How to engage consumers in demand response: A contract perspective

•Future electricity systems expect extra flexibility to be provided by the demand side.•There is a need for ‘software’, i.e. contracts, next to ‘hardware’ like smart grids.•We propose a consumer profiling method based on their load mix and personal preferences.•Different consumer categories need to be engaged through diversified contracts.•A diversity of market players must act as demand response intermediaries.

Nowadays, the European electricity systems are evolving towards a generation mix that is more decentralised, less predictable and less flexible to operate. In this context, additional flexibility is expected to be provided by the demand side. Thus, how to engage consumers to participate in demand response is becoming a pressing issue. In this paper, we provide an analytical framework to assess consumers' potential and willingness to participate in active demand response from a contract perspective. On that basis, we present policy recommendations to empower and protect consumers in their shift to active demand response participants.