Proposals to introduce statutory licensing for domestic and microbusiness flexibility services risk being rushed through in just 12 months, potentially squeezing out smaller innovators and increase consumer costs, Flex Assure and ADE: Demand have warned.
The Government and Ofgem are have been consulting on bringing load control and demand-side response activities within a formal licensing framework for the first time. The move is intended to strengthen consumer protections in a rapidly expanding market, where households are increasingly being asked to shift their electricity use to help balance the grid.
Flex Assure and ADE: Demand strongly support the principle of statutory licensing and consistent safeguards. However, in their respective responses to the consultations, the organisations caution that the proposed 12-month transitionary period is too short for many smaller firms to navigate. Compliance with the new regime is estimated to cost providers between £143,000 and £353,000 annually – a burden that smaller, innovative companies are unlikely to absorb.
In the meantime, Flex Assure’s domestic and microbusiness code of conduct and compliance scheme, developed through the NIA-funded HOMEflex innovation project and now funded by the DSOs and NESO’s Power Responsive, provides a robust framework already being used by providers.
Flex Assure and ADE: Demand are calling on regulators to formally recognise the scheme as an interim compliance pathway. Providers are also encouraged to join the scheme now to demonstrate their commitment to consumer protection.
Sarah Honan, Head of ADE: Demand, said, “Regulation must protect consumers without locking smaller innovators out of the market. If licensing rules are too heavy-handed or rushed, we risk choking competition, slowing innovation and driving up costs. We need a balanced approach that lets all providers compete.”
Charlotte Roniger, Scheme Manager at Flex Assure, said, “Flex Assure fully backs statutory licensing, consumers deserve strong protections in this evolving market. But a rushed 12-month transition would hit smaller innovators hardest, reduce competition and ultimately raise consumer costs. Our independently audited scheme bridges the gap, delivering full consumer protections today while giving regulators time.”
