Urban water systems can be highly energy intensive. Yet, they are also excellent candidates for demand-response since they possess readily controllable operations and large amounts of storage. However, real-worlds trials have delivered mixed results, which implies the need to understand the underlying mechanisms of flexibility in water operations. This paper studies the potential to shift energy demand in an urban water system located in the River Thames basin, a region encompassing the city of London, England. Results show that the system could theoretically shift up to 20.1% of its annual energy demand for pumping (2.1 GWh), saving the local water utility around £5.6 million in electricity costs. However, the water system’s flexibility is shown to be highly variable due to the variability in water demands and electricity prices, in-turn affecting the financial returns from demand-response. Sensitivity analysis reveals that factors such as the seasonal reservoir control strategies and total storage capacity are key determinants of system flexibility. A relationship between water storage capacity and flexibility is also derived, which could be used to estimate water sector flexibility in other regions.