Q4 2025 established new rules, targets and obligations for a more responsive and decentralised GB power system. The National Energy System Operator (NESO) set a clear ambition to unlock an additional 750MW of industrial and commercial (I&C) flexibility by 2030, reinforcing the growing role of consumer-led flexibility in supporting Clean Power 2030.
Wholesale markets were shaped by volatile wind output and mild winter temperatures. While average prices remained relatively stable, periods of low wind and high demand pushed prices above £200/MWh on three occasions, strengthening the business case for flexibility and peak demand shifting. Delivered cost arbitrage opportunities were significantly higher than in Q3 due to the application of winter third party costs. Consumers on pass-through contracts could have been able to save over £380/MWh by shifting demand from peak periods.
The Demand Flexibility Service (DFS) saw lower volumes than Q3, driven largely by mild weather and reduced system stress. However, activity shifted later into the evening peak, reflecting changing demand patterns and seasonal drops in solar generation. NESO also confirmed upcoming reforms, including demand turn-up, locational procurement, sub-1MW bids, and improved baselining for variable assets – all expected to widen participation.
On the policy and regulation side, Elexon’s new Market Facilitator role went live, introducing standardised rules designed to reduce barriers to entry across flexibility markets. Meanwhile, the upcoming launch of Slow Reserve in March 2026 will replace STOR, with more accessible thresholds and improved routes for demand-side response providers.
Looking ahead to Q1 2026, the market awaits key decisions on Capacity Market reforms, and further announcements as part of the Review of the Electricity Market Arrangements (REMA) programme, including updates to balancing reform – all of which will shape the next phase of flexibility growth.
At Drax Energy Solutions, the announced agreement to acquire Flexitricity will, once complete, strengthen our ability to help customers unlock greater value from their flexible assets and participate across an expanding range of markets.
Read the full Flexibility Focus report for detailed market analysis, policy updates and revenue insights here.
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