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The number of sites served by demand response (DR) in Europe will grow from 1.87 million in 2013 to 2.56 million by 2020, according to a new report from Navigant Research.

The report says that the energy market in Europe is undergoing a major transformation, with new regulations taking effect across the European Union, as well as at individual country and regional levels. As a consequence, Navigant says Europe is emerging as a major DR market, with significant opportunities for technology and services vendors in the years ahead.

"Unlike the United States, Europe is a relative newcomer to the DR market," says Marianne Hedin, senior research analyst with Navigant. "Only recently have utilities in this part of the world started to consider implementing DR programs by conducting field tests to examine feasibility. Today, the European energy market is entering a new era of profound change that is enabling DR to become a key resource."

Nevertheless, the regulatory barriers to DR continue to be formidable in Europe, Navigant notes. The research firm says that the market structure favors generation with no basic contractual agreements to enable DR because regulators have assumed that generation resources will provide the necessary capacity. Only a handful of the 27 member states have created regulations and clear payment and contractual structures that support aggregated DR. According to the report, in the overwhelming majority of member states, regulations continue to block consumer participation in DR programs.

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