Britain draws a size boundary around its licence-free wholesale market route: under 2 MW in, over 10 MW out

Britain has spent two years building the most permissive route to the wholesale electricity market that any large grid offers a household asset. On 10 August 2026 the regulator published the document that draws its outer edge, and the edge is a number in megawatts.

Ofgem directed that Balancing and Settlement Code modification P511 be made, publishing its decision on 10 August 2026 with an implementation date of 24 August 2026. P511 sets eligibility criteria for the arrangements created by P415, which let flexibility dispatched by independent aggregators be traded in the wholesale market through a Virtual Trading Party, without the aggregator holding a supply licence and without the customer's supplier agreeing to it.

Eligibility is now decided by the largest half-hourly Active Export recorded for a Metering System Identifier Pair over the previous 365 days. Below 2 MW, the pair stays eligible. Above 10 MW, it is out. Between the two, a behavioural test applies: total Active Export is compared against total Final Import over the previous 30 days, and a pair that is net exporting on that adjusted basis is ineligible.

The thresholds are not arbitrary and the decision letter says where they came from. The 2 MW floor exists because, in the workgroup's assessment, sites below it cannot realistically negotiate bespoke commercial agreements or reach the wholesale market another way, so P415 is their only practical route. The workgroup explicitly rejected setting the floor at zero on the grounds that it "would risk capturing assets that P511 was intended to support." The 10 MW ceiling was chosen to separate out larger export-led sites, and was aligned to an existing industry reference point: the upper end of G99 Type B, which covers generating modules of at least 1 MW and less than 10 MW.

What went wrong with P415

The modification was raised on 18 March 2026 by Axle Energy, an aggregator, which is the detail that makes this story unusual. The BSC Panel recommended urgency the same day, and Ofgem approved urgent treatment on 31 March 2026.

The problem Axle identified was double payment. A generator selling through a Virtual Trading Party can be paid twice for the same electron, once by the VTP and once by its power off-taker. Worse, actions taken by a VTP trigger compensation to suppliers whose volumes were displaced, and that compensation is mutualised across all suppliers, which means it lands on consumer bills. Ofgem's own framing is that the economic incentives in the original P415 arrangements "could result in the mutualised compensation fund increasing rapidly."

The scale is where the sourcing gets thinner, and the honest version is worth stating precisely. Ofgem's decision letter records the Proposer's projection that P511 would avoid between GBP 35 million and GBP 500 million of mutualised costs initiated by generators over the following twelve months, equivalent to roughly GBP 1.10 to GBP 17.10 on a consumer bill when spread across 30 million GB households. That range spans a factor of fourteen because it is a projection of either continued growth at the observed rate or continuation of the current cashflow, and it is the Proposer's arithmetic, not Ofgem's own impact assessment. A footnote in the same decision letter gives the actual figure mutualised to date; The Energyst reports it as approximately GBP 19 million between 1 September 2025 and 28 February 2026. [UNVERIFIED: the GBP 19 million figure did not survive text extraction from the Ofgem PDF and is taken from trade press paraphrasing that footnote.]

Ofgem says, in writing, that it is not sure

The most useful passage in the decision is the one that concedes the weaknesses. Ofgem writes that the workgroup "did not establish that the selected thresholds are uniquely correct, that every ineligible asset has an alternative, practical route to market, or that transition will be immediate or costless," and acknowledges edge cases where an asset is deemed ineligible because of data problems, operational issues or seasonality.

It also names the obvious failure mode. Fixed thresholds create cliff edges, and Ofgem records that generators who would otherwise be ineligible have an incentive to change their output, or split their output into smaller loads, in order to stay under the line. The regulator's assessment is that this "could undermine the eligibility criteria whilst creating further distortions within the market." Against objective (d), efficiency of the settlement arrangements, Ofgem concluded P511 is neutral rather than positive, precisely because the gaming risk offsets the clarity.

Ofgem considered and rejected the slower options: a minded-to decision for consultation, a targeted request for information, its own impact assessment or cost benefit analysis, and sending the proposal back for further workgroup evidence. Each was judged to delay implementation while the mutualisation risk grew. A minority of the workgroup held that P511 reduces competition and customer choice by removing a route to market for some sites.

Why it matters

Two things are worth taking from this, and they point in opposite directions.

The first is that the argument which closed this door is the argument normally used to close the door on households. Cost socialisation, the claim that a small group of participants is imposing costs on everyone else's bill, is the standard case against net metering, against distributed generation, and against most schemes that let the edge transact directly. It has usually been deployed downwards. Here it was raised by an aggregator against larger generators, and used to preserve a small-asset route rather than to shut one. That inversion is the interesting part: the incumbent argument turned out to be load-bearing for the insurgents too, once the route they built started attracting entrants it was not written for.

The second is that P511 is a proxy, and Ofgem says so. Export size and a 30-day net-export test are administrable and auditable, which is why they were chosen under an urgent timetable, but they are stand-ins for the thing actually being targeted, which is whether an asset has another way to sell. Proxies invite arbitrage, and the regulator has written the arbitrage into its own decision document. Whether the route survives as a channel for consumer-led flexibility now depends less on the thresholds than on how quickly industry revisits them, which Ofgem has asked it to do without setting a date.

What is still unknown

How much registered capacity became ineligible on 24 August 2026, and belonging to whom, is not established anywhere in the decision. Ofgem says only that Elexon's analysis of metered export data indicated material export capability is concentrated in a relatively small cohort of higher-capacity sites, and that it understands from the Final Modification Report that those assets should be able to reach the wholesale market by other routes. [NEEDS DATA: capacity registered under P415 before and after 24 August 2026.]

Nor is it clear how the 30-day net-export test treats a site with a strongly seasonal export profile, beyond Ofgem's acknowledgement that seasonality is one of the edge-case risks it accepted. Consultation respondents asked for a review mechanism or appeal route for edge cases; none was adopted.

Sources

• Ofgem, P511 Balancing and Settlement Code (BSC) changes, decision published 10 August 2026, and the decision letter PDF linked from that page
• Ofgem, decision on P415, Facilitating Access to Wholesale Markets for Flexibility Dispatched by VLPs
• Ofgem, P511 BSC urgency decision, 31 March 2026
• Elexon, New rule approved to support flexibility
• The Energyst, New rule approved to support flexibility, 12 August 2026