AleaSoft Energy Forecasting, July 29, 2026. The electrification of transport, industry and buildings will be one of the main drivers of electricity demand growth in Europe over the coming decades. However, for this increase to help integrate more renewable generation and improve the efficiency of the system, consuming more electricity will not be enough. It will also have to be consumed more flexibly.
A European plan sets the route towards greater electrification
The Electrification Action Plan, published by the European Commission on July 17, 2026, notes that electricity currently accounts for around 23% of the European Union’s final energy consumption. The plan sets a reference of reaching 32% by 2030 and proposes an indicative target of 46% for 2040.
The growth envisaged will be considerable. A significant share of the new consumption will come from electric vehicles, heat pumps, electrified industrial processes, data centres, renewable hydrogen production and other activities with very different consumption profiles.
Demand response, the new lever of flexibility
Some of these consumers will have to operate continuously. Others will be able to shift part of their activity between different hours of the day without affecting their output or the quality of their service.
This ability to change the timing of consumption in response to prices or to the needs of the system is known as demand response. It can mean increasing consumption during hours of abundant renewable production, reducing it at moments of greater stress or shifting it towards periods with lower electricity market prices.
Demand flexibility can take many forms. An electric vehicle can charge during the hours with the lowest prices. A heat pump can run ahead of schedule by taking advantage of the building’s thermal inertia. An industrial plant can adapt certain processes or store heat. An electrolyser can adjust its hydrogen production according to the price of electricity and the availability of renewable energy.
Flexibility needs will multiply by 2050
A study published in July 2026 by the European Commission’s Joint Research Centre concludes that the daily flexibility needs of the European system could increase fivefold between 2025 and 2050, mainly because of the growth of photovoltaic solar production. The analysis highlights the growing role of flexibility from electric vehicles and industry, together with batteries, interconnections and dispatchable generation.
This does not mean that all demand must react constantly to prices, nor that other flexibility technologies will stop being necessary. A secure system will require a balanced combination of energy storage, interconnections, grids, dispatchable generation and consumers able to adapt part of their demand.
Price signals and regulatory barriers still to be resolved
Nor should demand response be framed as a one-sided obligation for consumers. For it to develop, it has to deliver a clear economic benefit. Companies and households will need understandable price signals, suitable dynamic contracts, metering systems, automation and access to flexibility markets.
ACER still identifies significant barriers to demand participation. These include the limited uptake of dynamic contracts, the uneven rollout of smart meters and the difficulties aggregators and small resources face in accessing certain markets. The agency estimates that Europe will need 50% more flexibility by 2030 and recommends strengthening price signals, simplifying access and accelerating digitalisation.
The European Commission is also developing a network code on demand response to make it easier for these resources to take part in wholesale markets and to provide local services such as congestion management and voltage control. Local flexibility markets will be an important piece in allowing distributors and consumers to manage grid constraints better.
Industrial flexibility, a route towards greater competitiveness
In the case of industry, flexibility can become a tool for industrial competitiveness. Adapting consumption to market conditions makes it possible to cut costs, manage risks and make better use of self-consumption installations, batteries and thermal storage systems.
To achieve this, having reliable forecasts of demand, renewable production and electricity market prices will be essential. Decisions will have to be taken across different time horizons, from intraday operation to long-term investment planning.
The value of electrifying at the right moment
Electrification will bring new opportunities for the electricity system and for consumers, but its value will depend on how it happens. Consuming more electricity in the wrong hours can increase congestion and back-up needs. Doing so at the right moments can cut costs, make better use of renewables and reduce the need for certain investments.
The future of the electricity system will depend not only on how much electricity is consumed, but also on when, where and with what ability to adapt. Electrifying will be essential, but electrifying intelligently will matter even more.
Bankable forecasts to plan electrification: the role of AleaGreen
Managing the growth of electricity demand and the flexibility that comes with it calls for reliable forecasts of demand, renewable production and electricity market prices across different time horizons. AleaGreen, the division of AleaSoft Energy Forecasting specialising in long-term forecasting, provides bankable forecasts of prices, demand and renewable production with horizons of up to 40 years, designed to support the financing of electrification, storage and charging infrastructure projects.
These forecasts, produced with a methodology backed by more than 27 years of track record that combines Artificial Intelligence, statistical models and fundamental analysis, allow investors, banks and developers to assess the profitability of their projects and anticipate demand flexibility scenarios with greater confidence.
Source: AleaSoft Energy Forecasting
