Energy Regulatory Update (UK) – September

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.

 

Offshore transmission owners

On 2 September 2025, Ofgem launched tender round 13 (TR13) of the offshore transmission owner (OFTO) regime – this is to identify, through a competitive tendering process, a suitable bidder to whom an offshore electricity transmission licence can be granted by Ofgem in respect of the transmission assets for each offshore windfarm project in TR13. There are three qualifying projects in TR13: East Anglia THREE, Inch Cape and Dogger Bank C. The TR13 documents published by Ofgem include the Guidance for bidders to follow in order to participate in the tender process for TR13. The legal framework for running competitive tenders for the OFTO regime is set out in the Electricity (Competitive Tenders for Offshore Transmission Licences) Regulations 2015 (No. 1555). For further information, please refer to Ofgem's Offshore electricity transmission (OFTO) page.

 

Contracts for difference

Contracts for difference (CfD) allocation round 7 has two separate elements, namely AR7, which relates to fixed bottom offshore wind and floating offshore wind, and AR7a, which relates to non-offshore wind technologies (i.e.. all eligible technologies other than offshore wind).

The timelines for AR7 and AR7a (which will run according to one of a number of potential scenarios depending on whether there are any appeals following assessment of the submitted applications) are on the Contracts for Difference (CfD) Allocation Round Resource Portal. As noted there, the 26th September was the day on which applicants were notified of the outcome of the qualification assessment (which relates to eligibility for participation in allocation round 7).

Of relevance to allocation round 7, on 10 September the Low Carbon Contracts Company published the "Initial Conditions Precedent (ICP) Guidance – AR7" document – this provides generators with guidance on the ICPs process under a CfD.

On 5 September 2025, the Competition and Markets Authority gave notice that its Subsidy Advice Unit had accepted a request from the Department for Energy Security and Net Zero (DESNZ) for a report providing advice to DESNZ concerning its CfD allocation round 7 subsidy scheme. The report, which will provide an evaluation of DESNZ’s assessment of whether the scheme complies with subsidy control requirements, is due to be published on 16 October 2025. The notice gives a summary of the main changes made to the CfD scheme for the purposes of allocation round 7.

 

Long duration electricity storage

On 23 September 2025, Ofgem published a press release headed "Super battery projects that maximise renewable-generated power enter next phase of Ofgem's green power storage scheme". This reports that Ofgem has completed the eligibility assessment stage for window 1 of the long duration electricity storage (LDES) cap and floor scheme (i.e. the window which opened on 8 April 2025), and has confirmed the 77 projects that have met the eligibility criteria and have now entered the project assessment stage of the scheme, which is the final stage.

The press release was accompanied by Ofgem's publication on 23 September of the "LDES window 1 eligibility assessment outcome" with regard to the 171 projects (across a wide range of technologies) which applied under window 1 of the cap and floor scheme. The applicant projects included (but were not limited to) Li-ion BESS, Pumped Storage Hydro (which releases water stored at height to turn turbines, creating electricity), Compressed Air Energy Storage, Vanadium Flow BESS, Liquid Air Energy Storage and BESS hybrid. The 171 projects were assessed using the seven eligibility criteria which are outlined in the Eligibility Criteria Assessment Framework which was published by Ofgem on 8 April 2025. Of the 77 projects that met the eligibility criteria, 71 projects are deliverable by 2030, and 6 projects are deliverable by 2033. All 77 eligible projects are detailed in Table 2 of the "LDES window 1 eligibility assessment outcome" document (at pages 8 to 11). Table 3 on page 11 of that document gives a breakdown of the 77 projects by technology type.

Also on 23 September, Ofgem published a document titled "Cap and Floor Project Assessment: Long Duration Electricity Storage (window 1)" (Project Assessment Framework) - this sets out the final project assessment multi-criteria assessment (MCA) framework that Ofgem, working with National Energy System Operator, will use to select the LDES projects to be awarded a cap and floor regime (i.e.. investment support) in window 1. The Project Assessment Framework, which was published with the outcome of the earlier consultation on it, provides guidelines for the 77 eligible projects to follow in submitting the required information for the project assessment phase (i.e.. in respect of submission of more detailed bids for final assessment). Ofgem and NESO will undertake the project assessment in quarter 4 of 2025, aiming to publish the 'Initial Decision List of Projects' offered a cap and floor regime in Spring of 2026, with final decisions on cap and floor awards expected in Summer of 2026. Projects will be evaluated on their economic, strategic, and financial merits, without predetermined weightings. Please refer to the Project Assessment Framework for more information.

 

Capacity Market

On 22 September 2025, DESNZ announced a consultation entitled "Open letter on new technologies in the Capacity Market, 2025". Rule 2.4 of the Capacity Market Rules requires that, by 1 October each year, the Secretary of State consult interested parties to determine whether any new generating technologies are capable of contributing to security of supply. Where any new technologies not already recognised as a Generating Technology Class are identified, the Secretary of State must amend the Rules to make those technologies eligible to participate in future Capacity Market auctions. The above open letter seeks views on whether such new generating technologies exist. DESNZ will publish the outcome of the review by 1 December 2025, as required by Rule 2.4.1(b) of the Capacity Market Rules. Earlier in September, Ofgem published the "Annual Report on the Operation of the Capacity Market in 2024/25" – this was provided by Ofgem to the Secretary of State pursuant to regulation 83 of the Electricity Capacity Regulations 2014 (No. 2043).

 

NESO's Electricity Transmission Design Principles

On 10 September 2025, National Energy System Operator (NESO) published a consultation document headed "Electricity Transmission Design Principles", aimed at streamlining the process for new transmission infrastructure projects by agreeing some general principles associated with transmission design up front, before specific projects come into development. This will allow discussions to focus on the unique aspects of project development.

The background to the consultation is that, on 4 August 2023, the Electricity Networks Commissioner proposed recommendations on how to accelerate the deployment of strategic electricity transmission infrastructure in Great Britain. The UK government adopted these recommendations, which now form the basis of the Transmission Acceleration Action Plan (TAAP) as published by DESNZ on 22 November 2023. The TAAP sets out 43 recommendations, which collectively seek to reduce the build time of electricity transmission network infrastructure from 14 to 7 years. Recommendation "RD1" of the TAAP provides that Electricity Transmission Design Principles (Principles) be created to provide greater clarity on the type of asset to be used in different environments.

The intention is for a final version of the Principles to be published in early 2026 (they will be updated from time to time in a process of review and continuous improvement, as described in Section 8 (Next Steps) of the consultation document). They are due to be given force in England and Wales by way of the UK government’s National Policy Statements (NPSs) for the development of nationally significant infrastructure, in particular "NPS EN-5 – Electricity Networks Infrastructure" (NPSs are statutory documents published in accordance with the Planning Act 2008).

The Scottish Government has been a consultee, and the intention from the TAAP is that these Principles complement Scotland’s National Planning Framework. In addition, the Principles will become embedded into NESO's strategic energy network planning processes through the Centralised Strategic Network Plan.

 

Connections reform and the progression commitment fee

On 19 September 2025, Ofgem published its "Update to decision on urgency treatment of CMP448". This relates to NESO's Connection and Use of System Code modification proposal CMP448: Introducing a Progression Commitment Fee (PCF) to the Gate 2 Connections Queue. As set out in its decision letter, Ofgem has extended the timetable for this code modification proposal. Under the amended timetable, Ofgem's decision on CMP448 will now be given in November 2025, with an implementation date (subject to the final decision) of quarter 1 of 2026. Please refer to NESO's "Connections Reform" page for information on the progress of connections reform (this page includes the link to the updated connections reform timeline).