Demand Side Flexibility Action Group

The Demand Side Flexibility Action Group, also covering Virtual Power Plants (VPPs), brings together GlobalABC and the Cool Coalition communities and expertise to advance knowledge, coordination and action on energy demand as a flexible asset, with a central focus on improving energy security and resilience in emerging markets and developing economies (EMDEs).

The energy transition is entering an "Age of Electricity," marked by rapid electrification of heating and cooling, mobility, industry and digital infrastructure, alongside a growing share of wind and solar in new power capacity. That combination is increasing the need for flexibility across energy systems: the ability to respond to variability, shift demand in time, reduce peak stress, and keep increasingly complex grids reliable and resilient.

Buildings are central to this challenge. They account for more than half of final electricity demand globally, and in 2024 electricity use in buildings made up nearly 60% of total growth in global power consumption. In developing countries, cooling is the fastest-growing demand source, driven by extreme heat and urbanization, and it holds the greatest flexibility potential. Electrified end uses such as heat pumps, EV charging and data centres are adding further pressure on grids, most of it concentrated in homes and offices.

Yet most buildings are still treated as passive consumers of electricity, and loads like cooling are rarely leveraged to deliver the benefits they could provide to energy systems. Demand response remains significantly underused worldwide: the IEA estimates only around 100 GW of demand response was in use globally as of 2024, of which just 30 GW came from buildings, against a need roughly six times greater.

This Action Group works to shift buildings from being seen only as sources of demand to being recognized as sources of system flexibility, and to build the enabling policies, business models and technical capacity needed to turn buildings and growing end uses in developing countries into a resource for a more resilient, efficient and renewable-powered electricity system.

Objectives

  • Support the deployment of demand-side flexibility solutions tailored to emerging and developing market contexts
  • Promote global best practices, case studies and lessons learnt that can be adopted in early market
  • Serve as a platform for knowledge exchange between members to inform ongoing work on demand-side flexibility 
  • Showcase how fast-growing demand loads like cooling and data centers can be practically leveraged and monetized to support grid flexibility 
  • Strengthen integration with Buildings and Cooling agendas – link demand-side flexibility and VPPs to cutting edge sustainable cooling solutions and promote alignment with Global ABC and Cool Coalition priorities

Strategic value and alignment with GlobalABC and Cool Coalition objectives

The Action Group supports:

  • Decarbonization of buildings and emission reduction through smarter energy use and faster renewables uptake
  • A faster, lower-cost pathway to large-scale electrification of energy demands  
  • Leveraging and monetizing fast-growing demand loads like cooling and data centers to support grid flexibility 
  • Efficient energy use in buildings through optimizing demand locally, and using demand as a resource for the rest of the system 
  • Integration of renewable energy into energy systems in ways that reduce impacts on the grid and increase system resilience 
  • Just and inclusive energy transitions by enabling better resource utilization through demand-side flexibility that improves affordability, cost efficiency and adaptation (e.g. through cooling)

The Action Group directly contributes to GlobalABC programme objectives by:

  • (PO1) Providing a dedicated platform for dialogue and global stocktaking on demand-side flexibility and accelerating its implementation around the world
  • (PO2) Enabling members to exchange best practices, share practical lessons learned, and strengthen coordination of ongoing initiatives on grid integration and demand-side flexibility
  • (PO3) Developing targeted knowledge products and compiling international best practices to support national and subnational stakeholders in accelerating demand-side flexibility and identifying priority actions 
  • (PO4) Fostering private sector engagement by facilitating relevant discussions and supporting the development of viable business models to enhance access to financing

Scope of work

The Action Group will cover the full ecosystem of demand-side flexibility and VPPs, including:

  • Policy and regulation: standards and codes, deployment guidelines under different tariffs and regulations, market access, aggregation and bidding rules
  • Technology and infrastructure: Smart meters, smart equipment, building energy performance and management systems
  • Business models and financial incentives: Aggregators, ESCOs, performance-based and financing models, demand response programs
  • Data and digitalization: interoperability standards, data governance, platforms

2026 priorities

  • Strategic input to upcoming UNEP-IRENA publications on demand-side flexibility
  • A global stocktake on demand-side flexibility in EMDEs, gathering evidence on key regulatory, financial, technical and institutional barriers; enabling conditions such as policy frameworks, market structures, digital readiness and institutional capacity; and viable business models, including aggregation models, utility-led approaches and cooling-as-a-service
  • Development of a toolkit for emerging and developing markets on how to develop and scale demand-side flexibility

Co-Leads

  • United Nations Environment Programme (UNEP)
  • International Renewable Energy Agency (IRENA)
  • China Association of Building Energy Efficiency (CABEE)