Demand-side flexibility (DSF) is fast becoming a cornerstone of Europe's energy transition, turning industrial electrification from a cost burden into a competitive edge. In our interview, Michael Villa, Executive Director of the European industry association smartEn, explains why AI-enabled aggregation is now indispensable, where regulation still holds DSF back, and how energy-intensive sectors from steel to data centres are unlocking new revenues while strengthening grid stability. He also looks ahead to smartEn's 2026 best-practice report and two key sessions in Munich.
DSF offers transformative potential for Europe's energy transition by enabling cost-effective, smart electrification, a cornerstone of the EU's goal to lift electrification from 23% to 32% by 2030. Our 2025 study showed that for energy-intensive industries such as steel, aluminium, paper, glass and cement, DSF turns electrification from a challenge into a competitive advantage: flexible electrified processes support decarbonization while unlocking new revenue streams through market-based flexibility, cutting energy costs and strengthening resilience against price volatility.
In practice, DSF is already moving beyond outdated interruptible schemes towards smart, market-driven models that allow industries to participate in balancing services, wholesale markets and capacity remuneration mechanisms without compromising output. Aggregated across sectors, these opportunities scale up significantly, making flexibility a critical enabler of industrial competitiveness and a renewable-powered energy system.
Several hurdles need attention. Outdated demand response schemes must give way to smart, market-based models that properly value dynamic participation. Industry investment in smart technologies, including electrified processes, distributed energy resources, AI-driven optimization tools and real-time control systems, needs support so companies can unlock their flexibility potential without operational disruption.
Regulatory barriers must also fall: current rules often restrict market access or impose prescriptive conditions that stifle innovation. Creating open, functioning flexibility markets, as envisioned in EU law, is essential to give industries clear, voluntary and profitable pathways. Finally, transparency and dialogue are needed to demonstrate return on investment and build trust that flexibility activations will not compromise output.
The real question is whether Europe can afford to deploy DSF without AI, and the answer is unequivocally no. The grid of 2030 will not resemble the grid of the past. We are integrating hundreds of gigawatts of variable renewables into a system never designed for two-way, millisecond-level responsiveness. The only asset class capable of bridging that gap in real time at continental scale is AI-powered demand-side flexibility.
smartEn members are not only running pilots. They are using machine learning systems right now, aggregating thousands of industrial loads, predicting grid stress events hours in advance, and dispatching flexibility faster than any conventional generator can respond. Response times are measured in seconds. Revenue stacking across balancing, capacity and intraday markets simultaneously. No rule-based system achieves this.
AI also dismantles the persistent myth that DSF is too fragmented to be relied upon. Every regulatory barrier slowing AI-enabled aggregation is a direct brake on the energy transition. We need frameworks that recognise AI-aggregated flexibility as a first-class grid resource, mandate interoperability standards and align settlement rules with the speed at which AI operates. The technology is ready. Our members are ready. The only remaining variable is political will.
EU legislation already requires Member States to implement demand-side flexibility, yet implementation remains uneven across Europe and many countries are leaving valuable cost savings and grid stability benefits untapped. To accelerate progress, smartEn developed a guidebook, Implementing EU laws: A guide to activate demand-side flexibility in the EU 27 Member States, which identifies the seven main barriers and provides actionable recommendations for overcoming them.
Our upcoming report, due in June 2026, examines best practices of DSF in energy-intensive industries and shows how industrial consumers are evolving from passive users into active participants in Europe's transforming electricity system, leveraging their operational flexibility to support grid stability, unlock new revenues and drive decarbonization. It draws on real-world implementations across sectors including agriculture, cement, chemicals, data centres, glass, iron and steel, mining, pulp and paper, timber, and waste and water management, making the case that demand-side flexibility is a strategic asset rather than a constraint.
The report identifies key patterns: how industrial processes can adjust electricity use through thermal inertia or material storage without disrupting operations, the multiple value streams this opens up, and the wider systemic benefits for renewables integration and reduced infrastructure costs. It also highlights the pivotal role of Flexible Demand Management Industry (FDMI) actors, with structured sectoral case studies showcasing scalable, mature solutions.
Two cutting-edge sessions are on the agenda. „Turning Industrial and Commercial Demand-Side Flexibility into Value“ will show how DSOs, TSOs, aggregators and retailers are scaling from pilots to coordinated programmes, embedding flexibility into daily grid operations through automated dispatch, new contractual models and fair value-sharing. „From Local Experiments to Lasting Markets: The Future of DSO Flexibility“ will explore the transition from experimental local markets to stable, scalable solutions, addressing regulatory readiness, market design, standardization and long-term security for providers. Both sessions promise actionable strategies and collaborative dialogue for shaping Europe's energy future.
In early May, EM-Power Europe hosted a webinar in collaboration with smartEn on the topic of demand-side flexibility. You can find the recording of the webinar, titled “Demand-side flexibility in action: Real-world strategies for energy-intensive industries,” on our The smarter E Digital Platform.