Demand side response for UK business

Four revenue streams, one set of assets

Demand side response is the working core of our virtual power plant for UK businesses: we connect the flexible equipment you already own, dispatch it within rules you set, and pay you on a single monthly statement.

New to the concept? Start with the plain-English guide to what a virtual power plant is and how it works, then come back for the numbers.

The appetite for this is structural, not a fad: NESO, the National Energy System Operator, expects flexible capacity to roughly equal UK peak demand by 2030. Each stream below gets the figures a finance director needs.

1. Capacity Market: £20 to £60 per kW per year

The Capacity Market pays an availability fee for committing to turn demand down during rare system stress. T-1 cleared at £20/kW/year for 2026/27 delivery, T-4 at £60/kW/year for 2028/29. You are paid for being ready, whether or not an event ever happens.

Entry is 1 MW, but aggregated: we combine smaller sites into one Capacity Market Unit, so you do not need a megawatt of your own. Expect 5 to 17 months to first revenue, because registration runs on the annual prequalification window (July to October).

Stress events are rare, around one or two per winter, with at least four hours' notice. Proven units sit an annual DSR Test, which we run end to end.

2. NESO's Demand Flexibility Service: up to £1,290/MWh

The Demand Flexibility Service (DFS) started life as a winter scheme and has run year-round since November 2024. It pays for shifting demand during specific service windows, including turn-up under the bi-directional product introduced in April 2026.

It is opt-in day-ahead: you see the windows, you choose whether to take part, so production always wins. On the headline winter 2024/25 event the service cleared up to £1,290/MWh.

The entry floor dropped to 100 kW per unit in April 2026, bringing mid-sized sites into scope, and first payments typically arrive within 4 to 12 weeks of connection.

3. DNO flexibility: around £50,000 per MW per year

Your distribution network operator (DNO) pays for local flexibility to manage constraints on its own wires, and the market crossed 9 GW contracted in 2025.

Typical earnings sit around £50,000 per MW per year, and the entry point is the lowest of the four streams at 10 kW per asset, so a single chiller, pump or charger bank can qualify. Service windows are pre-published, with 15-minute notice on dynamic services.

We are approved with every UK DNO (UKPN, ENWL, SP Energy Networks, NGED, SSEN and Northern Powergrid) and with NESO at transmission level, so any postcode goes into the right tender. Like DFS, it typically pays within 4 to 12 weeks of connection.

4. Bill-side schemes: EII, NCC, BICS and CCL exemptions

The fourth stream is cost reduction rather than dispatch revenue. The EII, NCC and BICS schemes and the Climate Change Levy (CCL) exemptions cut the levies and network charges for eligible energy-intensive businesses, worth 3 to 5 pence per kWh where the SIC (Standard Industrial Classification) code qualifies.

One example from the programme: an EII-eligible plastics manufacturer using 5 GWh a year saves £150,000 to £225,000 annually through EII and NCC, with the Capacity Market layered on the same site as a separate revenue line.

Because these schemes are settled against the supply invoice, not against events, they stack with everything else on this page.

The four streams at a glance

Programme rates as published for recent auctions and events. A no-obligation flexibility assessment shows the figures for your sites.

Demand side response: FAQs

What happens if we cannot deliver during a demand side response event?

It depends on the scheme. NESO's Demand Flexibility Service has no contractual penalty: you are paid for what you deliver. DNO contracts typically claw back availability fees at a 1.5x multiplier, and the Capacity Market caps persistent under-delivery at 200% of monthly revenue and 100% of annual revenue, with a £5,000 per MW termination fee on Unproven DSR units. In practice the exposure is managed by design: DFS is opt-in day-ahead, DNO windows are pre-published, and stress events are rare, around one or two per winter, with at least four hours' notice.

How is demand side response delivery measured?

Against a baseline built from your half-hourly meter data: settlement compares what your site used during an event with what it would normally have used. That is why half-hourly metering is the entry requirement and clean meter data matters. We handle settlement across every product and consolidate onto one monthly statement.

What metering and hardware does demand side response need?

Half-hourly metering is required for every meter in scope, and is enough on its own for the Capacity Market and basic Demand Flexibility Service participation, so most HH-metered sites start with no new equipment. DNO flexibility and faster services need an on-site controller that acts on a dispatch signal in seconds, which we supply, install and maintain under our capex at no upfront cost.

Can we stack Capacity Market, DFS and DNO flexibility on the same load?

Yes. Up to four revenue streams can stack on the same MWh, and clients typically earn 3 to 6 times more than running one scheme alone. One overlap rule applies: if a Capacity Market stress event coincides with a DFS event, that MWh is paid once, not twice. DNO flexibility usually stacks subject to the local network's rules, and the bill-side schemes (EII, NCC, BICS, CCL exemptions) stack with everything because they settle against the supply invoice.