Rising energy costs, grid instability, and decarbonisation targets are reshaping manufacturing. The Capacity Market helps manufacturers stay resilient, reduce risk, and unlock new revenue streams.
Energy is no longer a background cost – it’s a strategic factor shaping competitiveness. Across the UK, rising prices and growing grid instability are putting pressure on manufacturers to plan smarter. For UK businesses, the Capacity Market provides a way to generate new revenue while protecting operations from the risks of unplanned outages.
At Enel X, we believe energy flexibility isn’t just a technical solution – it’s a business strategy that builds resilience and supports long-term sustainability.
Why energy security matters more than ever
The UK electricity system is changing fast. As renewable generation replaces traditional power stations, maintaining grid stability becomes more complex. In its Clean Flexibility Roadmap, the National Electricity System Operator (NESO) forecasts that Britain will need a fourfold increase in flexibility by 2035 to keep the system secure.
The Capacity Market was introduced to ensure power is available when demand peaks, or generation dips. It rewards participants who can reduce consumption or switch to on-site generation during periods of grid stress – creating a modern safety net for UK industry.
The real risk of grid instability
These challenges are far from theoretical. In January 2025, low wind generation and interconnector outages created a 1.7-gigawatt (GW) shortfall, prompting NESO to issue an Electricity Margin Notice – a signal that the system was just one generator failure away from blackouts.
Similar events have occurred before. During ‘the Beast from the East’ in 2018, extreme cold weather and constrained gas supply pushed the system close to activating the Capacity Market. Extended low-wind and reduced solar periods, or dunkelflaute, are becoming more common, and can stretch capacity in multiple countries simultaneously.
Interconnectors that trade electricity between the UK and Europe play an important role, but these can also be points of vulnerability. Over the last two years, the GB system has experienced:
- 30-40 planned interconnector outages
- 10-15 unplanned outages, resulting in grid frequency drops and emergency balancing actions
These incidents highlight the growing importance of having reliable backup capacity ready when the grid is under pressure.
Outages cost more than energy
Even short interruptions can have major financial consequences. A 2025 report from UK consultancy that UK manufacturers can lose up to £125,000 per hour during unplanned outages due to lost productivity and supply chain disruption.
Across the UK, manufacturers are projected to lose more than £80 billion in 2025 from unplanned downtime alone.
Resilience demands active engagement, it’s a deliberate and strategic choice. Businesses that take proactive steps to secure their energy supply stand to gain a clear competitive advantage.
How the Capacity Market supports manufacturers
Through the Capacity Market, Enel X helps manufacturers monetise flexibility while strengthening their operational resilience. Participating sites agree to reduce electricity consumption or use on-site generation when required, earning regular standby payments even if never called upon.
Key benefits of participation include:
- New Revenue: Earn income for being on standby without major operational changes
- Simplicity: Enel X handles compliance, performance monitoring and dispatch coordination
- Strategic Resilience: Participation supports net zero goals, and enhances on-ESGsite energy security
How much revenue can manufacturers earn?
Earnings in the GB Capacity Market are based on the amount of flexible capacity a site can make available during periods of grid stress. Payments are linked to a market-determined “clearing price”, set through annual auctions run by NESO.
These auctions take place one year (T-1 auctions) and four years (T-4 auctions) ahead of delivery, providing stability and forward visibility for participants. Enel X secures the maximum Capacity Market positions at the best possible prices and allocates them to customers according to their operational capabilities.
By managing the process end to end – from qualification and registration to market participation – Enel X helps manufacturers access this opportunity with minimal disruption or capital expenditure.
“Being part of the Capacity Market has been a game-changer for us. Since 2020, simply staying on standby has earned our business £1.25 million,” says UK food manufacturer, Enel X customer.
A stable outlook amid market volatility
NESO’s Winter 2025 Outlook Report indicates that capacity margins this winter are the strongest in six years. However, potential “tight days”, when wind output could drop, remain in December and January.
These moments highlight why foresight and flexibility matter. Manufacturers that plan are best placed to avoid disruption and even benefit financially when market conditions tighten.
For UK manufacturers, the Capacity Market offers more than protection – it provides a competitive edge. By participating, businesses can create new, predictable revenue streams while strengthening their resilience and supporting both the UK’s energy transition and their own ESG goals.
In a time of uncertainty, energy flexibility is one of the smartest investments a manufacturer can make.
Want to learn more about how the Capacity Market could benefit your manufacturing business?
Contact: [email protected]
Author: Cameron Welsh, Business Development Manager, Enel X.
Cameron Welsh is an experienced Electrical Engineer with three decades in manufacturing, data centres, and critical infrastructure. He helps organisations improve resilience and efficiency, and over the past ten years has led initiatives connecting consumer-led flexibility to smart grids, generating new revenue and supporting the UK’s energy transition.
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