Ofgem has agreed a market change that will allow consumers to get the benefit of providing demand response from other parties as well as their supplier.

It approved a Balancing and Settlement Code Modification (modification number P415) on ‘Facilitating access to wholesale markets for flexibility dispatched by virtual lead parties’.

Virtual lead parties (VLPs) are aggregators that work on behalf of electricity generators and consumers to offer balancing services for the electricity system. Ofgem said, consumers of electricity who can increase or decrease their demand in response to requests cannot obtain the value from that flexibility within the wholesale market unless they enter into arrangements with their supplier to do so. This is because the BSC assigns all flexibility delivered by a consumer to their supplier. As a result, consumers can only access the wholesale market through their supplier.

When it is implemented in November 2014, P415 will also allow VLPs to also offer services in the wholesale electricity market. P415 had to consider options to compensate suppliers, because they would have already bought electricity to supply customers that would not be used if they reduced demand on request.

Elexon’s Chief Executive, Peter Stanley said: “We recognise the important and growing role flexibility has in electricity markets. Approval of P415 is an important breakthrough as it will give flexibility providers access to wholesale markets to realise the value of flexible assets.” He added, “We are excited to be implementing P415 on the Elexon Kinnect platform. In parallel, we will continue to work with industry and Ofgem to progress proposals for the associated compensation mechanism in the Balancing Mechanism for Suppliers and VLPs, in cases where suppliers’ volumes are adjusted by VLPs.”