According to a new whitepaper from Solar Promotion, industry accounts for around 35 percent of electricity consumption in the EU, and for more than 40 percent in Germany. That makes it a decisive lever for integrating renewable generation. Industrial demand-side flexibility (DSF) could cut the curtailment of renewables in the EU by at least 15.5 TWh, or 61 percent, and reduce greenhouse gas emissions by around 37.5 million tonnes annually by 2030.
At the same time, at least 60 GW of peak generation capacity could be avoided, €2.7 billion in annual system costs saved, grid expansion costs reduced by up to €29 billion per year, and consumers with flexible assets enabled to save more than €71 billion. System-wide savings are estimated at over €300 billion annually.
Potential by sector
The whitepaper, published to coincide with The smarter E Europe, draws substantially on a study by the European industry association smartEn, “The Business Case for Flexibility Provision in Energy-Intensive Industries”, which examines five sectors: steel and iron, aluminium, paper, glass and cement. The technical potential is substantial but unevenly distributed.
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Electric arc furnaces in steel production can achieve load flexibility of up to 80 percent in batch operation, while high-temperature electrolysis in aluminium production can be reduced by up to 88 percent, albeit at significant opportunity costs of around €550/MWh. Pulp and paper mills with hybrid steam generation and steam storage can activate flexibility up to 1,400 times per year.
In the cement sector, grinding processes offer load flexibility of up to 75 percent with more than 900 annual activations, made possible by intermediate storage of the material. Glass production is more constrained: 5 to 15 percent of process load can be shifted through hybrid electric-gas heating.
Annual revenues from providing flexibility vary widely by sector, ranging from around €50,000/MW in steel production and €35,000/MW in aluminium to €300,000/MW in cement manufacturing and €340,000/MW in the paper industry. The strongest business cases emerge where material storability and frequent activations come together. In the cement sector, flexibility revenues can close the cost gap for decarbonisation measures by up to 85 percent.
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Michael Villa, Executive Director of smartEn, sees this as a fundamental shift: “For energy-intensive industries such as steel, aluminium, paper, glass and cement, DSF turns electrification from a challenge into a competitive advantage: flexibly electrified processes support decarbonisation while opening up new revenue streams through market-based flexibility, lowering energy costs and strengthening resilience against price volatility.”
Practical implementation under way
Several European industrial sites are already demonstrating viable DSF business cases. Sappi's paper mill in Maastricht combined a 20 MW electric boiler with its existing CHP plant in 2025, enabling steam generation to switch between renewable electricity and natural gas within five minutes. The €6.5 million investment cuts CO₂ emissions by 22,000 tonnes annually and generates revenues on the balancing market. Sappi now offers other companies access to the secondary control reserve market as a balancing service provider.
In Neumünster in northern Germany, cold-chain logistics operator Peter Bade uses Encentive's AI-based energy management platform to shift consumption to periods of favourable spot prices or high PV generation. Electricity consumption at the refrigeration plant fell by 11.3 percent in the first quarter of 2024, translating into annual savings of 135 MWh and 54 tonnes of CO₂. Grid charges dropped by 30 percent in 2024 and 44 percent in 2025.
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At Speira's aluminium recycling site in Hamburg, a 1.6 MW battery storage system operated by Energy2market and EDF Renewables enables peak shaving and participation in the balancing market, delivering annual cost savings of more than €100,000.
Artificial intelligence plays a decisive role in aggregating such assets into grid-serving resources. Michael Villa: “Our members are already aggregating thousands of industrial loads in real time using machine learning, forecasting grid stress events hours in advance and dispatching flexibility faster than any conventional generator could.”
Regulatory and structural hurdles
Despite some 70 EU regulations across six legislative packages, access to demand flexibility remains fragmented. The whitepaper calls for consistent national implementation of the 2024/2025 EU electricity market reform, which introduces 15-minute trading intervals and requires member states to set targets for non-fossil flexibility.
Key recommendations include placing demand response on an equal footing with generation assets across all electricity markets, recognising flexible load management as a clean-tech sector, introducing flexibility-oriented grid charges, adopting a flexibility-first approach to grid planning, and removing tax privileges for gas. Electricity in the EU is currently taxed on average 1.4 times higher than gas.
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Michael Villa sees the decisive bottleneck here too: “Every regulatory hurdle that slows down AI-supported aggregation acts as a direct brake on the energy transition. We need frameworks that recognise AI-aggregated flexibility as a fully fledged grid resource, mandate interoperability standards and adapt settlement rules to the speed at which AI operates.”
Technical prerequisites include non-discriminatory access to consumption data, interoperable digital interfaces, transparent grid maps and EU-wide grid codes. Companies must also rethink their production planning and actively factor downtimes and load peaks into their economic strategy. Small and medium-sized enterprises in particular need support in identifying flexible loads and accessing aggregation options.
A necessary but not sufficient lever
The whitepaper finds that DSF alone will not cover future flexibility needs. Complementary technologies such as large-scale battery storage and bidirectionally charging electric vehicles remain indispensable. Given high energy prices and intensifying international competition, targeted support for industrial flexibility, alongside the expansion of renewable generation, storage and grids, is essential to secure a reliable, affordable and sustainable European energy system, the paper concludes. (hcn)
