EP.271 - Flexibility, Batteries and the Future of Europe’s Power System

This April Aurora Energy Researches Flagship Spring Forum returns to London for its 12th year. On 29th April 2026, join over 450 senior energy leaders for a full day of insight, debate and high-level networking. Here's CEO Keynotes from Global Energy and Finance Leaders, explored geopolitics, system resilience and investment strategy, and experienced live debates, breakout sessions and a recording of Aurora's energy unplugged podcast. As the energy transition enters a decisive phase, be part of the conversation shaping what comes next. Head to auroraear.com/events to book your pass and use the code podcast20 that podcast20 for an exclusive 20% discount. Welcome to Energy Unplugged, the go-to podcast focusing on the global energy transition. My name is Yesa Hetma and I'm Aurora's head of the Netherlands and Belgium. Today we're tackling a topic that's small capacity but critical for the energy future. That topic is flexibility. Europe's energy conversation is shifting away from pure decarbonization to a bigger conversation about energy independence. And independence isn't just about molecules or megawatts, it's also about response time. Flexibility is what keeps the lights on when renewables flood the grid or power plants trip. And it's not just a technical fix. It's central to the economics of the energy transition. Electricity prices have become far more volatile over the last years. In an ambulance, for example, we've seen that negative prices went from just a handful before 2020 to over 400 by last year and we've seen similar trends from Liberia to the Nordics. Aurora's research shows that this is not just a temporary blip. As renewables grow, price swings will remain. Flexible assets, whether demand side response or storage, are essential to keep renewable projects viable and market stable. To unpack this, I'm joined by Simon Buschel, CEO of SimPower, a company active across Nordics, increase and expanding to more markets, enabling both demand side flexibility and battery solutions. Previously at Amoresco and Imperial College London, and a founding member of the Dutch youth climate movement, Simon brings both a technical lens and a mission driven ambition to this topic. Simon, welcome to the show. Hi, yes, thanks. It's great to be here. Great. So before we dive into the content side of things, could you maybe tell us a little bit more about your backgrounds and your organization's role in the energy transition? Sure. So, I think my way to start with my background is at Imperial where I studied a master's in sustainable energy. And that's kind of where we first heard about this problem of balancing the electricity grid and that we were going to need more flexibility to enable more renewables in the grid as we go through this transition. At the time, we couldn't really figure out the business model that we wanted it to go after. We were looking at residential flexibility and looking at fridges, which I still think are very elegant solutions to the problem, but has a very bad business case. So yeah, after that, I worked at Ameresco in London as an energy consultant for a year and then just over 10 years ago, now quit my job there to start SimPower. And so SimPower's role in the energy transition, I guess it has always been the same in the really enabling flexible assets to access different energy markets. So we started with residential flexibility, but quickly pivoted to industrial flexibility and have spent the first eight years or so of SimPower really, really focusing on that. And we now have a portfolio of just over two gigawatts of industrial flexibility. So there we actually, we find the flexibility in industrial processes, we connect that to our software platform and then we trade that flexibility mostly across ancillary service markets, generating revenue for our customers and then also contributing to more stable grid. And over the last couple of years, we've also been adding batteries to the portfolio where we optimize them across the whole range of ancillary services and wholesale markets. Great. And as you mentioned, you've been interested in the topic of flexibility even before your time at SimPower. Can you maybe go into why this is and maybe reflect on the importance of flexibility also in the context of recent events like the Spanish blackout. So what could flexibility or more flexibility enabled in this system have meant to basically prevent these sorts of situations? Sure. So I think we're technically not allowed to comment on that yet in the sense that there's still some official findings coming out there, but happy to comment the way I see it at least. I think maybe to take a step back, flexibility has always been in an inherent need of any electricity system where there's always has to be a balance between supply and demand. I think the big thing that's changing now is we're going from a system where there was a relatively few number of generators that were relatively flexible on how they generated electricity and could always be matching the amount of electricity that they supplied to the amount of electricity that was being used in the country or in the electricity system. We're rapidly changing. Last year, I think there was more wind and solar electricity generated in Europe than coal and gas together for the first time. So we're rapidly changing to a grid where the primary electricity generators are less flexible and I'll come back later to why I say less flexible and not flexible, but so they're less flexible, but they're also very volatile. So you need more flexibility, you need more different ways of kind of adapting to that volatility than previously. At the same time, we're obviously trying to get rid of those gas and coal generators. So the original source of that flexibility is being removed. On the other side, there's a lot of electrification going on, which is both a challenge and an opportunity, a challenge because that electrification also brings variability in demand, but it's also an opportunity because in a lot of that electrification is there's the possibility to be more flexible with that electricity consumption. And I think that it feels to me like we have a lot of not all of the solutions on kind of both sides of that equation in terms of solar, wind, prices are coming down and so on the other side, electrification of heating, electrification of transport, it's all kind of moving in the right direction. And I think what we see now is that grids are really the absolute bottleneck in this energy transition. And you see that with, I mean, in the Netherlands, for example, there's this map of whether space that adds solar panels to the grid essentially and almost all of the Netherlands is red. There's not enough capacity on the grid. And I think this is where flexibility can really come in and help. We're not talking about replacing kind of investment in grids. We have to strengthen our grids and so on. But there's so much more we can do other existing grids. And the way to do that is to use more flexibility, demand-side response, use more batteries and so on and so forth. That's also why we started to empower because in this energy transition we need more flexibility, we need sustainable flexibility. But what's happened over the last couple of years is that's really become something that is being talked about across the energy sector and something that it's clear that we desperately need that. Otherwise it's going to become a bottleneck for the next phase of this energy transition. Yeah. Thanks for that. So basically in summary, we come from a system where the production side at least had a lot of inherent flexibility, right? And we're moving towards a system where more of that production side flexibility needs to be sort of enabled. And there's also more movement on the demand side, which was, of course, always inflexible and now really needs to be activated further to bring the two together. Yep. So a good summary. All right. But maybe just to pick on one thing, you say it was always inflexible. I think that's one of the neat things about demand response. It's not necessarily a new concept. So in the UK, for example, already going back a long time, we had storage heaters that would at night heat up when there was less demand on the grid, but you still have these kind of base low generators. So there were the storage heaters that would turn on at night and then heat up blocks of concrete essentially in a heater and then slowly release that heat over the day. That's very basic demand response, but it's doing exactly the same. It's making sure that we match supply and demand of electricity consumption. So this concept has been around for a while. It's just is getting more and more important and also more and more digitised and faster acting than it was maybe 30 years ago. Yep. Fair enough. And perhaps one of the other differences is that at least to me, it seems like the goal used to be to go for a base load demand profile. So to have stable demand throughout the day, throughout the year, this was also what was being incentivized for industrial users right through grid feed discounts, etc. Whereas we're now actually going to move to a system that's going to be much more production following. Hopefully. Absolutely. Yeah. So you're basically flipping that around that demand should follow supply as much as possible. Yeah. Great. And for listeners who do not live and breathe this every day, could you maybe go a little bit more into what this flexibility actually means? Can you break down the building blocks? So demands, site assets, batteries, etc. What do we have to think of when you're talking about flexibility? Yeah. So at the core, it's the ability of different types of assets. I'm going to say assets. I'm then talking about demand side consumption units to anything that consumes electricity, but also generators. So obviously coal and gas, but also wind and solar and hydro and so on. And then finally battery. So it's the ability of those different types of assets to change their consumption patterns or their production patterns when it's needed to balance the grid. That's at least how I would kind of, in general, think about flexibility. And yeah, the key building blocks that we see for a future flexible electricity system, which is sustainable and fully renewable, are assets. So yeah, well, we focus on industrial loads, but there's also some other great companies out there focusing on residential. So consumption assets, then batteries and then renewables, so especially solar and wind, obviously hydro is inherently quite flexible. And I think the interesting thing about renewables is that obviously you want to use the electricity from renewables as much as possible, but there are still many cases when it's actually better to occasionally turn it off or stop producing temporarily than it is to use it. So that's going to be an important source of flexibility as well, but I think the core building blocks will see are demand side assets and batteries. Yeah. And focusing on those two, how would you describe the differences in the characteristics of the flexibility that they provide to the system? So I think the traditional way of seeing this is it was that batteries are much faster reacting, but maybe can't react to that long, so they can do kind of lots of the kind of heavy lifting, it should have short response times, and then demand response is there more for the kind of the longer durations. I would challenge that slightly in the sense that I think that that is still very much looking at demand response from kind of let's say demand response 1.0 when people used to pick up the phone, call in industrial plant and say, you know, can you please turn off your machines for the next four hours? Actually, these days, the demand response that we provide, lots of the assets we work with have sub-second response times and can actually react multiple times per day, and those kind of things. So yes, a battery is very flexible and can respond quickly and so on, but actually I would say there are demand side assets that can also do that, and it's really about getting a portfolio of different assets with different characteristics that can together provide all the needs of the grid, and that's where we come in and that's kind of simp hours role in that. And I think that's a really important point to emphasise because I think that there's too often kind of discussions about batteries versus demand response or a lot of focus on batteries and I actually think we need to be thinking more holistically and just trying to get, you know, as much flexibility with different characteristics into the grid as possible. And of course, the key thing there as well is economics because batteries are expensive and demand response is a lot less expensive. Again, from my perspective, it's really important to keep promoting that demand side flexibility as well as the battery build out that's happening. Yeah, perhaps touching upon that topic of the economics of demand response versus batteries because you mentioned batteries are essentially more expensive because you have to actually build something for it, but at the same time, I've also talked to clients of ours who are these industrial players who say that it can be really expensive for them to provide these flex services because basically ramping down their plans to lower consumption means that they have to delay production which leads to all sorts of problems. So yeah, can you maybe dive a little bit deeper into those economics of demand response and when it can be provided at a relatively low cost and when it becomes a lot more expensive? Sure. So that's essentially our job at simp hour is to go into an industrial plan and figure out together with the team that works there. What is the cost of the flexibility with the different times of flexibility? The offer and where is there a business case and where isn't there a business case? I like to think about this from a household perspective. At home, you might be willing to let someone else play with your heating as long as they always keep the temperature within half a degree of your set point basically as much as you want and you might be willing to do that for not very much money. Let's say 20 euros per month or something. If you were looking at your television, you might say, okay, no, I don't ever want that to be touched because when watching television, I want to be watching television. However, if we were to say, okay, one time per year, we're going to turn off your TV for five minutes while you're watching it and we're going to pay you, let's say, a thousand euros per year. I'm making some kind of extreme numbers here. Then you might say, okay, I'm willing to provide that flexibility and that's exactly the kind of the conversation around flexibility that we have with our customers is which flexibility they have, what's the cost of that flexibility, and how can we, as part of our portfolio of assets, use that flexibility in a way that there's a business case for the customer. There's a lot of assets that can be very flexible for essentially no cost to the actual industrial processes. On the other hand, just as one example in the paper industry, you don't really want to touch the actual paper making process because if you do that, it's a very delicate process. It takes a lot of time to start up again and so on and so forth, but there's lots of processes around that that are inherently very flexible. That's just the conversation that we have with our customers around that. Yeah, makes sense. You also talked about the flexibility of renewables. Can you dive into that a little bit deeper, so how can you basically enable renewables to become more flexible? What does this mean for the economics of these plans? Because essentially, shutting down, you wouldn't think that that would make you any money. Yeah, it's a bit counterintuitive, but sometimes when it is expensive to be generating electricity, either because there are negative prices or because you have imbalances and so on and so forth. We see that happening. There's lots of renewable supplies that are struggling, especially the smaller ones. I think that what we are trying to do, and I'll be honest, it's early days in this business for us, but I think the first part is about just protecting revenue, so making sure that you don't generate electricity when you would be losing money on those kind of things. Then there's the Ancillary Services markets that you can play into and actually be providing down frequency regulation, which can be an extra revenue opportunity. Then I think the long-term and when you see lots of projects starting to come up there is that co-located batteries and renewables where you can make use of the existing grid connection, you can store electricity from the renewables in the batteries during low price moments and things like that. Then you can come to a more optimized overall system. Yeah, something that we've seen in the Netherlands and Belgium, but this might be a bit specific to these markets is that it's sometimes also possible to withhold power that you think you might be producing from a solar or windpark so that you can actually provide flexibility both up and down. Is this something you already see in practice in some of the clients you are supporting, or is this really something specific for the markets where you can maybe provide these reactive balancing surfaces? So we're not doing that yet. I think that in an ideal world, you wouldn't be doing that, right? You'd be trying to produce as much electricity from a new level as possible. And I think that's also one of the reasons we need more flexibility in the system. It's because of more demand flexibility, because if you had more demand flexibility, then you would have less negative prices and less need for these kind of things. However, with the kind of constrained systems that we're seeing quite often at the moment, but also times when there's a lot of kind of overproduction, then I can understand why there are people operating this way, but it's obviously from a system perspective, it's suboptimal. Yeah, exactly. And then perhaps it can be a stopgap solution in the next year's while there's still a little bit of shortage of flexibility. Yeah, interestingly enough, we've also done a financing case where we looked at these more advanced trading strategies for renewables and we saw a really clear upside actually coming from it. It's so very interesting. That was in the Netherlands. Yeah, indeed. And this was for a solar park, by the way, so even without a battery. Maybe let's dive a bit deeper into the topic of digitalization. So the role of software in unlocking flexibility, what does it basically take to go from the more theoretical side of getting this off the ground and actually implementing the systems at your clients to basically allow this very fast response? So the basics from our side are pretty simple. In the sense that we need to be able to measure the power consumption or production of the assets we're working with and we need to be able to control them and controlling them means either turning something on or off or up or down. So actually that's one of the things I really like about what we do is essentially we're very sophisticated on off switch. The basis is quite simple, but then how you combine that flexibility into a single pull, how and when you dispatch it and forecast it, for simple how that's always been based on software. I think if you go back to sort of, let's say the previous generation of demand response that there was still some more manual work going on, but for us that's always been fully automated and especially because you have those very quick reaction times and as we move into more and more value streams to that flexibility, so moving ancillary services but also day ahead an intraday and starting to optimize across portfolios, then you're really moving into a platform that has all of the buzzwords around AI and the machine learning and all the rest of it has to be absolutely baked into them. Yeah, I'm surprised it took so long for those to be added to the conversation indeed. Yeah, we were always waiting for the AI alerts to pop up. Yeah, exactly. AI machine learning is completely baked into the core of our system, but at the end of the day, our customers aren't working with us because we have fancy AI models, they're working with us because they trust us and we're generating revenue for them. So to make this a little bit more real for our listeners, could you share an example on how you help your industrial clients really get this off the ground? Sure. So I can give an example from Sweden. So we work with a company called Hasapur there who manufacture foam glass aggregates, which is a material that's used in infrastructure and sort of building construction projects. And there we are working with the kilns, so they're big chambers where they heat this glass up to very, very high temperatures. And the first step there for us is to work with them as I said before, to understand what processes, what machines they have that are flexible, and then what are the boundary conditions to that flexibility? So how quickly can it react, how long can it react for, how often can it react for, and then understanding, if you do turn it off, what's the impact of that on the process and so on, to get to that kind of business case for flexibility, and based on those boundary conditions, we can then decide which markets we are going to be bidding that flexibility into. So we call that the flex scan, and then once we have the flex scan, then we install some hardware that allows us, as mentioned before, to control and meet the assets. Then we start bidding them into the markets. At this point, they don't notice anything until they're activated. On average, if you look at the last year or so for that customer, they've been activated about four times a month for activations last thing, about five minutes each. But then they're not just paid for the activations, in fact, in this case, they're not paid for the activations, they're actually just paid for the capacity. So the ability to be ready to react in case of a big imbalance in the grid, and for that capacity, we're paid by the Swedish grid operator, transition system operator, and we take a cut of that revenue, and the majority of the revenue goes to them as a customer. And so, as you said before, the income they receive from that is much, much bigger than the costs that they have for those activations. So for them, there's a really interesting business case. Yep. And how does this differ for when you are doing trading on battery assets at least clients might be having? The core prints are the same, right? We saw some hardware that allows us to control and monitor the assets, and on the other side, we tried to maximize the revenue from those assets across all of the different markets that we trade in. I think four batteries, because of the less constraints in regulations, we're able to access quite a lot more markets, and so the optimization for us becomes then optimizing across all those different markets. And I think there are in general fewer constraints for battery than there are for an industrial process. There are constraints, obviously, in terms of the capacity of the battery, the amount of energy can store and so on and so forth. But yeah, the basic principle of taking an asset, understanding how much flexibility it has, and then generating as much revenue as possible with that asset across all of the different markets that are accessible to it is the same for both the modern response and batteries. Yep. And I can very much relate to what you are saying about really stacking all of these different markets. What we are seeing in both Belgium and in the Netherlands is that right now, for example, the AFR market is very interesting. So to provide relatively quick response and you get paid for the capacity that you provide to the system. But longer term, we expect that this will shift more to other markets as well. And even at this moment, we see that the optimizers who are making more money are really looking at the opportunities coming from all these different markets, from day ahead to entry day, and then FCR, AFR, whatever relevant balance markets there are. Definitely. And I think the key is, and that's shifting over time, is it used to be, you know, that you could say, well, this market is the most interesting for the next year or the next month or whatever. And actually, we're moving to a system where you're going to be wanting to be changing which market your batteries or your or your demand side assets are being monetised in on an hourly 15 minute, even minute, sort of by minute basis. And yeah, and that's where the, you know, AI machine learning has had some kind of models come in because that's just not something that you can do with a kind of traditional training desk. Yeah, makes sense. And of course, something we are constantly trying to capture as well with our in-house dispatch software. So we have developed Kronos that allows us to basically simulate this sort of behaviors to actually see how this can be basically projected for the years to come. So very interesting. And then one thing I also think is interesting in this context, maybe a little bit more relatable to the battery side. But there I am talking to quite a few battery developers who are looking for price certainty on their revenue side. So they are basically looking at these fixed price-dolling agreements. Well, renewable developers might be looking into fixed price BPAs with fixed productions. But at the same time, we see that markets are very volatile and that there's a bit of a trade-off between the certainty you get from locking in these prices versus staying flexible enough to really get rid of the upsides. Like, what is your perspective on this? And do you see one strategy as superior to the other? Or is it more that you need one in a different situation than the other? So yeah, I think it all depends on the asset owner and their risk appetites. And I think what you see also here is as markets mature, you'll get more and more kind of traditional kind of bigger infrastructure players coming in who value certainty more than they do the potential upside that you get, especially in the early days on the market when you have a lot of volatility and are able to capture maybe outsized revenue in the first few years. So it's part of the kind of matureing of market that you're going to see more and more people opting for that stability. And well, and yeah, so I see a lot of developers trying to do a bit of both, which I think is a very sensible model to de-risk some of it, but also be able to capture some of those, some of those upsides, especially in the early days. As SimPower, we sort of offer a menu of different options and work with our customers to figure out what works best for them from full tolling all the way through to actually offering a software solution that allows the customers to do the trading themselves. So you can have a menu of different options, a range of different options that people can choose from depending on their sophistication, their risk appetite, and so on and so forth. Yeah, interesting. And this is indeed also something I recognize from my region that we see more and more players opting for a combination of the two. So creating some revenue stability by going, for example, for a 50% fixed price tool and then still having a little bit more exposure for those higher revenues with the rest of their production. That makes a lot of sense. Yeah. Great. And then finally, if you could change one thing in policy or market design tomorrow to skill flexibility faster, what would it be? That's a big, a big question. There was a big challenge for flexibility in Europe, especially on the demand side. I was, I was recently speaking together with the CEO of a company called Voltaus, which is kind of the SimPower of the US. And we, we were comparing and contrasting the, the demand response deployment in, in the US versus Europe. And there's over three times more demand response deployed in the US than that has been in Europe, even though the grid in the US is maybe a third or so bigger than it is in Europe. So there's a really big gap. And that is purely due to regulations. So there's this clean energy directive that European Commission put in place in 2019. This has the all countries needs to open all of their electricity markets to independent demand side aggregation. And it feels to me like, like kind of momentum on that has really stalled. And you mentioned Spain earlier. I'm not going to directly link the lack of demand response in Spain to, to the events that happened earlier this year. However, Spain is a typical example of a country that has not implemented the right policies and regulations in order to enable demand side flexibility. And as such, there is essentially no demand flexibility there. And I think they're lacking quite far behind on batteries as well. And this isn't some sort of newfangled technology or something like that. We see lots of, lots of countries in Europe and outside of Europe that have implemented good policies and regulations around around demand response. So it's really taking that European legislation and actually implementing it in Europe across all the different countries. And if I could add a sort of extra wish, it would be that that is done in a harmonized way, because you also see that in kind of in every country we operate, the rules are a little bit different the way you connect to the TSO is a little bit different and so on and so forth. And I completely get that every country has a unique situation in different ways. Greece, for example, is right at the end of the kind of peninsula has lots of, lots of solar. They're going to want to do things in a different way to, somewhat like the Netherlands, for example, which has a lot of interconnections and so on and so forth. But still, we could allow for that kind of flexibility in different rules and regulations with some standard harmonization. And there's some good work going on, but I think that if you really want to unlock the flexibility potential that we do have in the system and there is a lot, then that needs to go a lot faster. All right. Thanks a lot for that Simon. So thanks for joining us. Thanks for sharing those insights. Thanks. Yes, it was great to join you and thanks to the interesting conversation. For listeners, inclusion, flexibility is essential to keep Europe's energy system running and to further decarbonisation in this system. And if you're dealing with price swings or negative prices, of course, at Aurora, we can help you with more insights through our power and renewable, as well as our flex subscriptions to basically see how flexibility can work for your business. And if you're interested in batteries specifically, I already mentioned it. Kronos dispatch software allows you to really optimize your operation, analyse performance across balancing markets and deliver a bankable revenue outlooks. So you'll find the information in the links in the show notes. And then I want to thank you all for listening. That was Yesa Etma, Aurora's head of the Netherlands and Belgium, talking to Simon Buschel, CEO of SimPower. Thanks for listening to Energy Unplugged. Do keep an eye on our podcast feed for more in-depth conversations with senior members of the energy industry. The best way to do this is to follow the podcast via whatever platform you use.