Flexibility Focus: key insights from Q1 2026

As part of the Reformed National Pricing (RNP) programme – which follows on from the conclusion of REMA – NESO published a Call for Input on Balancing, Settlement and Dispatch reforms on 11 February. One reform in this proposal calls for more effective price signals by moving to shorter settlement periods (SPs). Shortening SPs to either 5 or 15 minutes would incur significant transition costs nationwide. However, it incentivises more shape in market parties’ trading to better match the demand curve. This and other proposed reforms with potentially significant impacts for demand flexibility are covered in more detail in our report.

Wholesale markets were shaped by volatility in Q1, driven by a combination of conflict in the Middle East and cold weather. 28 February saw the first announced missile strikes against Iran by the US and Israel. This conflict caused an immediate spike in wholesale electricity costs due to its impact on oil and liquefied natural gas (LNG) trade. High prices persisted through the remainder of Q1, and the conflict continued to drive uncertainty at the end of the quarter. Meanwhile, January cold weather triggered the highest recorded electricity demand since 2018, causing prices to spike and an increase in imports via interconnectors.

On the policy and regulation side, Elexon’s flexibility delivery plan for 2026-28, published in January, focuses on two key outcomes: simplifying access to markets and enabling coordination and stacking. Its next step is to deliver against the actions set out in the plan while working with wider flexibility market participants.

Since writing the Q1 report, the Government published its RNP delivery plan. Looking ahead, we expect to see further developments related to the RNP workstreams which could include the REMA cost-benefit analysis. Further work on the RNP balancing reforms is likely to progress in Q2, following on from NESO’s CfI.

Read our full report for detailed market analysis, policy updates and revenue insights below, or view previous editions of Flexibility Focus.

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