UK Energy Law Guide: Regulation, Renewables & Deals

At a glance

• Core statutes: the Gas Act 1986 and the Electricity Act 1989 set up the licensing framework for the gas and electricity industries; the Energy Act 2013 introduced Contracts for Difference; the Energy Act 2023 created the National Energy System Operator; the Great British Energy Act 2025 established Great British Energy.
• Main regulator: Ofgem licenses generators, suppliers and network operators in Great Britain and enforces the Gas Act 1986 and Electricity Act 1989. Northern Ireland has its own regulator, the Utility Regulator.
• System planning: the National Energy System Operator (NESO), a publicly owned body, took over strategic planning of the electricity and gas networks from National Grid's Electricity System Operator on 1 October 2024.
• Main subsidy mechanism: Contracts for Difference, run under the Energy Act 2013 and administered by the Low Carbon Contracts Company, guarantee a fixed strike price to low-carbon generators for around 15 years.
• Public investment vehicle: Great British Energy, established by the Great British Energy Act 2025 (Royal Assent 15 May 2025), is a publicly owned company that can invest in and help deploy clean energy projects.
• Planning route for large projects: Nationally Significant Infrastructure Projects go through the Development Consent Order process under the Planning Act 2008, rather than normal local planning.
• Land agreements: most projects rely on options, leases, wayleaves or easements, negotiated separately from any regulatory licence or planning consent.

Overview

Energy law covers the rules governing how electricity, gas, heat and fuels are generated, transported, traded, supplied and consumed across the UK. It brings together primary legislation such as the Gas Act 1986, the Electricity Act 1989, the Energy Act 2013 and the Energy Act 2023, alongside regulations made under those Acts, licence conditions set by Ofgem, and planning and environmental rules that affect where and how energy infrastructure can be built.

On the commercial side, it takes in contracts between generators, suppliers, network operators and end users, as well as the property agreements that sit underneath any physical installation, such as options, leases, wayleaves and easements. Renewable generation adds a further layer, with schemes like Contracts for Difference shaping project economics and, more recently, the National Energy System Operator and Great British Energy shaping how projects are planned for and invested in. In practice, most energy matters involve a blend of regulatory compliance, contractual negotiation and landowner relationships working together.

Who does what: the key institutions

The institutional landscape has changed significantly in the last few years, and it is worth being clear about who does what before getting into any specific deal.

Ofgem — the licensing and consumer-protection regulator

Ofgem is the Office of Gas and Electricity Markets, and it remains the core regulator for gas and electricity markets in Great Britain. Its authority comes from the Gas Act 1986 and the Electricity Act 1989, as amended by later legislation including the Utilities Act 2000 and successive Energy Acts. Ofgem grants and can revoke licences for generation, transmission, distribution and supply, sets network price controls, and enforces consumer protection rules. It recovers its running costs from the companies it licenses rather than from general taxation.

NESO — the system planner

The National Energy System Operator (NESO) is a publicly owned body established using powers in the Energy Act 2023. It launched on 1 October 2024, taking over the role previously performed by National Grid's Electricity System Operator and extending it to cover gas system planning as well. NESO produces long-term documents such as the Strategic Spatial Energy Plan and the Centralised Strategic Network Plan, and it plays a central role in how quickly new generation projects can secure a grid connection. NESO is itself licensed and regulated by Ofgem, so it sits alongside the regulator rather than replacing it.

Great British Energy — the public investment company

The Great British Energy Act 2025 received Royal Assent on 15 May 2025 and put Great British Energy on a statutory footing as a publicly owned company under the Companies Act 2006, wholly owned by the Secretary of State. Its objects include facilitating, encouraging and directly participating in the production, distribution, storage and supply of clean energy, and improving energy efficiency and security. It is a commercial investment and delivery vehicle rather than a regulator, and its projects still have to go through the normal licensing, planning and land-rights process like any other developer.

Department for Energy Security and Net Zero

DESNZ sets overall government energy policy, sponsors Ofgem, NESO and Great British Energy, and lays the secondary legislation and commencement regulations that bring parts of each Energy Act into force. Guidance and consultations from the department are usually the first place to check for policy direction on a given scheme.

Key legislation

• Gas Act 1986 — the foundational statute for the regulated gas industry, covering licensing of gas transporters, shippers and suppliers.
• Electricity Act 1989 — the equivalent foundational statute for electricity, covering generation, transmission, distribution and supply licences.
• Energy Act 2013 — introduced the Contracts for Difference scheme and the wider Electricity Market Reform package that still underpins renewables support.
• Energy Act 2023 — a wide-ranging Act covering, among other things, the creation of NESO, carbon capture and storage, hydrogen business models, heat networks regulation and offshore energy production; it received Royal Assent on 26 October 2023 and has been brought into force in phases by a series of commencement regulations.
• Great British Energy Act 2025 — established Great British Energy as a publicly owned company; Royal Assent 15 May 2025.
• Planning Act 2008 — sets out the Development Consent Order regime for Nationally Significant Infrastructure Projects, which covers many large-scale generation and network projects.

Contracts for Difference

Contracts for Difference (CfDs) are the government's main support mechanism for new low-carbon electricity generation. Under a CfD, a generator and the Low Carbon Contracts Company — a government-owned counterparty — agree a fixed "strike price" for the generator's output, typically for around 15 years. If the market price of electricity falls below the strike price, the generator receives a top-up payment; if the market price rises above it, the generator pays back the difference. This gives developers and their lenders long-term revenue certainty, which is usually essential to financing a large renewables project. The scheme operates under Part 2 of the Energy Act 2013, and allocation rounds, eligible technologies and current strike prices are published through the GOV.UK Contracts for Difference collection.

Grid connection

Almost every generation project, from a single rooftop array to a large offshore wind farm, needs a connection to the electricity network, and the terms of that connection can make or break a project's economics. Since NESO's launch, it plays a growing role in how connection queues are managed and how the wider network is planned to accommodate new generation, working alongside the distribution and transmission network operators who deliver the physical connection. Developers should treat the connection offer as a commercial document in its own right, checking connection dates, curtailment risk, and what happens if the offer is varied or withdrawn.

Land and property agreements

Energy projects almost always need rights over land, whether that is a lease for the site itself, a wayleave for cables crossing third-party land, or an easement for permanent access. These arrangements sit outside the regulatory licensing regime and are negotiated as ordinary property contracts, but they need to be drafted with the project's full lifecycle in mind — typically 25 to 40 years for a generation asset, including construction, operation and eventual decommissioning. Key points to get right include the length of the term and any break rights, rent review mechanics, responsibility for decommissioning and site reinstatement, and what happens to the land agreement if the project changes hands.

Community benefit agreements

A community benefit agreement is a voluntary arrangement between a developer and the community local to a project, most commonly seen alongside onshore wind and solar schemes. It typically sets out annual financial contributions to a community fund, local employment or procurement commitments, or other social benefits for the area during the life of the asset. These agreements are not a legal requirement, but they are widely regarded as good practice and can materially affect how smoothly a project moves through local planning engagement.

Water use agreements

Where a project depends on water — hydropower schemes and some biomass operations in particular — a separate water use agreement is usually needed alongside the site lease. These agreements deal with abstraction rights, discharge obligations, access to watercourses, and responsibility for infrastructure such as weirs, intake screens or fish passes. They sit alongside, and do not replace, the regulatory permissions required from the relevant environmental regulator, which remain essential whatever the private agreement says between the parties.

Planning consent

Most energy projects need planning consent before construction can start. Smaller schemes go through the ordinary local planning process run by the relevant local planning authority. Larger schemes that meet the thresholds in the Planning Act 2008 are classed as Nationally Significant Infrastructure Projects and instead go through the Development Consent Order process, which is examined nationally rather than locally. Heritage, ecology, noise and visual impact are common areas of scrutiny in both routes, and the planning conditions attached to a consent can affect how a site is built and operated for its entire operational life, so they need to be read as carefully as the commercial contracts.

Key steps

1. Work out what you are actually dealing with. Before anything else, be clear on whether you are a landowner, developer, investor, supplier or consumer, because each sits in a different part of the regulatory map. A farmer leasing a field for a battery storage site has very different obligations from a company buying power under a corporate power purchase agreement.
2. Map the regulatory regime that applies. Check whether the activity needs an Ofgem licence or falls under a licence exemption, whether planning permission or a Development Consent Order is required, and which environmental permits are triggered. Getting this wrong early can delay a project by months and push costs up considerably.
3. Pin down the property and land rights. Make sure the term, break rights, decommissioning obligations and rent review mechanics are all properly documented before any works begin, and check who is responsible for site reinstatement at the end of the project's life.
4. Get the commercial contracts right. Power purchase agreements, grid connection offers, and construction and operations contracts all need careful review. Pay particular attention to curtailment risk, change-in-law clauses, indexation of payments, and what happens on the insolvency of any party in the chain.
5. Track the regulatory and institutional landscape. With NESO now planning the network and Great British Energy able to invest directly in projects, it is worth checking early whether either body is relevant to a given scheme, alongside the usual Ofgem licensing and CfD questions.
6. Plan for the whole lifecycle. Energy assets run for decades, and the law that applies at year one will not be the law that applies at year fifteen. Build in flexibility for regulatory change, keep compliance records tidy, and think early about end-of-life obligations, including site reinstatement and equipment disposal.

This guide provides general information about UK energy law and is not legal advice. Energy regulation and the institutions that administer it continue to develop, so always check GOV.UK, Ofgem and legislation.gov.uk for the current position before relying on any specific point.

Last reviewed: August 2026 by a non-practising solicitor · Next review due: August 2027 or on legislative change.