Unlocking the Future of Energy: How UK Flex Markets Are Reshaping the Grid

With Andy Lowe, CEO, Flexitricity

The Essential Flexibility Market

In a recent conversation with Andy Lowe, CEO of Flexitricity, we explored the rapid evolution of the UK’s flexibility markets and what they mean for the future of the energy system. As the UK advances towards its decarbonisation goals, one thing is clear: flexibility is no longer a nice-to-have—it’s essential.

Flexibility markets have quickly become a core part of how the UK manages its increasingly complex electricity grid. With more renewable energy—especially wind and solar—being integrated than ever before, maintaining balance between supply and demand in real time is a growing challenge. That’s where flex markets come in - and everyone from business to consumers is invited to have a seat at the table.

By allowing energy users to shift or reduce their consumption on demand, flexibility services help stabilise the grid, reduce costs and so avoid the need for costly new infrastructure. Businesses, industrial sites, communities and consumers can now be paid for changing when and how they use electricity—responding in real time to what the grid needs.

Flexibility Is Here to Stay

Flexitricity's 'virtual' power plant now includes roughly 1.2GW of connected capacity, encompassing a diverse range of assets. These vary from large-scale installations like the 50MW West Gourdie battery storage facility to smaller units such as backup generators in the hundreds of kilowatts, and even individual EV chargers rated at around ten kilowatts. Founded in Edinburgh in 2004 by Dr Alistair Martin, the company has long championed demand-side response and distributed energy. Today, it plays a key role in aggregating flexible assets like batteries, CHP and industrial load into the UK’s electricity markets.

“We have more market access now, flexibility is on the system, it’s here to stay and it’s a growth sector. It’s no longer a new thing, or a new concept. It’s proven to deliver definitive benefit and more flexibility is pretty central to all decarbonisation scenarios.”

Lowe’s view reflects a broader shift in the industry: flexibility is no longer experimental. It’s being deployed at scale and embedded into the day-to-day operation of the grid. From local Distribution System Operator (DSO) schemes to national balancing markets, flexibility is now a proven tool that supports reliability, affordability and decarbonisation.

A Major Milestone: Market Access for VLPs

In 2024, a major regulatory milestone was achieved. Virtual Lead Parties (VLPs)—companies like Flexitricity that aggregate flexible assets without being the site’s electricity supplier—gained direct access to the wholesale energy market.

“What’s really exciting is that the breadth of market access afforded to VLPs is growing. Wholesale market access is already approved and set for implementation by the end of this year. We’ll be able to bring behind-the-meter flexibility into the wholesale market as well as the Balancing Mechanism—without being the supplier to the site. It’s a huge milestone for the industry and a recognition of how far the market has come in recent years. It’s also a huge opportunity.”

This change has been transformative. Previously, access to the wholesale market required a direct supply license, which limited participation. Now, with these new rules, VLPs can unlock value from a much wider range of energy users—factories, data centres, hospitals and more—who previously couldn’t take part.

Real-Time and Day-Ahead Flexibility Take Centre Stage

Another major trend is the rapid expansion of real-time and day-ahead flexibility markets. Traditionally, flexibility was procured through long-term contracts or seasonal tenders. That model worked well for some but excluded newer technologies like battery storage and electric vehicle fleets that need quicker routes to market.

Now, UK Power Networks’ Distribution System Operator (DSO) has taken a significant leap forward with its Day-Ahead Flexibility Market, launched in April 2024. In just one year, the market has delivered 4.4 GWh of energy—enough to power over 15,500 homes for a month—and opened more than 40 flexibility zones through 150 flexibility competitions.

This shift allows assets like electric vehicles, batteries and heat pumps to participate in distribution, transmission and wholesale markets with far greater agility. Collaboration between UK Power Networks and the National Energy System Operator (NESO) has aligned the flexibility market with transmission balancing markets, giving participants the option to choose the best market for their daily needs.

According to a summer 2024 consultation, 75% of participants said the timing of UK Power Networks’ market aligns well with their commercial processes. The DSO’s advanced forecasting model ensures flexibility services are precisely matched to network needs, while co-optimising day-ahead flexibility with long-term contracts keeps costs down for consumers.

Flexibility’s Role in Net Zero

The UK has legally committed to reaching net-zero emissions by 2050, and energy flexibility will play a critical role in achieving that target. Every credible scenario for a decarbonised power system involves scaling up flexibility across generation, storage and demand.

Focusing for a moment on consumer flexibility markets, in its recent Clean Power 2030 (CP30) feasibility study the National Energy System Operator (NESO) suggested a near six-fold increase in the volume of available demand-side flexibility would be needed over the next five years to achieve the goal of decarbonising the electricity grid by the end of the decade.

NESO emphasises the need for significant acceleration in smart meter deployment and smart appliance standards to unlock the full value of flexibility. 

To achieve the desired level of flexibility, NESO estimates that smart meter participation needs to increase to between 27 and 29 million (86% to 90% coverage) in Great Britain. This requires a significant increase from the current 18 million operational smart meters.

The Industrial Flexibility Paradox: Untapped Potential Meets Apathy

Despite industrial and commercial (I&C) consumers representing the largest near-term source of demand-side flexibility, some suggest mobilising them remains a stubborn challenge.

In an article from Utility Week online, High Stakes for Flex Markets 2025

“The level of apathy in the I&C world is astronomical—they care more about price and security of supply than flexibility.”

The breakthrough they suggest is framing flexibility as an ESG accelerant, not just a cost play. “The key driver isn’t savings—it’s whether they can account for carbon reductions.”

However there is some inevitability in future flex trends.

Andy from Flexitricity,

“Flexibility is no longer about pilots or small-scale trials. We’re operating at scale and being integrated into the mainstream energy market. The potential is enormous—and we’re just getting started.”

With market access improving, new revenue streams opening up and regulations evolving, the UK’s flexibility markets are entering a new phase of maturity. From VLPs breaking into wholesale markets to DSOs running day-ahead auctions, the country is proving how a flexible grid can deliver cleaner, cheaper and more secure energy, setting a global benchmark in the process.