The Demand Flexibility Service (DFS) began in winter 2022/23, run by the National Energy System Operator (NESO), then National Grid ESO, after Ofgem approval on 4 November 20221. It was designed to reduce demand during evening peak periods and cut reliance on more expensive generation1. The Energy Saving Trust describes it as a service that rewards households for using less energy during peak hours2.
Participation in the first winter was significant. More than 1.6 million households and businesses took part across 20 events, reducing demand by up to 312MW, which Energy UK compares to the output of a small gas power station3. Carbon Brief reports 31 providers had registered by the end of the DFS period in March 2023, made up of 14 domestic-only, 10 non-domestic-only and seven covering both4. NESO paid households and businesses nearly £11m over the season, an average of around £3,330 per megawatt hour of reduced electricity across 22 sessions4. Energy UK puts the DFS cost at £11m, against around £340m spent keeping reserve coal power stations available3.
The service has changed since. On 27 November 2024 it became a year-round service and moved to operate as an in-merit margin tool1. Energy UK says it transitioned from a winter-only emergency measure to an all-year-round service, with events typically scheduled four to six hours before delivery3. On 9 April 2026 the service expanded further, with bi-directional flexibility, zonal procurement, a reduced eligibility threshold of 0.1MW, Primacy and a Self-Nominated Baseline option1. Energy UK dates the fourth iteration to 14 April 2026, rewarding customers for both reducing and increasing electricity use, delivered across 12 regions3.
"Launched in winter 2022/23, DFS was designed to help manage potential winter pressures by reducing demand during evening peak periods and reducing reliance on more expensive electricity generation"
Eligibility and rewards vary. The Energy Saving Trust says participants must live or have a business in England, Scotland or Wales, have a working smart meter, and be with a registered supplier or third-party app, and can only take part with one registered provider2. The service does not run in Northern Ireland2. Rewards include pounds or points towards energy bills, and vary by supplier2. Carbon Brief reported that during the first live session on 23 January 2023, 400,000 customers took part and were given £3.37/kWh of electricity demand they reduced, with £4/kWh offered the following day4.
Research for the ESO by the Centre for Sustainable Energy found 62% of participants were satisfied and more than 80% said they would take part again, though savings were small and people with health conditions, financial stress, and smaller or larger than average households had less positive experiences5.
Why it matters for households
The DFS is a route by which a household with a smart meter can be paid for shifting when it uses electricity, rather than only for using less of it overall. That connects a home's appliances and timing decisions to the national supply position: reducing evening peak demand lowers the need to fire up more expensive generation1. Energy UK notes the service was designed to be accessible to any household or business with a smart meter, and that participation is voluntary, with customers choosing whether to take part in each event3. Individual households typically earn small amounts from each event3. The Centre for Sustainable Energy found money was the main motivator but that savings turned out to be small5.
What happens next
From 7 October 2026, DFS will launch the capability to procure constraint management actions, letting providers participate in both margin and system tagged actions, and NESO will no longer procure constraint management actions through the Local Constraint Market1. NESO says this forms part of its wider objective to create a simpler, clearer and more scalable route to market for flexibility services1.
Sources5 cited
- Demand Flexibility Service (DFS) | National Energy System Operator, neso.energy
- Demand Flexibility Service explained - Energy Saving Trust, energysavingtrust.org.uk
- Energy UK Explains: How consumer-led flexibility works in power markets - Energy UK, energy-uk.org.uk
- Q&A: How Great Britain’s 'demand flexibility service' is cutting costs and CO2 emissions - Carbon Brief, carbonbrief.org
- Household engagement with the Demand Flexibility Service - Centre for Sustainable Energy, cse.org.uk