Electricity Demand Turn Up trial: EOI for flexibility providers

To work alone your organisation must be a UK registered business of any size or not for profit.

You must be a Flexibility Service Provider (FSP) working in the Great Britain (GB) electricity sector.

FSPs can include energy suppliers, aggregators, and industrial or commercial organisations that participate directly in energy markets.

To participate in the trial, you must confirm that you:

• have an existing customer base of domestic or non-domestic electricity consumers, or both
• are active in, or able to participate in, at least one of the NESO balancing markets, for example, Balancing Mechanism (BM), Demand Flexibility Service (DFS) and Local Constraint Market (LCM)
• have the capability to recruit new and existing customers for the trial
• can design and deliver innovative Demand Turn Up (DTU) propositions that would become viable or significantly more attractive with FCL rebates
• can support research and evaluation activities, including the provision of relevant consumer and electricity consumption data and, subject to appropriate permissions, access to participants for primary data collection
• are willing and able to work collaboratively with DESNZ, UKRI, NESO and the appointed Delivery Lead, including participating in regular meetings and reporting throughout the trial

An eligible organisation can only lead on one application.

If you are successful at the EoI stage, your full stage proposition for Phase 1 must:

• have a grant funding request of up to £3 million
• last up to 4 months
• carry out all of its project work in the UK
• intend to exploit the results from or in the UK
• start on 1 December 2026
• end by 31 March 2027

DTU is a form of consumer led flexibility that encourages consumers to increase their electricity consumption at times when additional demand can benefit the electricity system. It could help make better use of renewable electricity that might otherwise be curtailed. At present, however, Final Consumption Levies (FCLs) applied to electricity consumption can make it less cost effective to turn up demand than to curtail generation.

The aim of this competition is to identify FSPs, including energy suppliers and aggregators, that can participate in Phase 1 of a DTU Trial.

The trial will test whether rebating the value of eligible FCLs for verified DTU activity can make DTU more cost competitive, encourage consumer participation and reduce the need for renewable generation curtailment. It will generate evidence to inform future government policy on the treatment of FCLs for DTU.

If invited to the subsequent award stage, your Phase 1 proposition must:

• deliver measurable and verifiable DTU through one or more eligible National Energy System Operator (NESO) markets
• recruit and support eligible domestic or non-domestic consumers to participate in the trial
• provide participating consumers with a financial benefit linked to eligible DTU activity
• pass the financial benefit of FCL rebate payments to participating consumers, subject to any eligible participation costs agreed in advance
• measure eligible DTU activity and provide the data required to calculate and verify FCL rebate payments
• support the trial’s monitoring, research and evaluation, including the collection and analysis of relevant consumer characteristics and electricity consumption data
• comply with applicable market rules, consumer protection requirements, trial terms and data sharing requirements
• commence live delivery within the Phase 1 timetable

We are particularly interested in propositions that:

• serve a diverse range of consumers, including vulnerable and fuel poor households
• provide indicative estimates of the number and types of consumers that could participate in Phase 1
• estimate the DTU capacity and volume that could be delivered, including how this may vary by time, duration and location
• test different approaches to communicating DTU opportunities to consumers
• explore how industrial and commercial consumers can participate in DTU

The trial will seek to answer the following key research questions:

1. How much additional electricity demand is created in response to DTU signals supported by FCL rebates, and how much results from demand shifting?
2. What wider social and economic benefits result from providing FCL rebates for eligible DTU activity?
3. How do FCL rebates affect supplier and aggregator bidding behaviour and wider market outcomes?
4. Does the trial create any market distortions, undesirable impacts, perverse incentives or opportunities for gaming?

The trial will be delivered in three phases. Phase 1 will focus on delivering consumer propositions at pace and generating initial evidence against the trial objectives. You must therefore propose propositions that are already operational or can commence live delivery on 1 December 2026 if you wish to participate in Phase 1.

Phase 2 is expected to commence from April 2027 and Phase 3 from September 2027. Subject to evidence from earlier phases, these phases may test different variables, including FCL rebate levels, market interactions, consumer groups and approaches to scaling successful offers.

This EOI relates to Phase 1 only. The design and scope of subsequent phases will be informed by evidence and lessons from Phase 1 and may therefore change.

Phase 1 will use an FSP led delivery model operating through eligible NESO markets. Participating FSPs must:

• identify, recruit and support eligible domestic or non-domestic consumers
• design, communicate and deliver DTU propositions
• participate in eligible NESO markets in accordance with the relevant rules and requirements
• deliver measurable and verifiable DTU through those markets
• collect and provide the data required to calculate and verify FCL rebate payments
• pass the financial benefit of FCL rebates to participating consumers, subject to any eligible participation costs agreed in advance
• invite consumers to participate in research and evaluation activities
• support the collection and analysis of relevant consumer and electricity consumption data
• work collaboratively with DESNZ, UKRI, NESO and the appointed trial Delivery Lead

FSPs will continue to receive payments from NESO for accepted bids in accordance with normal market arrangements. FCL rebate payments will be administered separately through the trial.

FSPs that are not suppliers do not pay FCLs themselves but can reflect the value of the FCL rebate in a lower DTU bid price, knowing they will receive that rebate after delivery. The rebate is paid back to the FSP for the purpose of ultimately benefiting participating consumers, who initially pay FCLs through their electricity bill and can then receive financial benefit back from the FSP. We will make provisions within the trial design and selection process for avoiding any potential for businesses receiving double subsidies.

Briefing slides will be available to download after the event.

For advice, contact Innovate UK Business Connect’s Energy team.