Who controls access to the markets, data and technology through which flexibility is bought and sold is becoming increasingly important to the electricity system.

Published: 4 November 2026
Authors: Kiran Desai

Electricity competition is changing

Historically, competition and competition law analysis naturally concentrated heavily on generation and supply. The energy transition in the UK creates another competitive layer: the ability to shift, store, aggregate and optimise electricity consumption and production. That puts battery energy storage system (BESS) operators, aggregators, industrial demand-response providers and optimisation businesses into markets whose competitive conditions can depend heavily on access arrangements and market design. The National Energy System Operator (NESO) says demand-side flexibility is currently underrepresented in its services because of market rules, policy and regulatory barriers¹.

Key questions

The transition raises questions that business should anticipate regulators will consider and need to address.

• access: Could rules for participating in balancing or flexibility services disadvantage particular technologies, smaller assets or aggregators?
• data: If access to consumption, asset or operational data becomes important to competing effectively, who possesses it and on what terms can competitors obtain it?
• platforms and optimisation: What happens when multiple competing assets use the same optimiser, aggregator or bidding technology? At what point could information flows or algorithmic decision-making facilitate coordination?
• vertical integration: What competition questions arise if a participant operates at several levels, for example owning assets while also providing optimisation, aggregation or market-access services to third parties?
• aggregation and scale: Aggregation enables small assets to compete, but under what circumstances could concentration among aggregators or optimisation providers itself become an issue as these markets mature?

Competition and market architecture

Consideration of the above questions by business is not so much about compliance but about the market architecture, namely, however designed, what potential competition outcomes may need addressing?  However, there is something of a symbiotic point as well-designed competition rules can help create the conditions in which flexibility, storage and new business models can scale.

That matters because the electricity system is changing. Competition is increasingly taking place not simply between generators of electricity, but between different sources of flexibility: battery storage, flexible generation, interconnectors, demand-side response and, increasingly, aggregated consumer assets such as electric vehicles and smart heating.

For these businesses, the ability to compete may depend upon much more than the price they offer. It may depend upon access to the grid, balancing and flexibility markets, operational and consumption data, optimisation technology and other routes to market.

This is where competition law and policy can play a constructive role.

First, open and non-discriminatory access can promote entry. If access to infrastructure, data or a route to market is necessary to compete effectively, the terms on which access is provided can have an important bearing on competition. The question is not simply whether access exists, but whether market arrangements allow different technologies and business models a realistic opportunity to compete.

Second, competition rules need not prevent collaboration and aggregation. The transition requires significant coordination, and smaller assets may need to be aggregated to compete effectively. NESO's current work expressly seeks to remove barriers for smaller and aggregated assets and to increase competition. The challenge is therefore to distinguish legitimate cooperation that brings new capacity into a market from arrangements that unnecessarily restrict independent competitive decision-making.

Third, competition can encourage innovation in the routes through which flexibility is traded. Aggregators, optimisation providers and digital platforms can reduce barriers to participation by connecting assets with different electricity markets. But successful intermediation can also create new dependencies. As these models develop, questions concerning access to data, interoperability, exclusivity and conflicts between operating a platform and competing through it may become increasingly significant, in a similar way to how product platforms, such as Amazon, are facing regulatory challenges for being both a major platform on which sellers and resellers transact, and on which Amazon sells its own products.

Finally, effective competition should matter to investment. The government's 2026 Clean Flexibility Roadmap envisages a major expansion of clean flexibility as the electricity system decarbonises². Investors therefore need confidence not merely that markets exist, but that there are viable and durable routes through which their assets can compete.

The energy transition consequently presents competition law with a wider task. It must continue to prevent collusion and exclusionary conduct. But it can also contribute to something more fundamental: ensuring that the emerging commercial architecture of the electricity system remains sufficiently open for new technologies, new entrants and new business models to prosper.

That makes competition law not simply a constraint on the energy transition, but potentially one of its market-building tools.

The transactional implications

For energy-transition transactions, competition law should not begin and end with the question: does the deal require merger clearance? The more commercially interesting question may be what the transaction does to the parties’ position within an evolving energy ecosystem. Acquiring a battery, aggregator or optimisation business can bring control over capacity, data, customer relationships or routes to market. Understanding those relationships can expose strategic advantages, but also dependencies, conflicts and potential competition concerns. Competition analysis should therefore form part of the commercial understanding of the deal, not simply the regulatory process that follows it.

The energy transition is not simply changing how electricity is generated and consumed; it is creating new markets, new intermediaries and new commercial dependencies. Competition law has an important role to play in ensuring that this emerging architecture remains open, contestable and capable of supporting the investment and innovation the transition requires.

¹ NESO website, Flexibility | National Energy System Operator