Developing DR business cases in a volatile market place


Sim4Blocks is an EU-funded project with a central aim of demonstrating demand response systems and services in a small-scale blocks-of-buildings format at three pilot sites across Europe. The goal is to develop effective business models to roll out access of these services to electricity markets in a rapidly evolving energy efficient arena at both local and national level

The presence of demand response (DR) is progressing in the realm of smart buildings as a competitive strategy for integrating renewable energy sources into electricity supplies and balancing these supply and demand imbalances for businesses, in industry settings and in households. 

For DR solutions to achieve a far-reaching successful uptake across all stakeholder groups in this field, consumers are considered to need to participate in DR by banding together and exploiting their small flexible assets at an aggregated blocks-of-building level. For this option to appeal to industry, viable systems, algorithms and business models need to be established to prove to aggregators the marketability of bringing small flexible loads in blocks-of-buildings together.


4 Buildings in Plus Energy District copy


Sim4Blocks is a European project simulating DR and developing subsequent business models for blocks-of-buildings in a living laboratory environment at three pilot sites with diverse energy systems and consumer involvement in St Cugat (Spain), Naters (Switzerland) and Wüstenrot (Germany).

The project outcomes are to highlight the reliability of combining the flexibility of smaller buildings at cluster level and deliver real-time state-of-the-art DR for the grid through the engagement of consumers and the adoption of the studied business models, narrated by legislative developments, in real energy markets across the EU.

Legislative change in energy efficiency

The EU framework for energy efficiency is evolving and propelling EU member states to change their legislation, impacting the consumption of energy across many EU countries, a transformation Sim4Blocks is reckoning with head on.

Through the continued enforcement of such energy-led frameworks, Europe in the short and long-term can be seen to be moving towards a far more harmonised energy market. “Though positive for EU DR policy,” Malcolm Yadack, research associate at Stuttgart University of Applied Sciences believes, “it will be a major challenge to incentivise and implement small scale flexibility markets.”

Yadack, member of the coordination team at Sim4Blocks, is helping to coordinate the progress of Sim4Blocks across its three pilot sites and demonstrate proficiently and accurately that in this altering climate of energy efficiency, how much flexibility is available and make clear policy recommendations in publications to cement arguments for the market access of various DR models at local level.


Cluster management

Central to the objectives of Sim4Blocks is the management of DR at the blocks-of-buildings scale and the development of its business models, but the project is confronted with local electricity markets that are unique from one another. “This makes it challenging to generalise the most efficient way to manage energy-flexible building clusters that would be able to provide DR across the EU,” Yadack adds. 

For example, the Spanish market has high barriers to DR participation in the frequency reserve market and so the project has taken a more pragmatic cluster management approach with customer engagement DR in St Cugat, by measuring the effect of consumers’ willingness to adjust energy use in certain scenarios. 

Wüstenrot, on the other hand, takes a highly automated approach to DR. The neighbourhood is connected through an innovative agrothermal district heating network. Real-time simulation is key to this site with a complete physical model inputting and analysing different operational strategies for control of individual homeowners’ heat pumps..

“The results from these demonstrations are really promising,” said Yadack. “They’re testing and showing viable, close-to-market approaches to DR that could be replicated in other blocks-of-buildings and district settings.”


Project information


Project Title:

Sim4Blocks – Simulation Supported Real Time Energy Management in Building Blocks

Project Objective:

Sim4Blocks is demonstrating demand response systems and services at the blocks-of-buildings-scale at three pilot sites across Europe. The goal is to develop effective business models to roll out access of these services to electricity markets for residential and commercial applications in further EU countries.

Project Duration and Timing:

48 months from 01/04/2016 – 31/03/2020

Project Funding:

Overall budget: € 5 523 043,75

EU Contribution: € 3 729 055,76 

Project Partners:

AIT Austrian Institute of Technology GmbH (AT), CIMNE (BEE)Group (ES), EDF Energy R&D (UK), ELIMES AG. (CH), Energea (ES), Enisyst GmbH (DE), HFT Stuttgart (DE), HES-SO (CH), Home Pulse, Promusa (ES), Stadtwerke (DE), UCD Dublin (IR), EIFER (DE), Insight Media (UK), REstore (BE), Wüstenrot (DE)

Successful implementation

In order to disseminate the project’s business models successfully into the real economy, the necessary stakeholders in the field of smart buildings need to be involved. 

“Industry and the EU as a whole need to take action on policy and market structure if small-scale flexibility is to come to market”

“It is these engagements,” explains Yadack, “with noteworthy actors and groups such as IEA Annex 67, state-of-the-art aggregators, municipal utility companies and relationships with local residents that are proving valuable in helping Sim4Blocks apply and validate the research on how to assess, calculate and value small scale flexibility into the wider economy.”

However, challenges arise in engaging with such a comprehensive and diverse target audience like Sim4Blocks’. Even if the project is able to persuade stakeholders that there is capacity and success for locally aggregated flexible energy, Yadack highlights that Sim4Blocks is very dependent on regulation. “Industry and the EU as a whole need to take action on policy and market structure if small-scale flexibility is to come to market.”

The introduction of Europe’s new data protection framework is also proving to be a barrier facing the implementation of DR services, especially for consumers and network operators at the blocks-of-buildings level. In a liberalised market, if a third-party actor cannot access the energy data of households in order to offer flexibility at a local level (e.g., to the DSO) then those local markets, Yadack says, will struggle to materialise. 

Expected outcome

To mitigate these risks in the development of Sim4Blocks’ business models the project is constantly analysing and assessing the market conditions across the board and qualifying value in having a local DR cluster manager. The project is currently putting final touches to the actual implementation of DR systems and optimisation control algorithms to enable aggregators to bring the small flexible loads at the pilot sites to market.

“If the local situation, the nuances and specificities of a given neighbourhood can be given the best consideration,” concludes Yadack, “and if at the same time Sim4Blocks can provide evidence in its business cases that there is political potential and monetary value in the flexibility that these districts can offer, then the local cluster management of their energy use should be seriously taken into consideration by national and international aggregators as a component in their flexibility portfolios”

Main Contact

Prof. Dr. Wolfram Mollenkopf

Wolfram Mollenkopf, a professor at HFT, has been responsible for teaching within the building physics and energy technology sector and has been in charge with the coordination of research projects here since 2015. Before this, Mollenkopf worked on the conception of electricity and heat supply at the public utility of Tübingen.


+49 (0)711 8926 2768



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