Abstract

Distributed energy resources (DER) are increasingly being deployed across residential, commercial, and industrial sectors to enhance grid flexibility and support the transition to more resilient energy systems. Flexibility mechanisms—including demand response (DR) programs and virtual power plant (VPP) aggregations—enable increased capacity, improved grid management, and streamlined interconnection. The ongoing digitalization of the energy sector is facilitating the development of virtual marketplaces, making energy trading more accessible and efficient for a broad range of stakeholders. Pairing flexibility markets and utility programs with DER can contribute to cost-effective solutions and reduce the need for long-term grid maintenance and upgrades.

This report provides detailed forecasts for cumulative flexible DER capacity, revenue, and implementation spending across five major geographic regions: North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. Country-level analysis is included for selected markets with established or emerging flexibility programs: the U.S., France, Germany, the UK, Italy, Australia, and Japan. The forecasts focuses on DER participating in flexibility programs or markets—segmented into DR and VPP—rather than total installed DER capacity. Revenue reflects payments from wholesale or local flexibility markets and utility DR programs to service providers and customers for delivering flexibility, while implementation spending encompasses program costs, telemetry, device controls, and enabling software.

Guidehouse Research’s analysis is designed for electricity end users, DER owners, software companies, aggregators, regulators, grid operators, and electricity market operators seeking actionable insights into market trends, drivers, barriers, and regulatory developments. With cumulative flexible DER capacity projected to grow at a CAGR of 5.0% from 2025 through 2034, the report offers a comprehensive view of the evolving landscape, supporting strategic decision-making for stakeholders navigating the future of flexibility markets and enabling technologies.

What Questions Does This Report Answer?

•  What are the regional and global trends in flexible DER capacity growth, revenue, and implementation spending?
• How do flexibility markets and utility programs enable DER owners, aggregators, and other stakeholders to capture new value streams?
• How are flexibility markets evolving across different regions, and what factors are shaping their development globally?
• What are the key drivers and barriers to scaling flexible DER and advancing flexibility-enabling technologies?
• Which countries and regions are leading in flexible DER adoption, and how do their regulatory frameworks support or hinder market growth?
• What compensation methods and price ranges are available for DER flexibility, and how do they vary by market and procurement model? 

 Who Would Benefit from This Report?  

• DER owners
• DER software providers
• DER aggregators and VPP operators
• Regulators
• Electricity market operators
• Grid owners and operators
• Utilities
• Energy service providers

 Key Market Forecasts in This Report

• Cumulative Flexible DER Capacity by Region, World Markets: 2025–2034
• Cumulative Flexible DER Capacity by Region with Revenue and Implementation Spending, World Markets: 2025–2034
• Cumulative Flexible DER Capacity by Technology with Implementation Spending, North America: 2025–2034
• Cumulative Flexible DER Capacity by Customer Segment with Implementation Spending, North America: 2025–2034
• Cumulative Flexible DER Capacity by Technology with Implementation Spending, Europe: 2025–2034
• Cumulative Flexible DER Capacity by Customer Segment with Implementation Spending, Europe: 2025–2034
• Cumulative Flexible DER Capacity by Technology with Implementation Spending, Asia-Pacific: 2025–2034
• Cumulative Flexible DER Capacity by Customer Segment with Implementation Spending, Asia-Pacific: 2025–2034
• Cumulative Flexible DER Capacity by Technology with Implementation Spending, Latin America: 2025–2034
• Cumulative Flexible DER Capacity by Customer Segment with Implementation Spending, Latin America: 2025–2034
• Cumulative Flexible DER Capacity by Technology with Implementation Spending, Middle East & Africa: 2025–2034
• Cumulative Flexible DER Capacity by Customer Segment with Implementation Spending, Middle East & Africa: 2025–2034