Profitability of demand side management systems under growing shares of wind and solar in power systems

European power systems are facing a fast capacity expansion of wind and solar power that outpaces the capacity expansion of transmission lines, thus requiring additional solutions to balance the variability. We studied the profitability of demand side management (DSM) systems operating in the European power markets in 2025. The results show that the DSM system would be the most profitable (10+ % internal rate of return with up to 600 EUR/kW investment cost) in Germany, Poland, Denmark, and Baltic countries. This is because Germany and Poland still have a notable share of fossil fuels mixed with growing share of VRE creating a constant price variability. Sensitivity analysis shows that the profitability is very sensitive to specific unit parameters; especially larger storage-to-power ratio could increase the annual income more than 100%. The most notable systemic uncertainty is the total capacity of DSM units, as the value of further DSM investments decreases rapidly.