The European demand response (DR) market is forecast to grow to $3.5 billion (£2.6bn) over the next seven years.
New research suggests the market – currently estimated at $0.9 billion (£0.68bn) – will be aided largely by advances in Internet of Things (IoT)-enabled systems, which it claims could help the EU achieve nearly 40% of its 2020 energy savings and emissions reduction targets.
The rising installation of smart meters, influx of new energy service companies and technology-savvy start-ups are expected to play a “huge role” in driving the market.
Demand response is the mechanism through which consumers reduce or shift their electricity use during peak periods in response to time-based rates or other forms of financial incentives.
Utilities and aggregators are expected to “invest substantially” in innovative DSR technologies and predictive tools to reduce power generation costs as well as grid failures and outages.
The research suggests DSR will especially thrive in the residential sector, electric vehicles and data centre applications.
Swagath Navin Manohar, Research Analyst, Energy & Environment at Frost & Sullivan said: “As smart cities are mushrooming all over the region, DR systems with big data, predictive analytics, artificial intelligence and the Internet of Things will inevitably attract greater interest from utilities, aggregators and software companies.”