Elexon implemented code modification P415 — Facilitating Access to Wholesale Markets for Flexibility Dispatched by Virtual Lead Parties (VLPs) — in November 2024. The modification introduced the role of Virtual Trading Parties (VTPs), allowing customers to access wholesale flexibility markets independently of their supplier. The first VTPs entered the market in December 2024, with participation and scheme costs increasing rapidly through the winter of 2025–26.
Changing access for customer flexibility in the wholesale market
Before VTPs, customers could only use their supplier’s services to access wholesale market value. If the supplier didn’t offer flexibility services in the wholesale market, the customer couldn’t participate. They could only use independent aggregators, known as VLPs, for balancing mechanism and/or ancillary services participation. Introducing VTPs allows aggregators to trade customers’ flexibility on the wholesale market, enabling customers to diversify flexibility revenues.
When a customer reduces consumption in response to a VTP instruction (known as load shifting), the ‘saved’ energy compared with expected usage becomes a tradable volume. This is called deviation volume and it’s what VTPs sell into the wholesale market. Deviation volumes are measured against a historic consumption baseline for each settlement period.
Compensation of costs for suppliers
Suppliers buy electricity ahead of time to meet the forecast demand. When VTPs sell flexibility volumes on a customer’s behalf and demand falls during peak periods, the consumption changes. This results in the supplier having over-procured electricity it’s unable to sell to the customer. The supplier can receive compensation for this over-procurement cost from a mutualisation pot. All suppliers pay into this pot based on their market share, and Elexon redistributes the fund based on VTP activity in their portfolios. These payments increase suppliers’ costs. While historically small, these charges are becoming material.
How has VTP activity changed over time?
VTP activity was initially very muted. Until summer 2025, there was very little activity from registered parties. However, this changed in late 2025, when several participants significantly increased activity and associated costs. This has driven the surge in total compensation. Compensation payments rose more rapidly from October 2025 onwards, reflecting increased VTP activity over Q4 2025. February 2026 has seen the highest level of VTP activity so far, with compensation exceeding £5,700,000, highlighting how quickly costs can scale as participation increases.
The increase in VTP activity is a positive step for companies able to operate flexibly. However, it also introduces a growing system cost all consumers ultimately share. As the charge grows and suppliers can no longer absorb the additional costs, it’s likely to add another line item to Third Party Costs (TPCs) on power bills. Based on internal data, estimated costs per MWh rose from below £0.05/MWh for most of 2025 to £0.20/MWh in January 2026, then increased further to approximately £0.25/MWh in February. However, costs tailed off in March, down to £0.12/MWh. This could reflect reduced VTP activity, though wider market volatility during the month also played a role.
What comes next for P415?
In March, industry participants raised several code modifications to the Balancing and Settlement Code (BSC) relating to VTPs. P511 — Eligibility Boundaries for Generation Participation in P415 — notes that generation assets can currently utilise the VTP route to market, which was not part of the initial design intent. According to P511, around 80 per cent of total VTP cashflows in January and February 2026 were likely paid to a party using a small number of large gas-fired assets. This has raised questions about whether the scheme is delivering value for demand-side flexibility or unintentionally rewarding existing generation assets.
The proposal therefore seeks to set a threshold on the maximum size of generation assets under the scheme (e.g. 5–10MW), although this is still under discussion.
This next phase of P415 will be shaped by how these issues are addressed, particularly around cost recovery and eligibility. As the flexibility landscape evolves, having the right expertise in place is increasingly important. Drax completed the acquisition of Flexitricity on 1 April 2026. This expands our flexibility offering and enables us to help customers access more routes to market and maximise the value of their assets.