Energy Regulatory Update (UK) – January

Our energy regulatory teams across Europe provide updates to clients on a regular basis. This newsletter contains a selection of recent UK news items of relevance to the energy transition and more generally to the energy and natural resources sector. It identifies developments of a policy or regulatory nature considered to be of interest by the contributors.

 

Contracts for difference scheme: Offshore wind technologies

On 14 January 2026, the Department for Energy Security and Net Zero (DESNZ) published a ‘Contract Budget Revision Notice for Allocation Round 7’ giving the revised budget for contracts for difference (CfD) allocation round 7 for offshore wind technologies (AR7). The budget for Pot 3 (Offshore Wind) had been increased by GBP890 million. On the same day, DESNZ published the ‘Contracts for Difference (CfD) Allocation Round 7: results’ providing information on the successful Pot 3 (Offshore Wind) and Pot 4 (Floating Offshore Wind) applicants and their projects for AR7 (ie those to be offered CfDs). AR7 secured a record capacity of 8.4 GW of offshore wind.

DESNZ published two press releases concerning these AR7 results:

• ‘Record breaking auction for offshore wind secured to take back control of Britain’s energy’, 14 January; and
• ‘Record renewables auction supports 7,000 jobs and GBP3bn investment’, 15 January.

DESNZ’s ‘Collection: Contracts for Difference (CfD) Allocation Round 7’ page has been updated.

 

Corporate power purchase agreement call for evidence

On 9 January 2026, the Department for Business and Trade and DESNZ published an open call for evidence seeking views on how to develop and improve the corporate power purchase agreement (CPPA) market in Great Britain. This aims to identify barriers and opportunities for businesses to secure stable, competitively priced electricity through CPPAs, supporting industrial competitiveness and driving growth. The call for evidence, which closes on 6 March 2026, focuses on sleeved and unsleeved CPPAs as the core model of physical PPAs between businesses (as buyers) and generators, as well as onsite and private wire CPPAs. The call for evidence document states that, “[b]y concentrating on these types of CPPAs, we aim to understand how we can encourage agreements that provide attractive, long-term pricing structures and help businesses improve competitiveness while aligning to decarbonisation goals”.

 

Connections reform timeline update

The National Energy System Operator (NESO) advised in its newsletter of 30 January 2026 that the connections reform delivery partners (including NESO, electricity networks and all joint governance parties) have published on NESO’s ‘Connections reform timeline’ page a joint statement on the updating of the connections reform delivery timeline. The statement sets out the shared priority to give customers clear visibility of when offers will be issued and a plan that all can move forward with confidently. A revised timeline has been developed and is being reviewed through the programme’s joint governance process. Subject to sign off by programme governance, NESO is aiming to publish the updated plan in the coming weeks. The update on NESO’s ‘Connections reform timeline’ page includes a set of frequently asked questions to support connections customers.

 

Hamburg North Sea Summit - clean energy – offshore hybrid assets

On 26 January 2026, DESNZ issued a press release headed ‘UK and Europe sign historic pact to drive clean energy future’. This relates to the signing at the Future of the North Seas Summit of a clean energy security pact called the Hamburg Declaration, which secures 100 GW of joint clean energy projects between European countries. These will include new ‘offshore wind hybrid assets’ (ie wind farms at sea that are directly connected to more than one country through interconnectors). Along with the UK, the Future of the North Seas Summit brought together European leaders in Germany, France, Belgium, Iceland, Ireland, Netherlands, Luxembourg, Denmark and Norway. The above news was followed by a related DESNZ press release on 29 January headed ‘New North Sea board launched to drive a fair and prosperous transition’, and by the publication of the terms of reference for the North Sea Future Board.

 

Nuclear

On 21 January 2026, DESNZ published a notice informing that the Convention on Supplementary Compensation for Nuclear Damage (CSC) had entered into force in respect of the UK on 1 January 2026 – this relates to the UK’s accession to the CSC. The amendments to the Nuclear Installations Act 1965 that implement the CSC in the UK also came into force on 1 January 2026. These amendments were made by section 305 and schedule 22 of the Energy Act 2023 and the Nuclear Installations (Compensation for Nuclear Damage) (Amendment) Regulations 2025. The above commencement notice explains how the UK’s accession to the CSC will give greater confidence to private investors and the nuclear supply chain, helping to unlock new projects, and how it further strengthens the UK’s third party liability regime by establishing treaty relations with the contracting parties to the CSC and ensures greater amounts of compensation would be available through an international fund contributed to by the contracting parties in the unlikely event of a nuclear incident.

 

Low carbon hydrogen

On 19 January 2026, DESNZ announced on its ‘UK Low Carbon Hydrogen Standard’ page the publication of Version 4 of the Low Carbon Hydrogen Standard (LCHS) (ie the standard for hydrogen producers to use for greenhouse gas emissions reporting). The updated page includes a summary of the revisions made to the LCHS in Version 4, which are intended to improve clarity, simplify processes and reflect lessons learned from Version 3 and stakeholder feedback – they include a new process for evidencing Renewable Energy Guarantees of Origin (REGOs), aligning with wider energy sector practices. The LCHS aims to ensure that government-supported hydrogen production directly contributes to achieving the government’s carbon reduction targets. Projects receiving government support should use the version of the LCHS mentioned in their agreement. Also on 19 January, the Welsh Government published its ‘Strategic Policy Position for Hydrogen’ – this is its policy to encourage the development and deployment of hydrogen infrastructure, where (amongst more) the hydrogen produced meets the requirements of the UK’s LCHS.

 

Heat network zoning and Part 8 of the Energy Act 2023

On 21 January 2026, DESNZ published the government’s response to its Heat Network Zoning consultation that was launched on 18 December 2023. DESNZ has also published an informative summary of the response. These documents relate to the policy design for heat network zoning in England. The outcomes from the consultation are being used to draft secondary legislation to implement heat network zoning, using powers in Part 8 of the Energy Act 2023. For further information, see DESNZ’s ‘Collection: Heat network zoning’.