The UK’s new Market Facilitator, Elexon, amended the Balancing and Settlement Code (BSC) with P415 in November 2024, giving demand-side aggregators access to wholesale electricity markets.
In August 2026, Ofgem approved a further modification, P511, which refines the eligibility rules for this route. Here’s what both changes mean for distribution system operators (DSOs).
Key facts
What did P415 introduce?
In November 2024, P415 amended the Balancing and Settlement Code (BSC). This code governs how electricity supply and demand is balanced at a national level.
Demand-side aggregators (or Virtual Lead Parties (VLPs)) can now offer demand flexibility into the wholesale electricity market, alongside the Balancing Mechanism which they could already access. With this change, customers’ flexibility can now be offered into the wholesale electricity market without the involvement of the supplier.
What are the benefits of P415 to demand aggregators?
This opens up more choice to aggregators of distributed energy resources (DERs) in how they offer flexibility services. Independent aggregators could already offer services on behalf of their customers into:
- the Balancing Mechanism
- DSO Flexibility Services
- Demand Flexibility Service
- other services
With P415, they can add the wholesale market to that list, meaning greater incentives and more options. Aggregators can now shop around for the best price for their flexibility, and for their customers.
What does P415 mean for DSOs in the short term?
These new rules reinforce the movement of the market towards low carbon flexibility. The shift is inevitable as the government strives to decarbonise the UK’s power system by 2035.
As competition increases, DSOs need to make sure that their flexibility services continue to be attractive for demand-side aggregators. DSOs that don’t respond to the change could see a dip in the volume offered into those services in the short to medium term, as aggregators look to other markets and services.
What does P415 mean for DSOs in the long term?
Over the long term, P415 will help to accelerate rollout of low carbon technologies. That will ultimately give DSOs a bigger potential pool of flexibility to draw from – putting control back into the hands of DSOs.
System operators therefore need to consider how they can continue to evolve their approach to flexibility services, to meet flexibility providers where they are.
This means offering inclusive and coordinated flexibility markets that can enable aggregators to maximise value across multiple markets and services.
Why will DSO flexibility services still be attractive for demand-side aggregators?
Longer-term contracts and reservation payments are common for today’s flexibility services. However, demand-side aggregators managing variable loads tend to avoid those long-term commitments, with difficulties in forecasting that far ahead.
Instead, they prefer entering next-day forecasts and offers into day-ahead markets that only pay for the flexibility that’s used. This aligns with day-ahead wholesale electricity market timings and leaves the aggregator’s options open. They aren’t locked into a flexibility service too far ahead of when that energy is needed.
DSOs must therefore continue to evolve their flexible service design. That will allow them to cater for a range of use cases, and to maintain their attractiveness for a range of provider types. This includes decisions on market timing and payment structures – as well as lowering barriers for provider participation in local markets.
How does P511 refine the eligibility rules?
Since P415 came into force, a further modification – P511 – has adjusted who can use this wholesale market route.
This restores P415 to its intended purpose: enabling consumer-led flexibility, such as smaller behind-the-meter assets, domestic batteries, and demand-side response aggregators, rather than larger, export-led generation assets that already have other routes to market.
The concern behind P511 was that some generation assets, mainly larger, export-led sites with other routes to market, were being paid twice for the same flexibility: once by their Virtual Trading Party (VTP), and again by their power off-taker.
This was also inflating the P415 mutualised compensation fund, a cost that ultimately lands on consumer bills.
P511 addresses this with eligibility criteria based on a site’s largest half-hourly export over the previous 365 days:
- Below 2MW: Remains eligible to participate via the VTP route.
- Above 10MW: No longer eligible.
- Between 2–10MW: subject to a further test, comparing total export against total import over the previous 30 days. A site that’s net exporting on this basis is ineligible.
How does this change things for DSOs?
For DSOs, P511 keeps the wholesale market route open for the assets they’re already competing to attract: smaller behind-the-meter assets, domestic batteries, and demand-side response aggregators.
In that sense, it reinforces what P415 already set in motion i.e. more competition for distributed flexibility.
Assets outside the new criteria haven’t lost wholesale market access altogether. They can still participate through routes like the Balancing Mechanism or ancillary services, just not as a VTP.
What’s next?
Two related modifications, P509 (monitoring and reporting the benefits of demand-side response) and P510 (direct compensation for VTP actions), remain at workgroup stage, so the rules here may continue to evolve.
