Electricity systems are undergoing rapid structural change. Demand is rising quickly – nearly twice the average pace of total energy demand growth over the past decade and around 3% in 2025 alone. Electrification of transport, heating, cooling, industry and digital infrastructure is increasing electricity demand, while low-emissions sources could provide around half of global electricity generation by 2030. As these trends accelerate, global electricity demand could double by 2035, with short-term flexibility in the Stated Energy Policies (STEPS) scenario growing between two and seven times depending on the region.

Historically, power systems have been designed around the principle that supply follows demand. However, demand itself can increasingly contribute to efficient system operation. Digitalisation, connected technologies and new market arrangements are creating opportunities for electricity demand to respond to system conditions, helping to maintain reliability, reduce costs, integrate renewable energy and defer investment in infrastructure.

The recent energy crisis has reinforced the importance of resilience from energy shocks. In 2026, disruption to almost 20% of global liquefied natural gas trade pushed gas prices up by around 50%, highlighting the risks of relying solely on fuel-based flexibility. Demand-side measures, including energy efficiency and demand flexibility, could increasingly contribute to energy security, affordability and resilience.

This report, part of the IEA Digital Demand-Driven Electricity Networks (3DEN) initiative, examines how the role of demand flexibility could evolve through three case studies representing different stages of power system development: South Africa in 2025, Thailand in 2030 and Ireland in 2035. These case studies illustrate how electricity demand could develop over time from passive load into an active system resource.

Demand flexibility is already reducing the cost of managing peak electricity demand. In South Africa, demand flexibility measures have already avoided around 1.5 GW or 5% of annual peak demand. During periods of high demand, this has reduced peaking generation requirements by up to 20%. Although this generation contributes only around 1.4% of annual generation in South Africa, it accounts for approximately 14% of total system operating costs, illustrating how targeted reductions in peak demand can deliver important savings.

Demand flexibility also strengthens reliability during periods of system stress. In South Africa, the highest 3% of demand occurs during just 0.1% of the time. Demand flexibility programmes with large energy users have helped mitigate emergency load shedding through limited operation, supporting economic activity that would otherwise have been interrupted.

While demand flexibility is delivering value today, its most significant impact could lie ahead. With accelerating electrification, digitalisation and uptake of AI, flexibility could evolve from an infrequently used reliability tool to a routine operational capability that supports day-to-day system optimisation.

Demand flexibility could help manage electrification growth and get more out of existing infrastructure. In Thailand by 2030, mainly industrial flexibility could lower national peak demand by up to 13%. This could help manage rising demand for cooling, with every one-degree increase in temperature today adding around 1 GW to peak demand. Flexibility could play a crucial role in managing this by freeing up to 15% of transmission capacity on many network corridors, but increasing flows on some network lines underscores the need for stakeholder co-ordination of flexibility activation.

Other benefits include supporting greater uptake of renewable energy and reducing costs from fossil fuel generation. In Ireland, by 2035, the ambitious roll-out of flexibility technologies could reduce total energy system costs by up to 10%, lower fossil fuel dispatch, reduce renewable curtailment and strengthen energy security by mitigating exposure to volatile fuel prices. Demand response ready heat pumps could electrify the heating of around 170 000 additional homes without immediate transmission network reinforcement – the equivalent of nearly half of Ireland's current residential retrofit target.

The value of demand flexibility is highest when alternative sources of flexibility are limited. With Ireland in 2035 expected to have around five times more battery storage capacity relative to demand than Thailand in 2030, the marginal value of additional demand flexibility could be greater in Thailand. Determining the appropriate role of demand flexibility therefore requires quantifying the additional benefits demand flexibility can have, overall system needs, the availability and cost of alternative resources, and the factors that influence consumer participation and response.

Not all electricity demand is equally flexible. The greatest opportunities for flexibility are often found in specific end uses rather than in the largest electricity-consuming sectors. In South Africa today, most flexibility is provided by industrial users. However, IEA analysis shows that equipping hot water systems in just 10% of homes with smart controls could unlock an additional 600 MW of peak demand reduction, which is the equivalent to a large power station.

Electric vehicles (EVs) offer significant flexibility potential. In Ireland by 2035, both transport and heating sectors could provide a similar amount of flexibility, yet heating demand might be two-and-a-half times larger than transport demand. This reflects the high shiftability of EV charging compared with heating, which can be more constrained by thermal comfort. More efficient buildings could also enable an additional 15% reduction in renewable curtailment through heating flexibility, underscoring the mutually reinforcing nature of energy efficiency and flexibility.

Significant flexibility resources remain untapped in many countries. Scaling up the potential benefits would require accelerated deployment of smart technologies to monitor, communicate and control electricity demand. Smart meters, energy management systems, aggregation platforms, connected devices and AI-enabled analytics are needed for modern flexibility programmes. Increasing the scope for automated flexibility would make consumer trust and acceptance just as important as the underlying technologies themselves.

Interoperability is crucial to making the most of new and existing flexible technologies. For Ireland by 2035, the modelled flexibility would require substantial growth in enabling technologies, including an eleven-fold increase in smart EV chargers – making up around 70% of total chargers – and a four-fold increase in smart thermostats connected to flexible heat pumps. This could allow electric transport and heating technologies to provide around two-thirds of flexibility potential in Ireland by 2035.

Demand flexibility could lower operating costs, infrastructure investment, and peak demand, improving affordability for all consumers. Well-designed flexibility programmes could reduce operational costs in both Thailand and Ireland by around 10%. However, not all consumers might be able to participate equally in flexibility programmes, so careful policy design is needed to avoid penalising households less able to shift demand. If deemed a part of wider policy priorities, targeted support would be needed to more broadly share participation benefits.

For proven digital technologies, scaling up demand flexibility will be a policy and market design challenge. Demand flexibility-ready and interconnected devices are commercially available and are increasingly deployed globally. However, planning and market processes can often exclude demand flexibility despite its potential to improve system efficiency and reduce costs.

Successfully scaling up flexibility requires addressing implementation risks like consumer uptake and cybersecurity. If more interconnected and consumer operated devices are to play a more central role in power systems, it could increase cyber-risk, but also system dependence on consumer participation. Management of these risks will influence the extent to which demand flexibility could reliably provide grid services.

Better understanding of demand flexibility potential, costs and system value can help countries determine its role in future power systems, alongside efficiency, generation, networks, and storage. This report shows how flexibility could become an increasingly important component of modern electricity systems by managing growing demand, integrating renewables and improving system efficiency. Realising this value at scale may depend on the extent to which flexibility is considered in planning, investment and policy decisions through improved valuation methodologies and enabling regulatory frameworks.