• Blog

Flexible electricity supply and Britain’s evolving grid

Decarbonisation of the national grid is being achieved through the rapid growth of renewable energy generation from wind and solar power, which is successfully displacing fossil fuels. Yet this transformation brings a structural challenge: renewable output is variable and does not always align with patterns of demand.

Addressing this mismatch requires a more flexible energy system, capable of balancing supply and demand in real time.

This article explores flexible electricity supply and grids, highlighting their benefits, the barriers to adoption, and the steps being taken to transform Britain’s national grid into a truly flexible electricity system.

What is a flexible electricity supply?

A flexible electricity supply is the ability of the power grid to react swiftly to fluctuations in generation and consumption, keeping the system balanced and stable.

It represents a high-tech alternative to traditional grids, which were designed to handle controllable outputs from coal and gas power stations reliant on fossil fuels.

Flexible grids are essential for integrating renewable energy sources, such as UK wind farms that generate intermittent power depending on weather conditions.

A flexible electricity supply makes use of technology on both the supply side and the demand side to maintain the balance between electricity generated and consumed in real time.

What is the NESO’s role?

NESO is the National Energy System Operator in Great Britain (previously known as National Grid ESO) and is responsible for balancing the British electricity grid.

NESO is a public body that reports to Ofgem, the energy market regulator.

Here is a summary of NESO’s main roles in providing flexibility to the national grid.

Balancing activities

NESO ensures that the frequency of the electricity grid remains close to 50 Hz to avoid equipment failure and blackouts.

It pays flexible power generators, such as gas power stations and the Drax biomass power plant, to adjust output in order to meet demand.

These balancing activities are funded through Balancing Services Use of System charges, which are applied to both domestic and business electricity bills.

Operating flexibility markets

NESO designs and manages markets that enable different participants, such as power plants, energy storage facilities, and consumers, to offer flexibility to the energy system.

We explain how each of these markets works in the section below.

Coordinating national and regional grids

NESO works with grid operators across the British energy system to ensure that flexibility is delivered at both local and national levels. This includes:

• National Grid – The high-voltage electricity transmission system in Britain.
• Distribution Network Operators – Regional power networks that connect the National Grid to individual homes and businesses in their areas.

Why flexible energy matters for renewable power

In 2024, wind and solar farms together generated around 35% of the electricity used on the British grid. Supported by the Contracts for Difference scheme, this contribution is growing rapidly.

The challenge with wind and solar power is that they do not generate electricity consistently. On a still, cloudy day, output from these sources will be minimal.

Unlike the gas and coal power stations they are intended to replace, renewables cannot respond directly to changes in demand for power.

A flexible energy grid is therefore required to bridge the gap between renewable generation and electricity demand.

How does a flexible energy grid work?

A flexible energy grid relies on vast amounts of data and advanced technologies to manage the complexity of integrating renewable energy.

It must coordinate large power stations, distributed micro-generators, local demand variations, international electricity trading, and storage facilities, all working together to keep the system finely balanced.

This section explains the key components of a flexible electricity grid:

Smart grid technology

A flexible grid uses AI to dynamically manage energy from both large-scale and distributed sources, while integrating storage at national and local levels.

Advanced forecasting tools predict renewable generation based on weather patterns and anticipate electricity demand using historical data and international trading flows. This helps to ensure that reserves are available in emergencies.

The grid functions as a network of interconnected smaller grids, balancing local supply and demand in real time through smart meters and sensors. Machine learning also optimises storage, determining when to store and release excess renewable energy, and helping to maintain stability across all levels of the grid.

Energy storage

Energy storage is crucial for balancing the intermittent nature of renewable energy.

Storage facilities can absorb excess power when renewable generation exceeds demand, holding it in reserve until demand rises, at which point it can be fed back into the grid. The key sources of energy storage on the grid include:

• Pumped hydro storage – Facilities such as Dinorwig Power Station in North Wales, which use excess electricity to pump water to a high reservoir. When required, the stored water is released through turbines to generate power.
• Grid-scale batteries – Large lithium-ion batteries, such as the Blackhillock facility in Scotland, that can store excess renewable energy and discharge it rapidly to balance demand or support frequency control.
• Small-scale solar batteries – Domestic and commercial solar batteries using the Smart Export Guarantee scheme enable local energy storage at the point of generation, reducing reliance on regional electricity distribution grids during peak times.
• Green hydrogen production – Excess renewable electricity is used to split water into hydrogen and oxygen through electrolysis, creating a zero-carbon fuel that can be used to generate electricity in specifically converted gas power plants.

Demand-side response

Demand-side response (DSR) refers to schemes that incentivise consumers to shift electricity usage, helping to balance supply and demand.

Homes and businesses can be encouraged to use energy when renewable generation is high (e.g. when electricity prices are low or even negative) and to reduce consumption during peak times (e.g. when prices per kWh are high).

Although DSR is still developing, smart meters and connected devices will eventually enable automatic adjustments, such as charging electric vehicles when renewable power is abundant.

Widespread adoption remains the key challenge, but the potential for cost savings and improved grid efficiency makes DSR an essential element of a flexible grid.

Distributed energy resources

Distributed Energy Resources (DERs) are small-scale energy technologies connected to the electricity grid at the distribution level (closer to homes and businesses), rather than at large central power stations.

Local DERs can respond quickly to balancing requests at either a local or national scale. Examples include:

• Electric vehicle batteries, using “vehicle-to-grid” technology.
• Hot water storage tanks, storing heat when demand is low.
• Smart appliances, such as washing machines and dishwashers that can shift their operating times.

Coordinating these small-scale energy resources requires advanced technologies so that they can be controlled remotely by domestic or business energy suppliers.

Flexible energy generation

Flexible energy generation refers to electricity sources that can rapidly adjust their output up or down in response to operator controls.

At present, the majority of flexible generation is provided by gas-fired power plants. Although these will remain a last-resort option in the future, the following low-carbon sources are expected to be prioritised for generating power on demand:

• Biomass plants – Converted coal stations that run on biomass sources such as wood chips.
• Hydroelectric dams – Facilities that control water flow to adjust generation as required.
• Green hydrogen plants – Conventional gas stations converted to burn green hydrogen produced from excess renewable energy.

Flexible energy services available

The British national grid currently uses the following flexible energy services to actively manage supply and demand:

• Balancing Mechanism – The core real-time market where generators, storage operators, and demand-side providers offer to increase or reduce output or consumption to keep the system balanced.
• Capacity Market – Ensures that sufficient flexible capacity (generators, batteries, demand response) is available to meet future peak demand, by awarding payments for committing to provide generation capacity in future years.
• Demand Flexibility Service – A programme that incentivises businesses and households to reduce consumption during periods of grid stress, with payments provided for cutting demand during peak times.

How businesses can benefit from flexible energy supply

There are three main ways in which British businesses can benefit from a flexible energy supply.

Earn with DSR participation

Businesses with flexible operations or battery storage equipment can be paid to provide flexibility services to the grid.

The Demand Flexibility Service offers payments for each kWh of business energy consumption reduced during periods of peak grid stress.

💡 At Business Energy Deals, we can help your organisation take advantage of the Demand Flexibility Service. Use our business electricity comparison tool to switch to a supplier that offers demand-side response incentives.

Reduce costs with smart tariffs

Suppliers such as Octopus Business Energy are leading the way by offering multi-rate business energy tariffs, for example, Agile Octopus, which use smart meter data to help consumers adjust their energy consumption in line with real-time grid conditions.

Businesses can use more power when business electricity prices are lowest and cut back during peak demand periods, saving money while also helping to balance the grid.

Self-generation and battery storage

Businesses with commercial solar panels and battery storage can benefit from a flexible energy grid through strategic control of their consumption.

An Energy Management System enables businesses to:

• Charge batteries from the grid when prices are low.
• Discharge batteries at peak times to avoid the most expensive electricity prices.
• Maximise self-consumption of solar energy to minimise power drawn from a business electricity connection.
• Reduce business electricity standing charges by lowering the required grid connection capacity.

The future of Britain’s flexible electricity supply

Here we summarise current initiatives aimed at increasing the flexibility of the British electricity supply to support further growth in renewable power generation.

Market-wide half-hourly settlement

By 2026, the rollout of smart meters is due to be completed, giving the grid access to real-time energy usage data from all consumers.

Using this data, the energy industry plans to implement the market-wide half-hourly settlement reform, under which this granular data will shape the way energy suppliers buy and sell electricity.

This reform is intended to encourage suppliers to offer time-of-use tariff innovations, such as vehicle-to-grid tariffs, enabling more consumers to participate in demand-side response.

Increased base-load low carbon power generation

EDF Business Energy is currently constructing two major new nuclear power stations: Hinkley Point C and Sizewell C.

These stations will provide reliable base-load power for the grid, helping to reduce overall volatility in electricity generation.

Nuclear power stations are classed as a low-carbon source of energy, as the nuclear reaction used to generate electricity does not directly produce greenhouse gas emissions.

Developing energy storage capacity

NESO’s balancing schemes are encouraging the development of additional storage capacity on the grid. Notable grid-scale projects include:

• Statera’s Carrington Project (Manchester) – A 680 MW battery energy storage system, expected to become the largest in Europe when it comes online in 2026.
• Fidra Energy (Thorpe Marsh) – A 1,400 MW battery energy storage system, which has been granted planning permission and is expected to come online in 2027.
• Coire Glas PHS (Scotland) – A new pumped hydro storage project under development by SSE, with a potential capacity of 1,300 MW.

Challenges to achieving full grid flexibility

The transition to a fully flexible energy grid presents significant technical, economic, and regulatory challenges. While the benefits are clear, implementing the technologies required to make the grid more adaptable is both complex and costly.

The primary barriers to progress include:

Back to blog Back to water guides

• Share:
• 
• 
• 
•