EPEX SPOT and IDED (formerly known as SDIA) call for the large-scale activation of the currently untapped flexibility potential of data centers — through local flexibility markets, as outlined in a joint white paper.

The Untapped Potential of Data Centers

The transformation of the electricity system towards a decentralized and decarbonized structure poses new challenges for grid operators. To manage grid congestion at all levels, they resort to costly redispatch measures, which sometimes result in renewable energy facilities being curtailed.

Current estimates suggest the theoretical demand-response potential of data centers could reach 38 to 80% of installed capacity by 2030 — equivalent to a flexibility source of over 10 GW in the European power system. Furthermore, the high degree of automation in data centers allows precise real-time control over electricity consumption. Within just 15 minutes, consumption can be reduced by up to 10% without significantly affecting IT operations. Typical workloads can also be rescheduled with ease. Thus, data centers represent an ideal flexibility source for the future energy system — yet without local flexibility markets, this potential remains untapped.

Local Flexibility Markets as a Key

Currently, there are neither incentives to invest in flexibility resources nor mechanisms for providers to sell their services to system operators. Local flexibility markets would address this market failure: providers like data centers could offer and price their flexibility; system operators could resolve physical grid constraints reliably and economically almost in real-time.

“Together with SDIA, we urge regulators and system operators to create an economic framework or pilot program where local flexibility markets can be tested, regulated, and optimized — before being widely implemented. Only market-based mechanisms can generate a meaningful price signal for grid congestions, thus enabling the efficient integration of demand-side flexibility into the system.” — Philippe Vassilopoulos, Director of Product Development at EPEX SPOT

“Data centers are a rapidly growing and energy-intensive industry. We have a unique opportunity to integrate them into the energy system during their main expansion phase — by enabling their participation in flexibility markets. Other sectors are still catching up, while data centers have this opportunity ahead of them now.” — Max Schulze, Chairman of the SDIA

Activating data center flexibility contributes to decarbonization, relieves the power grid, promotes new technologies, advances sector integration, unlocks new sources of flexibility, and reduces energy transition costs for end consumers.