Flexibility Focus: key insights from Q2 2026

Developments in the conflict in the Middle East, as well as the short-term impacts of extreme heat, have dominated power prices in the second quarter of 2026. On-off peace negotiations in the Middle East intermittently increased transit of energy cargoes via the Strait of Hormuz. Meanwhile, a Europe-wide heatwave during the week commencing 22 June led to power market volatility on several days. Significant value was available for flexible assets and consumers over this period.

On the policy and regulation side, the Government and Ofgem published a range of relevant updates to the Capacity Market for demand-side response. the Reformed National Pricing (RNP) delivery plan in April, as we noted in our Q1 report. This is the next stage of the overarching electricity market policy review, following the Review of the Electricity Market Arrangements (REMA) decision to maintain a single (rather than zonal) GB wholesale market.

NESO published its Early View of Winter Outlook 2026/27 Report on 23 June. This annual report assesses the security of electricity supply from November ‘26 to March ‘27, providing an overview of the potential system tightness over the period. It forecasts that the de-rated margin will be 5.5 GW – an ‘adequate’ figure, albeit slightly lower than last winter.

As well as this, NESO committed to providing quarterly updates on its Demand-Side Flexibility (DSF) Routes to Market Review, publishing its Q2 2026 update in June. This included an innovation project exploring “synthetic” metering.

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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