Derogation under Article 6(4) of the Electricity Regulation for NESO’s Demand Flexibility Service 2026
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Amendments to the Terms and Conditions related to Balancing for NESO's Demand Flexibility Service 2026
Ofgem approves NESO's amendments to balancing terms and conditions to incorporate service documentation for the Demand Flexibility Service. The changes update Article 18 requirements under electricity balancing guidelines to include DFS parameters within formal balancing arrangements. This represents administrative housekeeping rather than substantive reform of the service itself.
Minor procedural alignment that formalises existing DFS operations within regulatory framework. The service mechanics remain unchanged — this simply ensures compliance with balancing code requirements.
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Amendments to the Terms and Conditions related to Balancing for NESO's Demand Flexibility Service 2026 | Ofgem
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Amendments to the Terms and Conditions related to Balancing for NESO's Demand Flexibility Service 2026
Publication type:
Decision
Publication date:
25 March 2026
Topic:
National Energy System Operator (NESO)
Subtopic:
Balancing supply and demand
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The Authority has decided to approve NESO's proposal to amend the relevant sections of the documentation for the Demand Flexibility Service (Service Terms and Procurement Rules) within the Terms and Conditions.
On 30 January 2026, we received a proposal from the National Energy System Operator (NESO) to amend the terms and conditions (T&C) related to balancing required by Article 18 of Commission Regulation (EU) 2017/2195 establishing a guideline on electricity balancing, as amended by the Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019 (EBGL). The proposal relates to an update to the T&C to incorporate service documentation for NESO’s Demand Flexibility Service (DFS).
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Demand Flexibility Service A18 Decision 2026 [PDF, 164.97KB]
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Derogation under Article 6(4) of the Electricity Regulation for NESO’s Demand Flexibility Service 2026
Ofgem approved NESO's request to extend and amend the derogation from Article 6(4) of the Electricity Regulation for its Demand Flexibility Service, a balancing energy product. The derogation allows NESO to operate DFS without full compliance with standard balancing market requirements. The decision was made on 25 March 2026 following NESO's proposal submitted on 30 January 2026.
The derogation maintains DFS as a carve-out from standard balancing market rules, preserving NESO's ability to procure demand reduction outside competitive balancing arrangements. This continues to socialise balancing costs while allowing selective participation — domestic consumers can opt in for payments while industrial users face full exposure through standard balancing mechanisms.
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Derogation under Article 6(4) of the Electricity Regulation for NESO’s Demand Flexibility Service 2026 | Ofgem
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Derogation under Article 6(4) of the Electricity Regulation for NESO’s Demand Flexibility Service 2026
Publication type:
Decision
Publication date:
25 March 2026
Topic:
National Energy System Operator (NESO)
Subtopic:
Balancing supply and demand
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This letter sets out our decision to approve amendments and extension to the derogation for the Demand Flexibility Service, in accordance with Article 6(14) of the Electricity Regulation.
On 30 January 2026, we received a proposal from National Energy System Operator (NESO) to extend and amend a derogation provided under Article 6(14) from a requirement of Article 6(4) of Regulation (EU) 2019/943 (the Electricity Regulation), as amended by The Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020 for its Demand Flexibility Service (DFS), a balancing energy product.
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Demand Flexibility Service A6(4) Derogation 2026 [PDF, 116.61KB]
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Summary
Ofgem: Amendments to the Terms and Conditions related to Balancing for NESO's Demand Flexibility Service 2026; Derogation under Article 6(4) of the Electricity Regulation for NESO’s Demand Flexibility Service 2026