After 2022, energy security became a political emergency. Governments moved fast on supply volumes, import routes and storage obligations. That response was necessary. It was also only half the problem.

The other half is system design. Europe now has a power system that is increasingly built around weather-dependent generation. As synchronous coal and gas capacity exits the system, the loss of inertia and frequency response is becoming a security concern. Security of supply and system flexibility are not competing priorities. They are the same problem approached from different angles.

The scale of what is required is visible in the numbers. The European Commission estimates transmission grid upgrades alone will require €477 billion by 2040. Total grid investment across transmission and distribution reaches closer to €2.3 trillion by 2050. Analysis from Allianz Research suggests that combining grid investment with targeted flexibility deployment could reduce final power prices by 30% by 2040. The case for flexibility is not philosophical. It is financial.

The regulatory framework is moving, if not yet fast enough. The proposed Network Code on Demand Response, submitted by ACER in early 2025 and expected to enter force in 2026, establishes a common EU framework for how demand-side resources participate in balancing markets. The Commission’s 2025 guidance on anticipatory grid investments pushes DSOs to procure flexibility from third parties as a first resort, before digging a single trench.

What this means in practice differs by sector.

For Utilities and Grid Operators:

• Expansion plans now need flexible assets and contractual instruments.
• Capacity mechanisms and long-term contracts must be evaluated against how reformed electricity markets reward availability and response.
• The 2026 EMD revision raises the unresolved question of locational pricing. Until it is settled, asset location is a due diligence variable, not a background assumption.

For Industrial Companies:

• Electrification strategies now carry a flexibility component. The timing of load matters as much as its volume.
• Behind-the-meter storage and flexible production scheduling are moving from cost-saving tactics to risk management tools.
• Participation in demand response schemes is becoming a source of revenue.

For Investors:

• Storage, grid infrastructure and demand response platforms each carry distinct risk and return profiles that require differentiated due diligence.
• Assets without a clear flexibility revenue stream face increasing uncertainty in reformed markets.
• Stress-scenario performance during grid constraint events now sits alongside revenue projections in due diligence.

The industrial companies best positioned in this environment are those whose operations can respond to system signals, shift load during high-price or high-stress windows and participate actively in the markets being built around that capability.

The window between now and the Network Code entering national enforcement is the period to act. Those who use it to restructure energy procurement, assess flexibility asset potential and engage with reformed market mechanisms will not be reacting to the next phase of European energy policy. They will already be inside it.