The legislation at the EU level is decisive in developing the local flexibility market. At the current stage, there are far-from-sufficient regulations on the local flexibility market, which can be perceived as a major barrier. The scope of this article is to explore the operational principles of the European local flexibility market and to assess the regulation of emerging flexible markets in order to help a new policy framework that facilitates the integration of flexible assets in the distribution grid. Although the evaluation primarily focuses on current regulations, numerous modifications are still being made to them, such as those brought about by the implementation of the Clean Energy Package. The possibility of the research material quickly becoming outdated makes this difficult. To reduce this risk, we also examine current debates over potential restrictions; nonetheless, the core of the report mainly applies to laws and policies that were in force prior to the second half of 2022. An examination and analysis of potential flexibility providers’ motives to offer flexibility on a local flexibility market were conducted concurrently with the regulatory assessment. The inquiry was initiated by identifying resources that may be used to improve the flexibility of the electrical system but are underutilized. Underutilized resources refer to assets that are already part of society, such as efficient energy use, support for behavioral changes, heating systems (such as district heating, heat pumps, and thermal inertia), as well as underutilized energy storage capacities that are underutilized in terms of supplying flexibility to the electric grid. Resources were found via conducting interviews and studying scientific literature. The rules and guidelines for the emerging local flexibility markets are examined in this study. The regulations need to be continually improved because they are far from complete.

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