Part 1 of the “From Electrons to EBIT” series: flexibility.
Introduction
We are facing a compounding surge: electricity demand has already doubled since the turn of the century and is set to double once more over the next 25 years.[1] Driven by renewables, sector coupling and grid congestion, the demand for flexibility[2] is expected to grow 2–3x by 2030 and 4–7x by 2050.[3][4]
Because of this, the emerging AI and data center boom, increased price volatility and more, many industry analysts think the digital transformation of the power sector is one of the largest value-creation opportunities of the decade.[5] But that doesn’t help you with a business plan.
The hype surrounding the digital transformation of the industry often obscures a crucial detail: where, and how, do you make real money in the digital transformation of the energy sector?
This article breaks down the hype to reveal the specific areas — and the actionable strategies — for generating substantial revenue and EBIT in the energy tech sector in the years to come, and provides guidance on the most investable “buckets” of value in the digital energy market.
The traditional energy money machine
Traditionally, profits in the energy sector have been built on physical assets and linear value chains: power generation (conventional and renewables); wholesale trading; transmission and distribution monopolies; retail supply to residential (B2C), SME, and commercial/industrial (C&I) customers. These value chains were asset-heavy and centralized. Money flowed through large-scale infrastructure — plants, grids, and customer contracts.
The energy system is now evolving from a predictable, centralized machine to a dynamic, complex, volatile (data-driven) network — one that requires new forms of flexibility, intelligence, and security to remain stable and profitable. Money now flows through a diverse set of energy assets and digital systems, while the large-scale infrastructure remains in place. To find the revenue, we must look closer at the digital layers now reshaping the industry.
The new digital value chain in energy
Digitalization is reshaping the energy sector by applying connectivity, data, automation, and AI across the entire value chain — from how energy is generated, stored, and distributed to how it’s consumed. This shift makes energy more measurable, predictable, and flexible, ultimately boosting the flexibility, efficiency, resilience, and profitability of the system. This can unlock new business models and value pools.
Key elements of the technology stack driving this transformation include:
- IoT and smart sensors — enable real-time data acquisition and monitoring of generation, grid stability, and consumption.
- AI and analytics — essential for predictive maintenance, optimization, and forecasting.
- Digital twins — allow for simulating and optimizing assets, grids, and market operations.
- Cloud and edge computing — provide the backbone for decentralized, low-latency control and rapid responsiveness.
Following the digital path of the money
While these technologies are powerful, the crucial question is where the biggest value pools will be in the coming 3–4 years and how to turn them into tangible revenue and EBIT.
Monetization opportunities in energy generally fall into two main buckets:
- Electrons: direct or indirect profits derived from electrons. This includes value from generation, trading, flexibility, balancing services and retail margins.
- Enabling systems (the “tech stack”): profits from the hardware and software that power the energy value chain. This includes devices, platforms, analytics, security and control systems, and related services.
Based on nearly a decade of experience in digital energy and a detailed analysis of all its individual segments, sub-segments and use cases, two significant future value pools — one from each monetization bucket — stand out: flexibility and security.
Flexibility: monetization and arbitrage of flexible electrons at scale
Decentralized energy resources (DERs) like solar, wind, storage, EVs and data centers create a massive global demand for digital orchestration and for different types of flexibility products and services, which are monetized via flexibility and energy trading markets.[6] Modern digital platforms are essential for tracking and optimizing energy flows in real time — making it possible to meet the skyrocketing need for flexibility at scale.
This shift is opening significant new revenue pools across the energy landscape, enabled by AI-driven explicit/implicit demand response and trading, automated dispatch, and ancillary grid services.[7] Recent research suggests that until 2030 in the EU there is a EUR 12bn demand-side flexibility market opportunity alone, growing 3x versus 2024 figures (EUR 8bn C&I, EUR 2bn residential and EUR 2bn services from aggregators).[8] Of the EUR 12bn, EUR 9bn is assumed to be captured by wholesale arbitrage, EUR 2bn via ancillary services and EUR 1bn via capacity mechanisms. For the US, similar trends are being assumed.
Commercial and industrial flexibility
The commercial and industrial (C&I) sector — with its substantial energy consumption and high utility bills — holds massive untapped potential for participating in both existing and emerging flexibility markets.[9] Crucially, monetizing this C&I potential creates significant business opportunities for the technology and service providers that enable these value streams to be captured.
One fundamental problem that needs to be solved is the easy adoption of the IT solutions required to enable flexibility revenue streams. Digital strategies for flexibility are required, including DER connections, data models, algorithms, process models and workflows.[10]
Looking beyond 2030, there will also be significant emerging opportunities using AI in the C&I context, such as agent-based deep reinforcement learning to determine the optimal energy management schedule for discrete manufacturing systems — minimizing electricity costs while improving grid stability.[11]
Residential flexibility
Residential electricity use, encompassing flexible loads like rooftop solar, electric vehicles (EVs), home batteries, and water heaters, accounts for roughly 30% of all electricity demand in developed economies. When aggregated effectively, this collective capacity becomes an attractive energy asset for the flexibility and trading markets.[12] It also provides very significant opportunities for energy retailers to optimize their sourcing strategies.
However, business models aiming to harness this flexibility must overcome significant technical and commercial hurdles:[13]
Technical challenges. The core technical difficulty lies in dealing with the heterogeneity of the physical hardware and the fragmentation of the digital ecosystem.
- Interoperability and security: communicating with this broad range of devices is complex due to a lack of established security standards and reliance on proprietary software and data interfaces.
- Scale and reliability: individual loads are relatively small per unit. Aggregating these resources requires maintaining the resilience of connections and ensuring the reliability of data transmission, which is technically challenging at scale.
Commercial challenges. There must be a compelling business case for both the homeowner and the aggregation or energy company.
- Cost-efficiency: the viability of the business model hinges on managing the cost to acquire new customers, the ongoing cost to serve, and achieving efficient transaction costs.
- Value proposition: asset owners must be sufficiently motivated to participate. This requires a clear and attractive financial incentive, such as a rewarding energy tariff or a transparent profit-sharing arrangement. In the US, residential units can earn between USD 200 and 1,200 p.a. depending on a number of factors. In the EU, these numbers can be EUR 200–700 p.a., and EUR 1,000 or more in specific situations.
- Regulatory challenges: in some jurisdictions, regulation blocks effective and explicit residential participation (e.g. minimum bid size, settlement).
By integrating a sophisticated tech stack with flexible energy assets, digitalization is transforming the energy landscape from a rigid supply chain into a dynamic marketplace of monetizable opportunities. Success in this transition will depend on overcoming the technical and regulatory hurdles of aggregation to unlock the multibillion-dollar value pools inherent in commercial and residential flexibility.
Key takeaway: The digital transformation of energy is shifting profit from physical infrastructure to the AI-driven orchestration of flexible electrons, creating a multibillion-dollar market in managing decentralized energy resources to capture arbitrage opportunities and solve grid volatility.
Next: securing the edge and scaling intelligence
Part 2 analyzes the critical role of digital security in protecting a fragmented grid edge, and Part 3 evaluates the strategic path toward commercializing AI as a core enabler of system resilience and efficient energy management.
Continue with Part 2Security: securing the grid edge →References
[1] McKinsey, Global Energy Perspective 2025. https://www.mckinsey.com/industries/energy-and-materials/our-insights/global-energy-perspective
[2] Flexibility is often defined as the ability to adapt energy demand and supply to external signals.
[3] International Energy Agency, Net Zero by 2050: A Roadmap for the Global Energy Sector, 2021. https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf
[4] EU Agency for the Cooperation of Energy Regulators, Tackling the power system flexibility challenge, 2023. https://acer.europa.eu/sites/default/files/documents/en/The_agency/Documents/ACER-EEA_Flexibility_challenge_ITRE-ENVI_28112023.pdf
[5] Accenture, Tech Vision 2025: Utilities industry perspective. https://www.accenture.com/us-en/blogs/utilities/tech-vision-2025-utilities-industry-perspective
World Economic Forum, Digital transformation of industries, 2016. https://www.res4med.org/wp-content/uploads/2017/05/wef-dti-electricitywhitepaper-final-january-2016.pdf
Grand View Research, Virtual Power Plant Market, 2025. https://www.grandviewresearch.com/industry-analysis/virtual-power-plant-market-report
[6] ENTSO-E, System Flexibility Needs for the Energy Transition, 2024. https://www.entsoe.eu/system-flexibility/
EPRI, Powering Data Centers: U.S. Energy System and Emissions Impacts of Growing Loads, 2024. https://www.epri.com/research/products/000000003002031198
[7] Boston Consulting Group, Why Your Company Needs to Be an Electricity Trader, 2021. https://www.bcg.com/publications/2021/benefits-of-becoming-electricity-trader
B. Vrhovčak, Unlocking the Value of Aggregated Demand Response: A Survey of European Electricity Markets. Energies, 2023. https://doi.org/10.3390/en16176386
[8] McKinsey & Company, Unlocking Europe’s €8 billion energy flexibility opportunity, 2025. https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/unlocking-europes-8-billion-euros-energy-flexibility-opportunity
[9] McKinsey & Company, Unlocking Europe’s €8 billion energy flexibility opportunity, 2025. https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/unlocking-europes-8-billion-euros-energy-flexibility-opportunity
[10] M. Ranaboldo et al., A comprehensive overview of industrial demand response status in Europe, Renewable and Sustainable Energy Reviews, Vol. 203, 2024. https://doi.org/10.1016/j.rser.2024.114797
[11] Renzhi Lu et al., Multi-agent deep reinforcement learning based demand response for discrete manufacturing systems energy management, Applied Energy, Vol. 276, 2020. https://doi.org/10.1016/j.apenergy.2020.115473
[12] Explicit demand response for small end-users and independent aggregators – Status, context, enablers and barriers, Publications Office of the European Union, 2022. https://data.europa.eu/doi/10.2760/625919
[13] Araavind Sridhar et al., Aggregator decision analysis in residential demand response under uncertain consumer behavior, Journal of Cleaner Production, Vol. 495, 2025. https://doi.org/10.1016/j.jclepro.2025.144997