By Peter Stanley, Elexon Chief Executive
From December 2025, Elexon begins operations as the market facilitator for electricity flexibility. There are more than 20 national and local market places where flexibility is sold across Britain. We will be working to align these markets and make them more open, co-ordinated and transparent.
Increasing flexibility capacity has an important role to play in reaching the Clean Power 2030 and Net Zero goals, and we must work with the buyers and sellers of flexibility to achieve that. We will also develop a flexibility market asset registration (FMAR) solution to act as the ‘single source of the truth’ for details of all assets participating in multiple flexibility markets. It is critical to tightly couple market rule development with the underlying data infrastructure that supports participation in these markets.
The arrangements for the role will need to provide confidence to participants
We need governance arrangements for the market facilitator role to ensure that it is clearly defined, effectively implemented, and adaptable to evolving market conditions. These arrangements must meet the needs of flexibility market participants and provide them with confidence to encourage the flexibility markets to grow. We have published a consultation on the arrangements and we will submit final proposals to Ofgem for a decision this summer.
Two-year delivery plans will be the cornerstone of market facilitator operations
Ofgem is due to publish a final decision on the scope of the role. We expect it to confirm that Elexon will need to publish two-year delivery plans for market facilitator operations. In the first delivery period (2026-27) we would prioritise alignment of DSO flexibility services with the majority of the NESO ancillary services. The development and delivery of these two-year plans will be the cornerstone of the market facilitator governance arrangements, explaining the flexibility market rules and outputs we are committing to.
We will publish the first delivery plan in December 2025 (to cover January 2026 to March 2028) and will ensure that participants can input into each plan through close collaboration. We will also provide an annually updated delivery schedule to ensure transparency, accountability, and alignment with wider policy objectives. We aim to focus on activities that have a meaningful impact and drive market coordination forward.
Flexibility Market Rules will provide consistency, interoperability and efficiency
The setting and monitoring of compliance with Flexibility Market Rules will be the backbone of our work as market facilitator. The rules will deliver the consistency, interoperability and efficiency that flexibility buyers and sellers of flexibility need. The Energy Networks Association is in the process of handing over the Open Networks programme to Elexon, and during the rest of 2025, we will transform the programme’s outputs into the first version of the Flexibility Market Rules, which will be available by the time we begin operations. They will include new, broader primacy rules (providing clarity on which flexibility purchaser takes precedence when the same asset is called on to provide more than one service). We are also working with the ENA to develop a dispatch API standard (a set of technical specifications defining how system operators can link to (and dispatch) flexible assets. Another important aspect of the rules is the development of a common approach to Distribution System Operator baselining (the process for measuring the amount of flexibility that providers can offer compared with their usual generation or consumption).
Checking on progress
With just four years remaining to deliver a major step change in flexibility once we start to deliver the role, keeping a close eye on progress will be key. We will need to verify that Distribution System Operators and the National Energy System Operator (which provide the local and national flexibility markets, respectively) are complying with implementation plans for Flexibility Market Rules. If they do not comply, they could be at risk of breaching Ofgem licence conditions, which will be set to ensure compliance with flexibility market facilitation, before we begin operations. We will provide clear visibility of progress tracking, which will be integrated with existing regulatory reporting mechanisms to minimise duplication.
Open rule change process
Flexibility is a fast-moving area of the energy markets, and the rules or governance arrangements will need to evolve. We are proposing that any market participant can raise a change proposal, and as market facilitator, we will decide whether to approve or reject it. Any decision we make can be appealed to Ofgem. This is important for maintaining the openness, inclusivity and flexibility that Elexon is known for inthe management of wholesale market rules. It should also encourage innovation. We will strike the right balance between meeting the delivery plan objectives while facilitating any changes raised.
Stakeholder Advisory Board to provide scrutiny
To successfully deliver the role, we will need to demonstrate that we are making transparent, and trusted decisions that are open to independent scrutiny. We are proposing that a Stakeholder Advisory Board be set up to act as a ‘critical friend’ for delivery planning, budgeting, change requests, performance monitoring and other areas.
The SAB will be a non decision-making body consisting of representatives recruited by a chair appointed by Ofgem. The representatives will need to include flexibility buyers, sellers and people who are independent. We anticipate that the SAB’s first formal meeting will be in early 2026 and we will be looking to recruit members over the next few months.
Cost recovery
The market facilitator role is an addition to Elexon’s remit, and we will need to recover the additional costs we face for delivering it. For 2025/26, these costs mostly relate to recruiting expertise to support delivery. We are proposing that Elexon’s costs for performing the role are treated as BSC costs, meaning that they will be recovered from BSC Trading Parties in proportion to their market share. This spreads costs fairly across suppliers and generators, both of whom benefit from more effective flexibility markets.
Elexon will consult on the costs each year as part of its business plan process and the Stakeholder Advisory Board will provide views to Elexon’s board, which makes final decisions on our budget.
Flexibility markets are expanding quickly. As an example, earlier in April, UK Power Networks confirmed that its day ahead flexibility market had delivered 4.4GWh in its first year, enough to power more than 15,000 homes for a month. In the coming years, millions of smart appliances will be connecting to the networks and once Elexon has implemented half-hourly settlement, the expectation is that more consumers will be offering flexibility services by taking up new offers that suppliers develop.
As the market facilitator, we are looking forward to building on the progress and working with participants to grow these markets and deliver the benefits of a more flexible system to all consumers.
