How Flexibility Markets Can Prevent Renewable Energy Losses

This Research Highlight condenses ABI Research’s latest report on flexibility markets, detailing how Distributed Energy Resources (DERs) and technology manage renewable energy’s variability. It presents key trends and actionable recommendations for vendors, utilities, and regulators to improve grid operations.

Market Overview

Renewable energy sources like solar and wind are displacing traditional hydrocarbons in power grids, but their intermittent nature poses problems. Unlike consistent fossil fuels, renewables rely on weather, creating irregular output that grid operators address by curtailing excess production or using gas turbines for redispatch. These approaches drive up costs.

ABI Research’s Energy Flexibility Trading for Utilities, Industries, and Enterprises report introduces flexibility markets as a remedy. By utilizing Distributed Energy Resources (DERs) such as batteries and hydroelectric systems, along with Artificial Intelligence (AI)-supported technology, these markets aim to stabilize grids and reduce wasteful practices.

The report highlights significant potential in flexibility markets. Without change, curtailment could increase from 515 Gigawatts (GW) in 2025 to over 1,400 GW by 2030. Flexibility markets, however, could make a dent in this loss, improving capacity utilization. Increasing demand, regulatory support, and DER growth fuel this shift. This Highlight draws from the report to outline major trends and steps forward.

“The primary barriers to developed, impactful flexibility markets are regulatory and technological. Energy systems are of national importance and are conventionally stringently regulated. For DERs to better facilitate and support the grid, regulations must foster prosumer participation in the energy market—primarily by removing restrictions on who can, and cannot, contribute.” – Daniel Burge, Industry Analyst

Utilize DERs to Boost Flexibility

A central trend in grid operations is the growing role of DERs in flexibility markets. These assets, including batteries and small-scale generators, allow prosumers—those who produce and consume energy—to trade surplus power. The report notes that, by 2030, flexibility markets will reduce the need to curtail renewable generation, benefiting utilities with more agile grids and DER owners with commercial opportunities.

Vendors targeting utilities should focus on creating services like local market platforms and Virtual Power Plants (VPPs) to manage DER assets. System Operators (SOs) and utilities can leverage these resources to meet demand more effectively. Embracing DERs now aligns with the report’s vision of a market-driven energy transition by 2030.

Related Article

Digital Transformation in Energy: The Power Move Utilities Can’t Ignore

Respond to Regulatory Support by 2027

The report identifies regulatory adaptation as a key trend, with major changes expected by 2027. Current rules often limit prosumer participation and favor infrastructure spending over market solutions. However, our analysts anticipate that, by 2027, regulators will ease these restrictions and encourage SOs to facilitate flexibility markets, improving grid management.

Regulators should adjust policies to allow prosumer contributions and incentivize SOs to adopt market-based approaches. Vendors can develop tools like trading platforms and VPPs to fit this shift. Preparing for 2027 positions stakeholders to take advantage of the report’s forecast regulatory boost.

Apply Technology to Ease Congestion

Technological adoption is a vital requirement to support flexibility markets, as outlined in the report. Solutions such as VPPs for aggregating DERs and AI-based forecasting tools to predict available energy help reduce curtailment and redispatch. These advancements will lower congestion costs and decrease dependence on gas-fired systems over time.

Technology providers should build platforms for energy exchange and forecasting services to support SOs. Utilities and SOs can use these tools to optimize renewable output. Implementing this technology aligns with the report’s emphasis on reducing grid rigidity through innovation.

Optimize Trading for Better Efficiency

The report points to more granular trading as a trend enabled by flexibility markets. Unlike traditional wholesale markets with fixed regional prices, these markets adjust to short-term demand, local production costs, and transmission needs. This precision enhances renewable utilization and cuts operational expenses.

Vendors should offer platforms that enable dynamic trading and VPPs to compile DER energy. SOs and utilities can adopt these systems to refine energy distribution. Following this trend supports the report’s goal of improving grid efficiency through flexible, localized markets.

 Get the Report

For a complete view of flexibility markets and how to strengthen renewable energy systems, download the full report: Energy Flexibility Trading for Utilities, Industries, and Enterprises