Post: Ofgem sets out future for local energy flexibility

Ofgem sets out future for local energy flexibility

Energy regulator Ofgem has announced that Elexon will be the market facilitator for local flexibility – a role that will see it tasked with co-ordinating demand flexibility offers.

The appointment follows a consultation on whether Elexon or the Future System Operator should take on the role. In a statement, published on 29 July, Ofgem confirmed that Elexon will start its new role by 2026, provided three key tasks are completed. These tasks include designing the market facilitator role, updating the Balancing and Settlement Code (BSC) for Elexon and working with industry stakeholders to develop flexibility markets.

In this role Elexon 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 aims to support the government’s 2030 clean power target by strengthening the energy system’s flexibility. Ofgem said the move would drive flexible electricity use as the UK increasingly switches to wind and solar power under aims to make savings of up to around £70B by 2050.

Ofgem will now work with Elexon and other stakeholders across three workstreams: 

• 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. 

The same day Ofgem launched a consultation on a proposed common Flexibility Market Asset Registration (FMAR) solution.

Ofgem’s original Call for Input on the Future of Distributed Flexibility  in 2023 proposed ideas for the coordinated digitisation of flexibility markets. FMAR provides 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 individual market. It is designed to help maximise participation in flexibility markets and benefit system operators, asset owners, and ultimately all consumers through lower bills enabled by building a smarter more flexible energy system.

Specifically views are being sought on:

• prioritising common Flexibility Market Asset Registration as the first step in achieving the overall Flexibility Digital Infrastructure vision

• the scope of the digital infrastructure solution, as well as the functions and principles it should deliver
• the Market Facilitator being responsible for delivering enablers and design activities, through Working Groups
• the advantages and disadvantages of a range of delivery body options for the digital infrastructure itself
• aligning in the long term with the policy vision for general asset visibility

The consultation closes on 23 September 2024.