The BtM opportunity is compelling but how does the it work technically?

In this second of three blogs on Behind the Meter (BtM) assets, I focus on GB markets but the architecture is broadly similar across liberalised power markets: small devices produce or shift energy consumption; someone aggregates them; value is realised via retail optimisation, network services, and wholesale/system markets.

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We’ll walk through it from the ground, up…

1) Grid Edge – Distributed Energy Resources (DER) and flexible load.

This is the physical BtM boundary. Included in this layer are EV chargers, home batteries, PV inverters, heat pumps, hot water, building management systems (for SMEs), and occasionally backup generation. Devices differ wildly in controllability and capacity: a battery is highly dispatchable; a heat pump is flexible within comfort bounds set by its owner; PV is mostly non-dispatchable (but can be curtailed or stored). IoT devices controlled by smart energy management systems on premises do the work here.

Many installations start with a home or site controller that does “local best effort”: self-consumption optimisation, peak shaving, tariff arbitrage, and comfort management. This layer is also where customer constraints live: “car must be 80% by 07:00”, “don’t drop temperature below X”, and so on.

I include the APIs, security and emerging protocols which expose the millions of physical assets in this layer.

2) Data Products – Head-End Management Systems / Operations Controllers.

This layer deals with the enormous amount of data produced at second-by-second granularity. It’s often messy, and needs to be cleaned, verified and stored. Some data at this level has to be billing quality while other systems are dealing with control signals and telemetry.

In GB, the smart metering system provides secure meter communications and remote reads (with the DCC as a key part of the national smart metering infrastructure). Smart meters are key because they provide auditable measurements that settlement and many flexibility products rely on. Current rollout statistics show the direction of travel, but also why legacy/non-smart sites remain a constraint (DESNZ Smart Meters Statistics, Q4 2024).

3) Aggregation & Flex Management – Aggregator / VPP platform

The aggregator pools thousands to millions of kW-sized sites, turning them into a manageable MW-sized portfolio. This is where forecasting, optimisation, constraint management, and dispatch logic sits – plus operational constraints: device availability, customer opt-outs, comms failures, and performance tracking.

Traditional suppliers are conceptually at this level also. It’s where baselining happens, so deviation from forecast can be tracked.

Energy Services Companies (ESCOs) provide sophisticated packages to businesses including funding and leasing of DER equipment. They are very much born of installation and engineer stock but can be part of an aggregator, or at least work closely with them.

The key to bringing BtM assets to market – Aggregation.

The commercial enabler in this stack is really aggregation. From a market perspective, an aggregator needs four things:

• A route to market: registration and qualification as a market party (or via a partner who is one).
• A product definition: what is being sold (energy, response, availability windows, etc.).
• Baseline and verification: a method to measure what would have happened without dispatch, and what actually happened.
• Settlement and imbalance treatment: rules that define who is financially responsible when real-world delivery diverges from schedules.

In GB, a notable evolution is the formalisation of Virtual Lead Parties (VLPs) as a route to access wholesale market participation for flexibility nominated by independent aggregators.

Baselines, telemetry, and measurement

BtM aggregation is mostly about controlling devices but it’s also about managing data settlement. Three important concepts are Baselining, Telemetry and Data:

• Baselining: estimating counterfactual demand (particularly for demand response) is messy. Baselining errors create disputes, risk, and supplier imbalance exposure.
• Telemetry vs meter reads: fast services may require near-real-time telemetry; settlement may rely on half-hourly/quarter-hourly data. Aligning the two is a common aggregation problem.
• Data quality and security: the system needs to be robust against missing data, spoofing, and operational issues (firmware changes, device replacements, customer comms outages).

Hybrid Roles

In GB, platforms such as Kraken sit across retail optimisation and flexibility orchestration. Their own announcements describe a residential VPP reaching 2 GW with 500,000+ connected devices (Kraken, July 2025). Whether you call this “supplier-led aggregation” or a platform enabling third-party propositions, the technical point is the same: the value comes from controlling heterogeneous devices at scale while meeting market obligations.

(4) Market Access for Aggregators

At this layer we introduce regulator-governed market access. In the UK Elexon has implemented market codes P415 and P483 to facilitate market access for aggregators. This is where big changes have allowed BtM aggregated volumes to be integrated and traded as regular energy products.

Conceptually this is the same layer as traditional asset trading and nomination. Aggregated BtM volumes merge with traditional markets here.

5) Market and network interfaces (DSO/TSO/wholesale).

Finally, the portfolio is monetised. In GB this includes:

• System operator services (balancing and ancillary services), where participation routes and product requirements vary by mechanism and evolve over time.
• Wholesale markets where traditional long-term and spot energy contracts are bought and sold.

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The Gaps

The top and bottom of this stack have had industry focus for a long time.

Traditional markets, though constantly evolving, have been operating for years – long term, Day Ahead and Intraday as well as balancing and reserve services are well established. Regulatory frameworks are being put in place to allow flexible BtM assets to be traded.

From the hardware end, IoT devices, smart meters and Energy Management Systems are advanced and undergoing rollout (though it remains to be seen how much appetite consumers have for the technology). Data management protocols are evolving and collaboration across the industry appears to be healthy.

There is interest from start-ups – investment dollars being spent in new firms focussed on the aggregation opportunity.

Everything up to the Aggregator is in “BtM world” – lots of data, optimisation and customer care, above that it’s wholesale markets and well defined tradable products. Bridging this gap is where there is opportunity:

• Portfolio scheduling and nomination logic that treats aggregated flexibility like a dispatchable asset
• Product mapping across multiple markets (flex, ancillary services, wholesale trading)
• Metering/telemetry reconciliation, settlement feeds, and dispute workflows
• Risk controls: performance risk, imbalance exposure, and constraint conflicts (local vs national dispatch)

Next, in the third of this series of blogs, I’ll translate this technical stack into commercial reality: who pays, who carries risk, what products are credible, and how regional market design choices shape the business models.

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