In striving towards creating a more flexible energy future in the UK Ofgem has appointed Elexon as the market facilitator for local energy flexibility. This follows Ofgem’s consultation in December 2023 on whether Elexon or the Future System Operator (the National Energy System Operator) should deliver the role.

Elexon’s brief is to spearhead and enable greater flexible energy use across the UK’s local electricity distribution networks. It will also act as a single, expert entity that will work closely with Ofgem, the ESO (Electricity System Operator), ENA (Energy Networks Association), local networks, and Flexibility Service Providers (FSPs) to drive alignment between local, and national flexibility markets and remove any barriers. 

Why is a shift to flexible energy needed?

This shift to more flexible energy use is needed, especially as the UK becomes increasingly dependent on intermittent low-carbon generation such as wind and solar power. At the same time, electricity demand is expected to rise by 50% by 2035, with an increasing uptake of EVs and heat pumps anticipated.  

Ofgem Director Eleanor Warburton, said: “To successfully operate the developing low carbon energy system of the future we need more flexible tools to make the best use of our intermittent wind and solar potential along with network and consumer assets to meet demand.” 

She added: “We are already starting to see a real acceleration in small-scale flexible energy use as consumers increasingly access cheaper energy through more flexible consumption. 

“As a market facilitator, Elexon will be able to coordinate and align local and national energy markets to unlock the full value of flexibility. Meanwhile, asset registration will create a streamlined one-stop sign-up point, which will help maximise consumer participation in flexible consumption.”

To reach the government’s target for clean power by 2030 the country needs a system in which flexibility plays a much bigger role. It is envisaged that greater use of flexibility could reduce the cost of the electricity system, for consumers. 

When do operations begin?

Ofgem has set a target for Elexon to begin its operations by early 2026, following the successful completion of three workstreams:

  • The detailed design of the market facilitator role and functions.
  • Modifying the Balancing and Settlement Code allowing Elexon to take on the role and establish the governance and funding model.
  • Work across the industry and with the Energy Networks Associations’ Open Networks project to maintain the growth of flexibility markets, in advance of the co-ordinating role the market facilitator will play for these.

Elexon Chief Executive Officer, Peter Stanley says: “We are pleased to be appointed by Ofgem to deliver the market facilitator role. Flexibility will be pivotal to the energy sector’s drive to Net Zero and, we will work with Ofgem, the NESO, flexibility providers, Distribution System Operators, and the industry to ensure that we deliver the role successfully.”

Flexibility Market Asset Registration solution

Ofgem has also launched a consultation on a proposed common Flexibility Market Asset Registration (FMAR) solution. This streamlined new system would provide a single point of registration for flexible consumer assets such as EV (Electric Vehicle) chargers, heat pumps, and home battery storage systems to participate in all local and national flexibility markets. This would move away from the present system where Flexibility Service Providers (FSPs), who aggregate assets on behalf of consumers, must sign up multiple times for each market.

The steps outlined by Ofgem could help achieve the Government’s goal of clean power by 2030, contributing to an estimated £30- 70 billion savings from flexibility by 2050. It could also reduce bills for all consumers. These savings could be achieved through a more efficient use of the energy system through flexibility, reducing the need to build new energy generation and new electricity networks.