UK Clean Flexibility Roadmap: Powering up Britain’s clean energy flex-appeal
On 23 July 2025, the Department for Energy Security and Net Zero (DESNZ), Ofgem, and the National Energy System Operator (NESO) jointly launched the Clean Flexibility Roadmap (Roadmap). For the first time, all three principal public bodies have set out a unified, actionable strategy to deliver a smarter, more flexible, and consumer-focused energy system. The Roadmap sets out how flexibility can support the UK’s clean power ambitions for 2030 and net-zero by 2050, with a focus on market reform, system planning, supply chain resilience, and international cooperation.
1. Short-Duration Storage: Market and Regulatory Developments
The Roadmap establishes a framework for scaling short-duration flexibility across the energy system, combining consumer participation with targeted infrastructure development. A key consumer-side element is the Marketwide Half-Hourly Settlement (MHHS) programme, which will enable dynamic, time-of-use pricing and facilitate new retail products based on real-time system conditions, which Ofgem expects to be implemented by 2030 at the latest. Associated reforms to the retail energy market are designed to ensure tariff transparency, encourage flexible appliance uptake through smart functionality standards, and remove disincentives (in the form of final consumption levies) for exporting electricity from home storage and electric vehicles (EVs). Under the current framework, final consumption levies are applied to electricity imported into home and EV batteries, which are not refunded when that electricity is exported to the grid, creating a disincentive for consumer-led flexibility (CLF) participation.
By 2050, the majority of CLF capacity is projected to come from EVs, supported by the widespread rollout of bidirectional (V2X) charging and digital tools. Smart meters, consumer protections, and inclusive participation strategies – particularly for low-income households – are expected to underpin an accessible and secure flexibility market.
In parallel, grid-scale batteries are identified as a key component of the clean power system, with a government target of 23-27GW of capacity by 2030, compared to approximately 5GW at present. These batteries are expected to provide fast-response services, balance intermittent and non-dispatchable renewables, and support grid stability. Efforts are also underway to speed up grid connections for battery projects that support national decarbonisation goals. Projects will be prioritised if they meet capacity limits and have proper land rights (as per the government’s Clean Power 2030 (CP 2030) Action Plan). Hybrid metering arrangements are being actively considered to enable co-location of battery storage with renewable energy generators backed by the Contracts for Difference (CfD) scheme, making it easier to integrate and optimise clean power generation and storage on the same site.
The Strategic Spatial Energy Plan (SSEP), announced as a key element of Reformed National Pricing as part of the Review of Electricity Markets decided in July, aims to guide long-term investment in networks and generation, while policy efforts also address supply chain capacity, workforce skills, and investor confidence. This includes maintaining a strong health and safety framework, and DEFRA has been engaging with stakeholders to develop a consultation on including grid-scale batteries within the Environmental Permitting Regulations and is expected to publish this imminently.
The Roadmap also indicates a review of how the Renewable Electricity Guarantees of Origin (REGO) scheme interacts with flexibility. Currently designed to certify the renewable source of electricity, REGOs may not fully reflect the time-sensitive value of flexible consumption, generation or the deferral of renewables volume to a more useful period from a system perspective. DESNZ will consider whether alterations to the REGO framework could better support consumer-led and system-level flexibility, potentially by improving temporal granularity or aligning certificates with actual system decarbonisation benefits. An update on the government’s assessment is expected at Roadmap Forum in July 2026, with potential implications for how market participants use REGOs in shaping tariffs, claims, and carbon accounting. Ofgem are advancing plans to develop Flexibility Digital Infrastructure, which started with a Call for Input in 2023, aimed at integrating flexible energy resources into the grid, enhancing system efficiency, and supporting the transition to a net-zero energy system by 2050.
2. Long-Duration Electricity Storage: Policy and Investment Outlook
Long-duration electricity storage (LDES) is being scaled up as a core element of system resilience and decarbonisation. The government has identified LDES – defined as storage with durations exceeding eight hours – as important for managing periods of low renewable generation and reducing dependence on unabated gas. Key measures include:
- Cap and Floor Regime Extension: Ofgem is implementing a cap-and-floor regime to provide revenue certainty and reduce investor risk for LDES projects. The first window is targeting between 2.7 and 7.7 GW of new capacity (from eligible technologies such as lithium-ion and pumped storage hydro) with successful applicants to be announced in the first half of 2026. Should the initial window fall short of NESO’s requirements, the Roadmap announces that a second round may be expedited, with a timetable to be published by the first quarter of 2026.
- Blended Finance Initiatives: DESNZ is working with the UK Infrastructure Bank, British Business Bank, and the National Wealth Fund to combine public and private funding. This approach aims to lower the cost of finance and de-risk deployment for novel LDES technologies, including demonstration-scale projects not yet suitable for revenue-regulated models. Blended finance options may include subordinated debt and convertible equity, alongside private sector investment.
- Strategic Spatial Energy Plan: NESO’s upcoming SSEP, to be published by 2026, will identify optimal locations for LDES deployment through to 2050. This will guide system-wide coordination, inform connection studies and environmental assessments, and support the deployment of LDES assets where most needed. Future policy is expected to include more robust locational incentives, such as enhanced Use of System (UoS) discounts or dedicated network reinforcement allowances.
Technologies such as pumped hydro, compressed or liquid-air storage, flow batteries, and thermal storage will complement short-duration batteries and emerging hydrogen systems, supporting a resilient, renewables-dominated grid. Provisional licence awards for successful applicants under the cap and floor scheme are expected by mid-2026, for delivery by either 2030 or 2033.
3. Market Reform and Flexibility Integration
As part of the Roadmap, the UK government is advancing market reforms to enhance flexibility and integrate emerging technologies. Key among these are Capacity Market reforms (including, most recently, a reminder on the prohibition on capacity withholding), with a government response to the December 2024 Capacity Market Low Carbon Flexibility call for evidence expected by the end of 2025, aimed at better integrating CLF resources.
NESO is targeting a further reduction in “skip rates” (where flexibility assets are not dispatched in the Balancing Mechanism) to achieve technology parity by March 2026, building on current initiatives that have so far had limited success. This sits alongside ongoing IT upgrades to replace legacy Balancing Mechanism systems by 2027. The government, following its latest REMA decision, will implement Reformed National Pricing, with a Delivery Plan to be published later in 2025. A balancing reform consultation will be launched later in 2025, with potential to lower the mandatory Balancing Mechanism participation threshold, enabling smaller assets to participate, and considering a reduction in settlement periods from 30 to 5 or 15 minutes, to enhance dispatch efficiency for flexible assets.
The ED3 Framework Decision marks a shift to proactive, strategic investment in distribution networks, requiring Distribution Network Operators (DNOs) to align with Regional Energy Strategic Plans (RESPs) starting Q2 2026. This approach prioritises regional tailoring of investments, supply chain development, and the use of distributed flexibility for local network management. Voltage management is set for a possible wide rollout following an Ofgem consultation in autumn 2025, and a Significant Code Review of Distribution UoS charges is expected to introduce more granular locational and temporal pricing signals, encouraging load shifting and flexibility. These network reforms aim to collectively enhance the grid’s ability to accommodate renewables and flexibility technologies efficiently.
4. Digitalisation and System Flexibility
Digitalisation and smart data initiatives are central to unlocking system flexibility and consumer engagement. NESO will publish a Sector Digitalisation Plan in summer 2025, aligned with the Roadmap and CP 2030 Action Plan. A comprehensive asset visibility framework, backed by government and Ofgem, will be developed, including a response to a call for evidence by the end of 2025 and potential new DNO licence requirements to maintain accurate asset registers.
To empower consumers, RECCo (Retail Energy Code Company) which oversees the UK’s retail energy market, has been appointed by Ofgem as the delivery body for the new Consumer Consent Services, will deliver a consumer consent mechanism by end-2026, enhancing transparency and control over energy data use. Complementing these efforts, planning and supply chain resilience measures include NESO, Ofgem, and DESNZ ensuring the first RESP methodology fully integrates flexibility modelling by Q2 2026. Public finance institutions will expand support for domestic manufacturing and supply chains, highlighted by a £1bn Great British Energy Clean Energy Supply Chain Fund launching throughout 2025, and the National Wealth Fund investing in low carbon power and flexibility technologies. Market Demand Guarantee options, as proposed by the Clean Energy Industries Sector Plan to encourage domestic manufacturing of electricity network equipment, are being explored to strengthen local production and supporting the growth and resilience of the UK’s clean energy ecosystem.
5. Practical Implications and Looking Ahead
For developers of battery and LDES assets, it is important to reassess project timelines in light of connection queue reforms, as pre-2030 connection dates are now primarily reserved for projects that are ready to proceed. The introduction of environmental permitting for batteries will add a new critical-path consideration, making early engagement with the Environment Agency advisable.
Financiers should be aware of the differing revenue models across storage technologies. While short-duration storage can be operated on a merchant basis, many new projects secure contracted revenues via revenue floors, tolling agreements, and Capacity Market contracts, mitigating their revenue volatility (though potentially reducing overall returns). In contrast, the LDES cap-and-floor mechanism will offer a structured framework with guaranteed minimum returns and capped upside, improving bankability for long-duration projects. Nevertheless, there is concern about the market distortion that the cap and floor regime could represent for shorter duration flexibility.
Supply chain participants, particularly those involved in transformers, HVDC cabling, and power electronics, should monitor developments related to the Great British Energy fund and the possible introduction of a Market Demand Guarantee. Transparency regarding NESO’s substantial annual network build programme, exceeding £40 billion, will be crucial for informed investment decisions in domestic manufacturing.
For data and technology businesses, there are significant opportunities to develop solutions for asset registration, consent management, and flexibility optimisation. Aligning product development with the Dynamic System Investment (DSI) minimum viable product timeline and forthcoming Ofgem consultations on Flexibility Digital Infrastructure will be key to capitalising on these opportunities.
Rather than introducing entirely new policies, the Roadmap consolidates planning, market, and digitalisation initiatives, many of which were first set out in the CP 2030 Action Plan, into a unified delivery strategy. The ability of the sector to achieve rapid deployment of storage and establish interoperable data-sharing frameworks will be pivotal in maintaining progress towards a highly flexible, renewables-driven grid by 2030 and a fully decarbonised power system by mid-century.
The next 18 months will be particularly significant, with the LDES cap-and-floor window, the rollout of the DSI minimum viable product, and Ofgem’s reforms to voltage management and network charging (also forming part of the wider Reformed National Pricing strategy) all set to play a critical role. Early and proactive engagement from market participants in the various consultations will be essential, as the pace of reform is accelerating and those who do not adapt may find themselves at a disadvantage in the evolving policy landscape.
