What is the change to the market?

Ofgem announced late in July this year that Elexon has been appointed as the single market facilitator for local energy flexibility across the UK.

Ofgem considered three other alternative options (the DNO, FSO, and ENA). Ofgem confirmed that its decision to appoint Elexon was due to its strong track record of delivering across several industry programmes in relation to stakeholder engagement and its proven ability to take on new roles.

Elexon will act as a single, expert entity and work closely with the operators, transmission networks, local distribution networks and flexibility providers to improve market blockers and liquidity.

The announcement came after an Ofgem consultation initiated in March 2023 following comments that UK local flexibility arrangements were currently not fit for purpose. Without reform, there was a risk it could become an obstacle, not an enabler, to the UK’s net zero targets. Ofgem therefore proposed a clear direction for a simplified landscape by creating and assigning a new market facilitator role to a single, expert actor. Elexon will became an independent expert body, accountable for all decision-making and driving all local flexibility market technical discussions.

The consultation concluded that the single market facilitator will need to work to standardise, simplify and improve the accessibility of all local flexibility markets.

Ofgem will now work with Elexon as the pointed single market facilitator across three main workstreams:

-Detailed Design
Refining the Elexon roles and responsibilities as the appointed single market facilitator.

-Implementation
Establishing a regulatory and legal framework to ensure compliance with all parties.

-Transition from Open Networks
Ensure a smooth transition.

Ofgem has committed that Elexon will become fully operational by the end of 2025, or early 2026 at the latest.

Who is Elexon

Elexon is currently a key player in the UK electricity industry. It is responsible for managing the balancing and settlement of electricity in the United Kingdom. Elexon is a not-for profit entity which is fully funded by all UK electricity market participants. Any surplus of profits made by Elexon go directly back to UK electricity participants.

What we think

The announcement is another positive development in the energy flexibility market and a sign of the important role flexible assets and energy storage have in the UK energy industry.

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