Licence Exempt Supply - Generator FAQs (Frequently Asked Questions)

1. What is Licence Exempt Supply (LES)?

License Exempt Supply (LES) allows renewable generators to supply electricity directly to consumers without holding a full supply licence, under conditions set by The Electricity (Class Exemptions from the Requirement for a Licence) Order 2001.

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2. Who can I supply power to under LES?

You can supply:

Non-domestic customers up to a total of 2.5MWh per half-hourly period
Domestic customers up to 1.25MWh per half-hourly period

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3. What’s changed recently?

In 2025, Ofgem approved BSC Modification P442, which excludes LES volumes from paying certain government levies (e.g., CfD, FiT, RO). This improves the commercial value of LES arrangements for all parties.

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4. What are non-commodity charges and why do they matter?

These include costs beyond the energy itself, such as:

Transmission & Distribution
Environmental Levies (CfD, FiT, RO)
Supplier margins

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5. How much more could I earn through LES?

Generators can earn an additional £8 to £25/MWh during matched supply periods. Actual benefit depends on:

Profile matching with the consumer
Contract terms with the LES offtaker. Each offtaker will split the benefit differently, some to the client, some to the offtaker, some to a third party intermediately and some with you the generator

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6. What happens to the levies if I don’t pay them?

When generators and consumers avoid levies via LES, the cost of funding UK renewables (e.g., CfDs) is redistributed to other licensed market participants. This is legal but may raise reputational considerations.

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7. What are the risks for generators?

No guaranteed upside: Revenue depends on how well your generation matches demand.
Exceeding limits: Supplying over 5MW/h (or 2.5MW to domestic) is a criminal offence.
Compliance: Errors in data or aggregation across sites could trigger unintended breaches.
Policy change: LES benefits may be reduced if the regulatory framework shifts.
Reputational risk: You may be seen as benefiting from levy avoidance, even though legal.

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8. Who manages these risks?

Your offtaker or LES service provider will typically manage compliance, settlement, and volume matching. However, you must understand your exposure - particularly around export volumes and contractual obligations - as this will vary between offtakers.

Elexon oversees the Balancing and Settlement Code (BSC), which governs how electricity volumes are measured and financially settled in the UK market. Following Ofgem’s approval of Modification P442, Elexon now ensures that LES volumes are correctly recorded and excluded from certain government levies (e.g., CfD, Capacity Market). While Elexon doesn’t manage LES agreements directly, its role is critical in enabling the regulatory and financial mechanics that underpin LES models.

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9. What are the eligibility requirements?

Installed capacity under 50MW
Not RO (Renewable Obligation scheme) accredited
Allows for the supply of up to 2.5MWh per half-hourly period to commercial customers, and 1.25MWh per half-hourly period to domestic customers
All renewable technologies (solar, wind, hydro, etc.)

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