International Energy Agency

Key findings

As electricity demand grows and power systems become more electrified, decentralised and renewable-rich, managing when and how electricity is used is increasingly as important as expanding supply. “By improving the use of existing generation and network assets, demand flexibility can raise system efficiency by up to 30% and deliver greater value.”  

• Enhance power system efficiency. Flexibility and efficiency reinforce each other, as flexibility enables more efficient grid operation, while efficient buildings and smart equipment expand the scope for cost-effective demand shifting. By improving the use of existing generation and network assets, demand flexibility can raise system efficiency by up to 30% and deliver greater value. 

• Strengthen energy security. Demand flexibility reinforces electricity security and system resilience by reducing peak demand and lowering reliance on fuel imports. Recent events in California, Western Australia, and France demonstrate this capability, where customers reacted quickly to support system operators, rapidly reducing consumption and helping avoid system crises such as blackouts. 

• Enhance affordability. Shifting electricity consumption to lower-cost hours can offer financial benefits for consumers directly through smart tariffs. For instance, households can typically save 5-15% on electricity costs [..]. Meanwhile, it can also deliver capacity to the grid at a cost up to three times lower than building new capacity, helping keep electricity costs lower for everyone. 

Reduce emissions. By facilitating the integration of variable renewables and reducing reliance on fossil fuels during peak periods, demand flexibility can lower the carbon intensity of the power system by shifting consumption away from peak hours, when emissions are generally higher, sometimes by as much as 70% compared to off-peak times. 

Source : https://www.iea.org/reports/scaling-up-demand-flexibility/executive-summary (2025)

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