Ofgem appoints local energy flexibility market facilitator

UK energy regulator Ofgem has confirmed Exelon, a company owned by National Grid ESO that manages the Balancing and Settlement Code (BSC) in Britain, as market facilitator for local energy flexibility.

The announcement confirms Exelon’s mission to spearhead and enable greater flexible energy use across GB’s local electricity distribution networks.

It will 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.

The appointment by Ofgem was accompanied by the launch of a consultation on a proposed common Flexibility Market Asset Registration (FMAR) solution.

The solution is hoped to be a streamlined system that would provide a single point of registration for flexible consumer assets such as EV 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 individual market.

Elexon’s appointment

The appointment of Elexon follows an Ofgem consultation last year.

The company, which is the code administrator and central systems delivery body for the BSC, also performs a number of additional roles on behalf of government and Ofgem, including settlement arrangements for Electricity Market Reform schemes and as programme manager for Market-wide Half Hourly Settlement.

With their appointment, Exelon will be responsible for reducing friction across DSO markets, aligning transmission and distribution market arrangements, and developing local flexibility markets.

Ofgem will also work with Elexon and other stakeholders across three work streams:

• Detailed design – to further shape and refine the detail of the market facilitator role
• Implementation – to put in place the regulatory and legal framework to formally appoint Elexon
• Transition – to ensure a smooth transition and handover from the current arrangements, without any loss of momentum

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Ofgem wants the market facilitator to be fully operational by early 2026 at the latest.

Commenting in a release was Elexon chief executive officer, Peter Stanley: “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.

“Elexon is a neutral body that is recognised for the inclusive and collaborative approach we take to working with the industry. We can provide confidence that we will act impartially when delivering the role, for the benefit of all market participants and consumers.”

The UK’s shift to local flexibility

According to Ofgem in a release, the shift to more flexible energy use is needed as Great Britain becomes increasingly dependent on intermittent low-carbon generation sources, such as wind and solar power. At the same time, electricity demand is expected to rise by 50% by 2035 with increasing uptake of EVs and heat pumps anticipated.

These new steps outlined by Ofgem are hoped to help achieve the Government’s 2030 clean power goals and could also contribute to an estimated £30-70 billion ($38.5-89.8 billion) savings from flexibility by 2050.

These savings would be achieved through more efficient use of the energy system through flexibility, reducing the need to build new energy generation and new electricity networks.

Said Ofgem director Eleanor Warburton: “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.

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

“As 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,” added Warburton.