Market facilitator policy framework consultation

What this is about

This consultation set the policy framework for the Market Facilitator role that Ofgem had already decided in July 2024 would be carried out by Elexon. The principle had been settled; this paper turned it into a working specification. Three documents need to be read together: the July 2024 delivery body decision (Elexon gets the job), this December 2024 framework consultation (what the job is), and the spring 2025 framework decision plus the September 2025 blueprint (how the job is operationalised). The end point was the 12 December 2025 go-live.

The framing is the standard flexibility-coordination story. Renewable generation, electric vehicles and heat pumps need responsive demand and distributed assets to balance against, and the current arrangements for procuring that flexibility sit in silos: DNO local flexibility tenders run on their own platforms with their own rules, NESO procures balancing services nationally on different terms, and a flexibility provider that wants to stack revenues across markets faces a registration, technical and contractual matrix that suppresses participation. The consultation describes this as friction and proposes a single body to reduce it, with four areas in scope: setting up the Facilitator (transitional roles, workplan), the enduring function (what stays with Ofgem, Elexon, NESO and DNOs), the deliverables (plan, budget, technical outputs) and performance evaluation.

The institutional choice embedded here is the substantive point. Ofgem could in principle have used the Market Facilitator decision to push toward a price-based coordination mechanism: a single auction or settlement venue where local and national flexibility products clear against each other and the price reveals where the value is. It did not. The Facilitator was scoped as an administrative coordinator, standardising products, registering assets, aligning processes, leaving DNOs and NESO as the procuring entities on either side. The September 2025 blueprint confirmed this. That choice was effectively made at the framework stage, and this consultation is where it was visible in draft.

Options on the table

The consultation does not present formal binary options. It proposes a direction and asks for views on parameters within that direction. Three substantive design choices sit underneath the framing, and respondents had room to push on each.

Scope of the Facilitator's enduring function

The proposal is that the Facilitator owns cross-cutting coordination tasks (asset registration, product standardisation, market design alignment, data and reporting) while DNOs continue to procure local flexibility and NESO continues to procure national balancing services. The Facilitator does not buy flexibility, does not settle trades, and does not set prices. It defines the common rails on which DNO and NESO procurement runs.

Who wins: incumbents on either side. DNOs keep their flexibility tenders and the discretion that comes with them. NESO keeps the balancing market. Elexon gets a new mandate adjacent to its BSC role without displacing anyone. Who loses: flexibility providers who wanted a single venue with price discovery, and the case for a genuine flexibility market clearing on price rather than administrative procurement. The Facilitator as scoped reduces transaction costs at the registration and product-definition layer but does not move the system to price-based coordination at the dispatch or value-stacking layer.

Transitional arrangements between Ofgem and Elexon

The consultation proposes a forward workplan with Ofgem retaining policy and oversight functions and Elexon taking delivery functions, with a defined transition. The substantive question is how much rule-making authority transfers and on what timeline. A heavy Ofgem retained role keeps the Facilitator subordinate to the regulator and slows decision-making; a light Ofgem retained role gives Elexon more operational latitude but raises accountability questions for a body that is funded by industry levies and run as a not-for-profit.

Who wins under heavy Ofgem retention: parties who want regulatory predictability and a clear appeal route. Who wins under light retention: parties who want speed and operational pragmatism, principally Elexon itself and flexibility providers facing immediate friction.

Performance and evaluation framework

The consultation proposes parameters for evaluating Elexon's performance as Facilitator: a delivery plan, a budget, technical outputs and performance metrics. The choice here is whether evaluation is process-based (did Elexon deliver the workplan items, on time, on budget) or outcome-based (did flexibility market liquidity increase, did participation broaden, did costs fall). Process metrics are easier to measure and harder to game on the upside; outcome metrics align incentives with the policy goal but depend on counterfactuals the regulator cannot construct cleanly.

Who wins under process metrics: Elexon, and any future delivery body in a similar role. Who wins under outcome metrics: consumers and Ofgem's ability to demonstrate value, though only if the metrics are credible.

Questions being asked

The consultation document itself contains the formal question set (in the PDF, not the landing page text shown here). The landing page identifies four areas for response. The questions grouped by theme follow that structure.

Setting up the Market Facilitator

Questions on the forward workplan of activities and publications, and on the transitional roles and responsibilities for Ofgem and Elexon during stand-up. These are really asking respondents to flag sequencing risk: which deliverables need to land first for the rest to function, and where can transition be compressed or extended without breaking the launch path.

Market Facilitator function

Questions on what is in scope for the Facilitator and what remains with Ofgem, Elexon (in its BSC role), NESO and DNOs. These are the substantive boundary questions. They ask respondents to test the proposed scope against use cases (asset registration, product standardisation, settlement interfaces) and to flag where the boundary as drawn creates gaps, overlaps or unworkable handoffs. The unstated subtext is whether the Facilitator should evolve toward a price-discovery role or stay administrative.

Market Facilitator deliverables

Questions on the parameters for the key deliverables: delivery plan, budget, technical outputs. These ask respondents to comment on scope, granularity, sequencing and funding envelope. Budget questions matter because the Facilitator is funded through industry charges that ultimately reach consumers; technical output questions matter because the data and product standards Elexon defines will shape what flexibility providers can sell and to whom.

Market Facilitator performance arrangements

Questions on how Ofgem proposes to evaluate Elexon's performance as Facilitator. These ask respondents to comment on the balance between process and outcome metrics, on the cadence and visibility of reporting, and on the consequences of underperformance. The implicit question is whether Elexon's monopoly position as Facilitator needs the kind of incentive structure that price control regimes apply to network monopolies, or whether a lighter performance framework is appropriate for a delivery body operating on a defined workplan.

How to respond

Deadline: 11 February 2025 (the landing page also lists 12 February as the closed date; the consultation was open for nine weeks from 10 December 2024).

Submission method: by email to the Ofgem flexibility team.

Contact: Joseph Cosier, Ofgem, telephone 020 7901 7000, email flexibility@ofgem.gov.uk.

Main document: Market facilitator policy framework consultation (PDF, 418.64KB) on the Ofgem consultation page. Responses were subsequently published as a zip file on the same page, and Ofgem's spring 2025 decision document closes the loop on this stage of the framework.