility, new tools are needed to engage industries and small consumers, such as energy communities.

How can demand flexibility be achieved?

There are two main strategies:

  • Modifying consumption patterns, by identifying equipment or uses that can be shifted — such as washing machines, electric vehicle charging, or water pumping systems — and leveraging the thermal inertia of certain systems, such as heat pumps, electric water heaters, or refrigeration compressors.
  • Using storage technologies, including chemical batteries, pumped hydro, or the production and storage of other energy vectors like renewable gases.

Both strategies can be used either to save on electricity bills (implicit flexibility) or to generate income by offering flexibility to the grid to help alleviate congestion (explicit flexibility). The latter is more complex and, in the short term, is only feasible for users with large, flexible loads. While applicable to all types of consumers, smaller ones (like households or small businesses) need to aggregate in order to pool enough flexibility to participate in these markets and obtain real benefits.

What is demand aggregation?

Demand aggregation is an energy management strategy where multiple consumers, coordinated by an aggregator, adjust their electricity usage collectively to offer greater flexibility. This may involve temporarily increasing or decreasing consumption, or storing energy — for example, using batteries.

Aggregation can lead to direct savings through implicit flexibility, by better integrating with local renewable sources (optimizing self-consumption) or reducing energy imports during high-price hours. However, its most valuable potential lies in providing explicit flexibility services — i.e., participating in markets that were traditionally accessible only to large consumers or energy producers.

Aiguasol’s Practical Applications in Flexible Demand

In self-consumption environments using renewable sources — such as photovoltaics — or with potentially shiftable energy demands, system flexibility is key. Especially when combined with aggregation mechanisms, such as centralized batteries or coordinated adjustments in consumption habits, which help achieve goals like:

  • Maximizing self-consumption: By concentrating energy use during peak solar hours using detailed analysis of demand curves and identifying programmable or shiftable devices. At Aiguasol, we implement this strategy across various projects, particularly in collaboration with companies with photovoltaic installations, aiming to optimize local renewable generation.
  • Maximizing energy sovereignty: By integrating storage systems to retain energy produced during low-demand periods for later use, thus avoiding grid imports. Aiguasol has developed a methodology to identify optimal photovoltaic and battery configurations to achieve different levels of energy independence. These solutions have been applied in both large private consumer settings and shared self-consumption environments with centralized storage.
  • Maximizing demand response: By adjusting equipment usage according to hourly tariffs — for example, scheduling appliances or HVAC systems during cheaper hours. This strategy reduces electricity bills and, if significant flexible loads are available, allows participation in the Active Demand Response market (SRAD), where users are compensated for reducing consumption at key times when requested by the system operator to maintain grid stability. Aiguasol applied this strategy in the DECARBSHIPS project (within the PERTE NAVAL initiative), adapting shipyard energy use to market dynamics, such as inflation or daily price spreads.
  • Maximizing arbitrage: Integrating storage systems allows users to sell self-produced or previously stored energy back to the grid during high-price periods, optimizing energy arbitrage. These systems enable participation in flexibility markets, such as secondary or tertiary regulation markets, where participants are financially compensated for producing or consuming energy based on system needs. Aiguasol has explored optimal control strategies for large-scale storage systems in projects such as GESYS, REGENERA, and CHESTER.

How can users benefit from flexibility?

Smart demand and storage management are key to optimizing decentralized energy systems. Through forecasting and the use of adaptive algorithms, it’s possible to anticipate scenarios and adjust energy consumption to improve efficiency. Energy Management Systems (EMS) make real-time decisions to optimize battery usage and grid interaction. This enables cost reduction, increased self-consumption, improved returns on solar installations, and the generation of revenue through participation in flexibility markets.

 

Challenges to Advancing Distributed and Shared Flexibility

Despite its potential, current flexibility markets have significant limitations. Historically, they were designed for large-scale generation and consumption, making it difficult for small consumers and energy communities to participate. This structural bias creates a gap between the real potential of distributed flexibility and its actual participation capacity.

To bridge this gap, several legislative, technological, and organizational challenges must be addressed. Chief among these is the need to revise the regulatory framework to formally recognize the active role of users and to establish accessible participation mechanisms. Progress is also needed in grid digitalization, data transparency, and the creation of interoperable platforms that support aggregation and dynamic local flexibility management.

Energy communities play a crucial role in enabling collective participation, but market operations must be adapted and inclusive models incentivized to make this a reality. Including small actors in the system goes beyond equity — it’s an opportunity to build a resilient, decentralized, and sustainable electric system.