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.
You can supply:
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.
These include costs beyond the energy itself, such as:
Generators can earn an additional £8 to £25/MWh during matched supply periods. Actual benefit depends on:
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.
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.
Renewable Exchange will provide through our competitive tender process:
If your asset is FiT accredited, you are able to get a Licence Exempt Supply agreement as long as you meet the other eligibility criteria. If you are benefitting from FiT Export payments however, you are not eligible for LES. If you benefit just from FiT Generation payments and have a PPA in place for the export, then you are eligible.
We strongly advise that the 2.5 MWh/HH licence exemption is not applied individually to SPV’s, it is likely Ofgem will aggregate the capacities if it determines that the projects are effectively part of the same generating operation.
Factors such as common ownership, co-location, shared infrastructure, or centralised management can lead Ofgem to treat the SPVs collectively as a single entity (if there is no headco) for regulatory purposes. If this happens, the cap would apply across all projects collectively, not per SPV.
It is strongly advised to seek legal or regulatory advice if you're considering interpreting the rules per SPV.
Payment terms differ from offtaker to offtaker. Typically quarterly is the fastest, but can be as long as 18 months in arrears. We suspect this will become more competitive over time.
You can generate as much as you can, just the licence exempt amount cannot exceed 2.5MWh per HH period when supplying a business, or 1.25/MWh /HH when supplying domestic.
No, you can’t reliably use multiple suppliers to match 2.5 MWh/hh of exempt supply from multiple sites without breaching the exemption conditions. The cap applies to the total simultaneous supply by a single exempt entity, and Ofgem may aggregate across sites and supply points if they are under common control or functionally linked. This makes it very hard to stay within the exemption when scaling across multiple sites and offtakers, as offtakers don't have a way of reconciling what LES they have administered.
There is always a risk, which is why we're clear that the PPA is the most important element to a generator. That said, the cap ensures that this will not be applicable across the whole industry and the benefit will be felt most by those smaller generators.
Download our full Licence Exempt Supply guide here.
If you have any questions about LES, and how you can maximise the revenue from your power, get in touch with us today.
