The Demand Flexibility Service (DFS) became a year-round service on 27 November 2024 and moved to operate as an in-merit margin tool, according to the National Energy System Operator (NESO)1. The change means the service is no longer confined to winter, and that NESO can use it as one option among others when managing system margins1.
The service was launched in winter 2022/23, following Ofgem approval on 4 November 2022, and was designed to help manage potential winter pressures by reducing demand during evening peak periods and reducing reliance on more expensive electricity generation1. NESO describes its aim as making it easier for homes and businesses to take part in the electricity market and be rewarded for shifting when they use electricity1.
"On 27 November 2024, DFS became a year-round service and moved to operate as an in-merit margin tool"
The government's Statutory security of supply report 2025, published on 17 December 2025, records the same change in similar terms: "In November 2024, DFS changed from a winter-only enhanced action to an enduring year-round, in-merit margin tool"2. The report covers the next four calendar years and concludes that Great Britain is expected to have the ability to access and secure sufficient supplies of electricity and gas to meet consumers' demands over the short and long term2. For this winter, 2025/26, NESO forecasts a derated margin of 6.1GW (10.0%) of Average Cold Spell peak demand, up from 5.2GW (8.8%) last winter and the highest predicted margin since 20192.
Further changes to the service are dated. On 9 April 2026, NESO says DFS expanded with bi-directional flexibility, zonal procurement, a reduced eligibility threshold of 0.1MW, Primacy, and a Self-Nominated Baseline option1. From 7 October 2026, DFS will launch the capability to procure constraint management actions, allowing providers to participate in both margin and system tagged actions, and NESO will no longer procure constraint management actions through the Local Constraint Market1.
| Change | Date |
|---|---|
| DFS launched after Ofgem approval | 4 November 20221 |
| Became year-round, in-merit margin tool | 27 November 20241 |
| Bi-directional flexibility, zonal procurement, 0.1MW threshold, Primacy, Self-Nominated Baseline | 9 April 20261 |
| Constraint management actions; end of LCM procurement | 7 October 20261 |
Why it matters for households
A year-round service changes the shape of household flexibility. Under the winter-only design, payments were tied to evening peaks in the colder months; as an enduring in-merit tool, DFS sits alongside other options NESO uses to balance the system at any time of year1. For a household, that means the route to being paid for shifting or cutting use is no longer seasonal in principle, though whether any individual event is called depends on system conditions and on the provider running the offer.
The service operates through registered providers rather than directly with households. NESO publishes two tables of registered providers, one for domestic households and small businesses and one for all other businesses, showing whether each is a member of the Flex Assure compliance scheme1. Households therefore take part through an intermediary, and the terms, payment rates and technology requirements are set at that level. NESO's own pages do not set out household payment rates for the year-round service, and no such rates are given in the security of supply report1.
The 0.1MW eligibility threshold introduced in April 2026 applies to units taking part, and NESO describes the changes as making DFS more flexible and accessible to a broader range of assets1. How that threshold interacts with domestic participation through a provider has not been reported in these sources.
What happens next
NESO lists the 9 April 2026 expansion and the 7 October 2026 constraint management launch as dated steps, with the Local Constraint Market procurement of constraint actions ending in line with the October transition1. The security of supply report notes that the next Capacity Market auctions will be held in March 20262.