Our use of cookies 
What does Elexon do?
Elexon plays a vital but often unseen role in Britain’s electricity market. The National Grid is a carefully balanced system in which thousands of generators and millions of consumers are producing and using electricity simultaneously.
At the centre of this system, the not-for-profit company Elexon ensures that the contractual commitments made by generators to supply power, and by suppliers to purchase it, are accurately fulfilled and settled.
Each year, Elexon processes over four million energy contracts, providing the financial and operational stability on which the entire market depends.
This guide provides a complete answer to the question “What does Elexon do?”. Here’s what we cover:
- Who is Elexon?
- Elexon’s settlement performance role
- Processing of settlement imbalances
- Managing the Balancing and Settlement Code
- How is Elexon funded?
- Who owns Elexon?
- Elexon’s role in the energy reform and decarbonisation
Who is Elexon?
Elexon is an independent, not-for-profit company at the heart of Britain’s electricity market. It was established in 2001 and appointed as the electricity market administrator, tasked with managing the settlement of all market transactions based on actual meter readings.
Elexon operates as a neutral administrator with no commercial stake in electricity generation, supply, or trading.
Based in Euston, London, Elexon employs approximately 250 people, including specialists in energy settlement, market design, IT systems, and programme delivery.
Elexon’s settlement performance role
Most trading on the wholesale electricity market takes place in advance between generators that sell power and suppliers that buy power on behalf of their customers.
In simple terms, a trade defines how much electricity, in kWh, will be fed into the grid by the generator and consumed by a supplier’s customers during a specific 30-minute period.
These trades are all based on forecasts. For example, a wind farm selling electricity must forecast wind conditions to estimate power generation for a specific 30-minute delivery period. Similarly, an energy supplier must estimate how much electricity its customers will consume.
Inevitably, these forecasts will differ from what actually happens. Elexon performs a settlement role to financially reconcile traded positions with actual delivery. The key steps are outlined below:
1. Collecting and processing metered data
Elexon collects metering data from across the electricity system to determine the actual volumes of electricity generated and consumed. This includes electricity meters installed at the properties of end consumers and at generator sites.
These metered values measure the amount of electricity, in kWh, consumed or generated during each 30-minute settlement period.
💡Elexon provides live metered data for our National Grid Live Energy Mix dashboard.
2. Collected contracted data from participants
Under the market rules, each participant must submit contract data to Elexon for each 30-minute settlement period. Elexon receives:
- Physical Notifications (PNs) – Intended generation output or demand.
- Energy Contract Volume Notifications (ECVNs) – Bilateral trades between BSC Parties.
- Metered Volume Reallocation Notifications (MVRNs) – Reallocations of metered volumes between parties.
3. Comparing contracted and actual volumes
For each half-hour settlement period, Elexon compares:
- The contracted electricity volumes reported by market participants, with
- The actual volumes delivered or consumed as measured by meters.
This difference is called an imbalance. Because the electricity settlement process still relies partly on estimated and validated metering data, sufficient time is required to collect readings and estimate consumption where precise data is not yet available.
Currently, the process for fully settling an individual 30-minute settlement period takes around 14 months. For example, the settlement of transactions that occurred between 09:00 and 09:30 on 3 September 2025 will be finalised by Elexon in November 2026.
The next section explains how these imbalances are settled financially.
Processing of settlement imbalances
The Balancing and Settlement Code sets out how generators and suppliers are charged or paid for their imbalances.
Elexon performs the settlement process by calculating imbalance charges and payments for market participants.
In general terms, settlement results in payments to:
- Generators who over-deliver electricity relative to their contracted position, and
- Suppliers whose customers consume less electricity than contracted.
And charges to:
- Generators who under-deliver electricity relative to their contracted position; and
- Suppliers whose customers consume more electricity than contracted.
This settlement process ensures that the costs of supplying and consuming electricity are allocated fairly based on what actually happens in the system.
The imbalance price per kWh used in settlement is derived from the costs incurred by the system operator NESO to balance supply and demand on the grid.
Managing the Balancing and Settlement Code
The Balancing and Settlement Code is the legal framework that governs how transactions between generators and suppliers are conducted in the wholesale electricity market.
It is a legal document of more than 1,000 pages that underpins the functioning of the market.
Elexon administers a continuous change process through which licensed participants can propose modifications. Elexon facilitates expert groups and consultations to determine whether these changes should be accepted or rejected.
How is Elexon funded?
Elexon is a not-for-profit company whose activities are funded by participants in the energy market.
The Balancing and Settlement Code sets out the mechanism by which Elexon recovers its costs through charges to market participants. The majority of Elexon’s charges are split 50:50 between producers and consumers.
Elexon calculates its charges so that the company breaks even each year. That is, it makes neither a profit nor a loss. In its latest financial filings, for the year to March 2025, Elexon recovered a total of £122 million from market participants.
Here’s how each portion of Elexon’s charges is calculated:
Production share
Approximately 50% of Elexon’s ongoing costs are recovered from generators, with the main contributors being gas fired power stations, wind and solar farms, and nuclear power stations.
Each generator pays its share of Elexon’s costs in proportion to how much power it generates compared with the total power fed into the grid.
Consumption share
Fifty per cent of Elexon’s costs are recovered from licensed electricity suppliers in the retail energy market.
Each domestic and business energy supplier is charged according to its customers’ proportion of total consumption compared with overall market consumption.
These charges are incorporated into domestic and business electricity prices by each supplier.
Who owns Elexon?
Up until 2024, Elexon was directly owned by the National Grid operator NESO, a subsidiary of National Grid Plc.
However, on 1 October 2024, Elexon’s ownership structure changed to a federated model, under which the 13 largest funding contributors to Elexon were each given a one-thirteenth share in the company.
According to the latest Companies House filings, the owners are as follows:
- Ovo Electricity Limited
- Octopus Energy
- Drax Power Limited
- TotalEnergies Gas and Power Limited
- Scottish Power
- Drax Energy Solutions
- Uniper UK Limited
- Orsted ESS Mersey Limited
- SSE Energy Supply Limited
- RWE Generation UK Plc
- British Gas Trading Limited
- E.ON UK Energy Markets Limited
- EDF Energy Customers Limited
The transition of Elexon’s ownership was enabled by the UK government’s Energy Act 2023, which strengthened Elexon’s role as an independent and neutral market administrator.
Since each shareholder owns less than 10% of Elexon, their individual influence on its operations is strictly limited.
Elexon’s role in the energy reform and decarbonisation
Britain’s energy industry is undergoing rapid change as it works towards its ambitious goal of a decarbonised national grid by 2030.
Since Elexon operates the trading and settlement system for the electricity sector, it is playing a vital role in delivering necessary reforms to the market.
Below, we highlight Elexon’s role in four major reforms that are supporting the decarbonisation of the grid.
Flexibility services
In a future decarbonised grid, power generation will be dominated by intermittent renewables, whose output must be balanced by flexible consumer demand that adapts to the availability of electricity.
The grid operator NESO is introducing grid flexibility services, through which households and businesses can receive financial rewards for reducing power consumption during periods of grid stress.
Elexon is responsible for introducing Flexibility Market Rules that govern these incentive schemes, as well as for providing the metering and settlement data that underpin their operation.
💡 Find out more about the demand flexibility service, where companies can earn revenue by reducing their business energy consumption on demand.
Market-wide half-hourly settlement
Elexon is the programme manager of the Market-wide Half-hourly Settlement (MHHS) reform and is responsible for overseeing around 180 organisations involved in its implementation.
Under the reform, all domestic and business electricity meters in Britain will automatically record and transmit energy meter readings every 30 minutes, reflecting the way half-hourly electricity meters currently operate.
The reform aims to use automated meter readings to significantly shorten the 14-month settlement period currently applied under the Balancing and Settlement Code.
Find out more in our full guide to the Market-wide Half-hourly Settlement reform.
Contracts for Difference scheme
The Contracts for Difference (CfD) scheme is the main government mechanism for incentivising the development of large-scale renewable electricity generation projects.
Under the scheme, developers receive a guaranteed fixed price for each MWh of electricity they generate, with the government providing a top-up for the difference between the guaranteed price and the market price.
Elexon acts as the settlement provider for the scheme, calculating the necessary payments on behalf of the government. It provides these calculations to the Low Carbon Contracts Company (LCCC), which acts as the legal counterparty for all CfD contracts.
Capacity Market
The Capacity Market is the UK government’s main mechanism for ensuring that back-up electricity generation capacity is available during periods of peak grid stress.
The scheme provides payments to generators, such as Drax Power Station, that guarantee they will be available as back-up when demand is high but renewable generation is low.
Similar to its role in CfDs, Elexon manages the settlement process under the scheme, calculating the payments due to participating generators.
Back to blog- Share:
