Ofgem has approved BSC Modification P511, introducing revised eligibility criteria for generation assets participating in the wholesale electricity market through the Virtual Trading Party (VTP) arrangements established by P415.
The decision follows concerns about the growing use of P415 by larger, export-led generation assets and the resulting increase in mutualised Supplier Compensation Cashflows.
P415 was introduced to provide independent aggregators with a route to bring consumer-led flexibility and smaller behind-the-meter assets into the wholesale market. VTPs enable independent aggregators to trade customers’ flexibility in the wholesale market.
Background to the changes
P511 was raised by Axle Energy in March 2026.
The modification was prompted by concerns about the rapid increase in the volume and cost of the P415 mutualised compensation fund.
Ofgem’s notes that approximately £19 million of Supplier compensation cashflow had been mutualised between 1 September 2025 and 28 February 2026.
A key concern was that some generation assets could potentially receive payments through both their VTP and their existing power off-taker arrangements.
At the same time, actions taken by VTPs can trigger mutualised compensation payments to Suppliers.
This created a risk that arrangements intended to support flexibility could instead lead to increased costs for consumers.
There were also concerns that this activity was moving away from the original policy intent of P415: providing a route to market for consumer-led flexibility and assets that do not have other viable routes to the wholesale market.
Further informationÂ
- P511 Balancing and Settlement Code (BSC) changes – Ofgem website
- P511 Eligibility Boundaries for Generation Participation in P415
What will change?
P511 introduces objective eligibility criteria intended to distinguish between consumer-led flexibility and predominantly export-led generation assets.
Eligibility will be determined using metered data, based on the largest half-hourly Active Export recorded for a Metering System Identifier (MSID) Pair over the previous 365 days.
The key thresholds are:
- Below 2MW: MSID Pairs remain eligible to participate through the P415 VTP route.
- Above 10MW: MSID Pairs are ineligible to participate through this route.
- Between 2MW and 10MW: an additional assessment applies, comparing Active Export with Final Import over the previous 30 days. An MSID Pair will be ineligible where it is net exporting on this adjusted basis.
The approach is intended to retain a route to market for smaller export-capable sites, particularly where P415 may be their only practical route to market, while limiting access for larger, predominantly export-led sites that are more likely to have alternative routes available.
Importantly, P511 does not prevent affected assets from participating in the wholesale market altogether.
Ofgem expects that the assets excluded from the P415 route should generally be able to access the market through other routes.
P511 also gives the BSC Panel the ability to remove a party’s qualification specifically in relation to its role as a VTP where non-compliance relates to its VTP activities.
This provides a more proportionate approach than removing the party from the BSC altogether.
Reasons for the Change
Ofgem’s decision recognises that P511 is intended to address an unforeseen competitive distortion while preserving access to the wholesale market for consumer-led flexibility and smaller generation assets.
Ofgem concluded that the modification will better facilitate effective competition by reducing the opportunity for predominantly exporting generators above 2MW to receive a competitive advantage through double payments.
It also considered that the new criteria provide a proportionate way of reducing the risk of rapidly increasing mutualised costs for consumers.
The decision also acknowledges that the new thresholds may affect some assets’ routes to market and that there may be edge cases arising from data, operational or seasonal factors.
Ofgem has therefore encouraged industry to keep the arrangements under review and consider whether further changes are needed to ensure viable routes to market remain available.
What happens next?
Ofgem has directed that BSC Modification P511 will come into effect on 24 August 2026.
Elexon will support the implementation of the new arrangements and continue to work with industry as the changes take effect.
P511 represents an important clarification of the eligibility framework for P415.
Its aim is to ensure that the VTP route continues to support the consumer-led flexibility and smaller-scale assets it was designed to facilitate, while reducing the risk of unintended market outcomes and increasing costs for consumers.
Elexon will continue to monitor the operation of the arrangements and their impact on market access, flexibility and consumers.
