Flexibility markets are heading into a year of accelerated change. In the UK, procurement windows are tightening with day ahead markets becoming the norm, and regulatory reforms are reshaping participation. In the US, rising electrification and load growth are driving utilities to look beyond traditional infrastructure and use distributed resources in more targeted, operational ways.
Together, these perspectives reveal a sector converging on the need for faster, fairer, and more dynamic flexibility. This round-up shares predictions from the Electron team as they look to the forces likely to define flexibility and markets in 2026.
The 2026 predictions:
- There will be a shift toward nearer real-time flexibility and richer value stacking
- New rules and a more open flexibility market will come into play in the UK
- Affordability pressures will encourage DER integration and operational innovation
- Interoperability will determine whether flexibility markets scale safely in 2026
- Non-wires alternatives are emerging as utilities race against electrification-driven load growth
1. There will be a shift toward nearer real-time flexibility and richer value stacking
Jeremy MacFarland, Head of Customer Success:
“Over the past couple of years we’ve seen the UK shift steadily toward closer-to-real-time procurement of flexibility services. Markets that were once dominated by long-term contracts are now opening shorter windows, with day-ahead and month-ahead trading a key part of the landscape.
“Two UK distributution system operators (DSOs) are already operating day-ahead markets, and, in 2026, we expect more operators to join them in moving closer to real time as they look to respond more dynamically to changing grid conditions and evolving load patterns.
“This shortening of the delivery horizon has started to unlock a richer value stack for flexibility service providers, bringing in new participants through utilisation-only markets while giving existing providers more scope to stack revenue across energy arbitrage, congestion management, and ancillary services.
“The timing of market notifications is central to this, as earlier acceptance gives distributed energy resource (DER) owners or operators acting as flexibility providers more time to ‘jump’ into other opportunities. Capacity refinement adds further value by releasing reserved MWs as forecasts improve – although current availability-payment rules fail to recognise the option value providers create when holding capacity ready ahead of delivery, limiting the returns they can realise.”
2. New rules and a more open flexibility market will come into play in the UK
Nick Huntbatch, CPO:
“The UK flexibility landscape will experience significant regulatory and structural changes starting in 2026, driven by NESO’s new RIIO-ED3 price control and Elexon’s formal role as Market Facilitator.
“The National Energy System Operator (NESO), incentivised to manage system constraints efficiently, will accelerate digitalisation by investing in independent IT systems and delivering the Data Sharing Infrastructure to standardise data exchange across the system.
“It will also develop Regional Energy Strategic Plans in 2026 to align national and local network investment. At the same time, Elexon’s strategic roadmap until 2028 will see the implementation of ‘Day 1’ Flexibility Market Rules by April 2026. These are essential for aligning baselines and settlement processes for revenue stacking, and defining clear Primacy Rules to resolve dispatch conflicts between NESO and DSOs.
“The design for the Flexibility Market Asset Registration (FMAR) platform, a single source of truth for assets, will also be completed in the first half of 2026.
“This environment will intensify competition between independent aggregators and traditional suppliers, primarily by dismantling key barriers to market access. Crucially, the implementation of regulatory modification P483 (approved in late 2025) will open the door for millions of domestic and small business customers to trade flexibility via independent aggregators by removing the restrictive requirement for half-hourly settled meters.
“Further streamlining is targeted by Elexon’s assessment of Issue 114 (IG114), which directly addresses the Duplicate Meter Point Problem (ABSVD friction) by aiming to establish clear rules for how costs and volumes are correctly settled when an aggregator operates an asset behind a supplier’s main boundary meter.
“All these coordinated efforts are designed to create a more transparent, efficient, and accessible flexibility market for all participants into 2026 and beyond.”
3. Affordability pressures will encourage DER integration and operational innovation
Chris Broadhurst, CCO:
“Affordability will be the top priority for utilities in 2026. Data centres aren’t going away. We’ll see more of them, faster load growth, and rising pressure on networks to connect these huge sites affordably.
“The conversation today is very one-sided, focused on accelerating connections, but still missing a clear framework for how DERs and consumer DERs can actually participate and benefit. That gap will force innovation, because we simply have to solve the data-centre problem in an affordable way, and that means bringing DERs into the mix.
“Affordability pressures will also push planning and operations teams much closer together as they find smarter ways to run the grid. It’s a catalyst for the kind of change the industry has been talking about for years, and there’s real momentum now that we should all be using.”
4. Interoperability will determine whether flexibility markets scale safely in 2026
Harrison Leaf, Acting COO:
“In 2026, UK flexibility will become more business as usual. As it does, parts of the underlying digital infrastructure of flexibility will be used for the first time, at greater scale, more frequently and with more at stake than during earlier phases. These are vital services like asset databases and consumer consent mechanisms, which must be in place before data can flow and businesses can transact. But, for a few reasons, these won’t be complete on launch, leaving energy sector operators working in a landscape of frequently shifting protocols. DSOs and flexibility providers can’t wait for perfect standards before they start transacting. The train has already left the station and it needs us to lay the tracks as we go.
“The main reason things aren’t perfect on day one is that they’re not trying to be. Iteration is good software practice. It makes sure we really understand needs before we build solutions. This approach has saved untold billions of shareholder and taxpayer money since at least the 2000 Dot Com crash. The key here is frequent and effective communication between those with needs and those with solutions.
“Other reasons include nuanced problems like standards alignment. Should the standard be stable before we begin to develop to it? Should we wait for consensus? Or should we iterate the standard along with the software? The stakes are growing and mistakes here can be costly – critical infrastructure and centralised systems are high-value targets. But analysis paralysis is costly too.
“We’ve seen this episode before, and not just in energy. Digital ID can and has been well implemented in other countries, but at this particular point in history, the UK’s digital ID programme is facing stark warnings from security insiders. This is avoidable with cooperation. 2026 will see Electron and other operators going beyond industry consultations and into a community of practice where developers, users and regulators co-create together. We’re working on modern, practical approaches to interoperability that make data usable across a wider variety of platforms and users from the start, meeting them where they are, so the whole system can, like an articulated train, move smoothly without breaking. This is usually faster than forcing alignment at every turn.
“That’s how and why our work on Flexify and Flex Markets Unlocked developed, where interoperable architectures made it possible to connect participants, manage flexibility provider information, and exchange data without locking the market into potentially fragile designs. In 2026, as DER participation increases, getting that type of architecture right early will help ensure flexibility markets scale smoothly.”
5. Non-wires alternatives are emerging as utilities race against electrification-driven load growth
Mark Rawson, Senior Vice President, North America:
“US utilities are facing a growing challenge: accelerating electrification is creating localized distribution capacity constraints that traditional infrastructure projects can’t always address cost-effectively or quickly enough. Electric vehicles, heat pumps, and building electrification are driving load growth that threatens to overwhelm distribution systems. By leveraging customer-sited DERs like smart thermostats, batteries, and managed EV charging to address localized capacity constraints, utilities can target their infrastructure investment dollars where they’re truly needed, keeping costs down and improving affordability for all customers.”
“Non-wires alternatives offer a faster, more cost-effective path to managing distribution capacity. Rather than spending years and millions on new transformers and lines for every hotspot, utilities can aggregate customer resources to shave peaks and defer or eliminate traditional capital projects where DERs provide sufficient relief. States like New York, California, and Massachusetts are already proving these programs can deliver reliable capacity at a fraction of the cost, directly supporting the affordability priorities Chris mentioned.”
“The operational challenge is real. Utilities need better methods for DER detection and understanding operating characteristics, forecasting their availability during critical peak periods, and integrating them into both distribution planning and real-time operating processes. Grid-aware DER customer program -where devices respond to local distribution needs and not just wholesale market signals – will be essential. Flexible DER markets that can procure capacity where and when it’s needed will become a necessary part of the utility toolkit. As DER penetration increases in 2026, utilities that master these capabilities will manage grid reliability and customer costs far more effectively than those relying solely on traditional infrastructure builds.”
