If you generate electricity in the UK, you may need a licence from the energy regulator. Operating without a required licence is a criminal offence with unlimited fines.

Most small and medium generators are exempt under the Class Exemptions Order. This guide explains:

When you need a generation licence (50MW threshold)
Differences between Great Britain and Northern Ireland
Environmental permits for combustion plant
Grid connection requirements
COMAH compliance for hydrogen and hazardous storage

Do you need a generation licence?

The Electricity Act 1989 prohibits unlicensed generation. However, the Class Exemptions Order provides automatic exemptions for smaller generators.

Electricity Generation Licensing Threshold

Ofgem licensing requirements for electricity generation, exemptions, application fees, and enforcement penalties.

Electricity generation in the UK requires a licence from Ofgem (Great Britain) or the Utility Regulator (Northern Ireland) unless your generating station qualifies for an exemption under the Electricity Act 1989.

Main licensing threshold: 50MW capacity or above
Class A exemption threshold: 50MW (with declared net capacity below 100MW)
Alternative small generator exemption: 10MW or less
Licence application fee: £350 to £1,050 (depending on activities)
Minimum annual licence fee: £500 per year
Penalty for unlicensed generation (summary conviction): Fine not exceeding statutory maximum
Penalty for unlicensed generation (on indictment): Unlimited fine
Penalty for licence condition breach: Up to 10% of applicable turnover
Enforcement time limit: 5 years from contravention
Total GB generation licences: 631 (as of May 2025)
Total NI generation licences: 69 (as of May 2024)

The licensing threshold means that generating stations with capacity of 50MW or more require a full electricity generation licence. Smaller generators under 50MW (or under 10MW for the alternative exemption) are automatically exempt under Class Exemptions, provided they meet the conditions.

You cannot hold both a licence and an exemption simultaneously. If your generation capacity increases above exemption thresholds, must apply for a licence.

Key exemption points

You are exempt from licensing if:

Your declared net capacity is under 50MW
You generate under 10MW under the alternative small generator exemption
You consume all electricity on-site (no export)

You need a licence if:

Your capacity is 50MW or above
You don't meet Class Exemption conditions
You export to the grid above exemption thresholds

Applying for a licence in Great Britain

In England, Scotland, and Wales, Ofgem is the licensing authority for electricity generation.

Apply for Electricity Generation Licence (Great Britain)

Step-by-step process for applying to Ofgem for an electricity generation licence in England, Scotland, or Wales.

If your generating station has a capacity of 50MW or more (or does not qualify for exemptions), must apply to Ofgem for an electricity generation licence. The application process involves submitting documentation, paying fees, and demonstrating your ability to comply with licence conditions.

After receiving your licence, must comply with all Standard Licence Conditions on an ongoing basis, including Grid Code compliance, Distribution Code compliance, security arrangements, CUSC compliance, information provision to Ofgem, and financial reporting.

What happens after you get a licence

Licence holders must comply with Standard Licence Conditions on an ongoing basis. These include:

Grid Code compliance
Distribution Code compliance (if connecting to distribution network)
Connection and Use of System Code (CUSC) compliance
Financial reporting to Ofgem
Information provision on request

Breaching licence conditions can result in enforcement action with penalties up to 10% of turnover.

Applying for a licence in Northern Ireland

Northern Ireland has a separate regulatory system. The Utility Regulator (NIAUR) is the licensing authority, not Ofgem.

Apply for Electricity Generation Licence (Northern Ireland)

Step-by-step process for applying to the Utility Regulator for an electricity generation licence in Northern Ireland.

Northern Ireland operates under a separate devolved regulatory system. If your generating station in Northern Ireland requires a licence, must apply to the Utility Regulator (NIAUR), not Ofgem. The application follows different regulations and procedures from Great Britain.

Northern Ireland operates a separate electricity market from Great Britain. It participates in the Single Electricity Market (SEM) with the Republic of Ireland, and has its own Renewable Obligation scheme (NIRO) rather than the Great Britain RO schemes.

Northern Ireland differences

Key differences from Great Britain:

Different application process and forms
Participates in Single Electricity Market (SEM) with Republic of Ireland
Northern Ireland Renewables Obligation (NIRO) rather than GB RO schemes
Smaller market with different commercial dynamics

Environmental permits for combustion plant

If you operate combustion plant (boilers, engines, turbines, CHP), you need environmental permits in addition to any generation licence.

Environmental Permit - Medium Combustion Plant

Medium combustion plant (MCP) with thermal input between 1MW and 50MW require an environmental permit from the Environment Agency. This implements the Medium Combustion Plant Directive (MCPD) in England.

What is a Medium Combustion Plant?

MCP is any combustion plant with a rated thermal input between 1MWth and 50MWth, burning any fuel. This includes:

Combined heat and power (CHP) plants
Backup generators
Boilers and engines
Gas turbines

Permit deadlines

Key compliance dates:

New MCP (from Dec 2018): Permit required before operation
Existing 5-50MWth: Permit required by 1 January 2024
Existing 1-5MWth: Permit required by 1 January 2029

Emission limit values

MCP permits set limits for:

Nitrogen oxides (NOx)
Sulphur dioxide (SO2)
Particulate matter (dust)

Step 1: Determine if your combustion plant is 1-50MWth thermal input
Step 2: Identify whether plant is new or existing (affects deadline and requirements)
Step 3: Apply for permit via Environment Agency online system
Step 4: Pay application fee (varies by plant type and complexity)
Step 5: Implement emission monitoring and reporting systems
Step 6: Submit annual returns to Environment Agency

Apply for an MCP environmental permit

Large combustion plant (50MW+)

Larger installations require more rigorous permitting as Part A(1) installations.

Environmental Permit - Part A(1) Installation

Large combustion plant (50MW thermal input and above) and other major industrial installations require a Part A(1) environmental permit. These are regulated directly by the Environment Agency.

What is a Part A(1) installation?

Part A(1) installations include combustion plant with thermal input of 50MW or more, refineries, and other major industrial processes with significant environmental impact.

Decarbonisation readiness (from Feb 2026)

New electricity generating stations will need to demonstrate decarbonisation readiness, including feasibility of:

Carbon capture and storage (CCS)
Conversion to hydrogen firing

This requirement comes into force 28 February 2026 under the Environmental Permitting (Electricity Generating Stations) Amendment Regulations 2024.

Step 1: Submit bespoke permit application to Environment Agency
Step 2: Include Environmental Impact Assessment if required
Step 3: Demonstrate Best Available Techniques (BAT) compliance
Step 4: From Feb 2026, include decarbonisation readiness report
Step 5: Pay risk-based application fee (typically £10,000-£50,000+)
Step 6: Allow 12-18 months for determination of complex applications

Decarbonisation readiness (from February 2026)

New electricity generating stations will need to demonstrate readiness for decarbonisation when applying for environmental permits. This includes feasibility assessments for:

Carbon capture and storage (CCS)
Conversion to hydrogen firing

Plan for this requirement if you're developing new generation capacity.

Grid connection requirements

All generators connecting to the electricity network need a connection agreement. The current connections queue is severely backlogged with over 700GW of projects waiting.

Grid Connection Agreement

All electricity generators connecting to the GB electricity network require a connection agreement with either National Grid ESO (transmission) or a Distribution Network Operator (DNO). The connections reform programme introduces a 'First Ready, First Connected' approach from 2025.

Connection queue crisis

The transmission connections queue exceeds 700GW of projects - over four times the installed capacity needed by 2050. Major reforms are underway to address this backlog.

Connections reform: TM04+

From January 2025, new transmission connection applications follow the 'First Ready, First Connected' (TM04+) process with two gates:

Gate 1: Initial application with indicative connection date
Gate 2: Firm offer requiring proof of planning progress and land rights

Milestones and termination

Projects must meet milestones (planning submission, land agreements) within designated timeframes. Failure to meet milestones can result in offer termination with cancellation charges.

Distribution connections

Smaller generators connect via DNOs. For projects impacting transmission, DNOs submit applications to NESO on behalf of customers.

Step 1: Identify whether you need transmission (>50MW typically) or distribution connection
Step 2: For transmission, submit application during open application windows
Step 3: Prepare evidence of planning progress and land rights for Gate 2
Step 4: For distribution, apply directly to your local DNO
Step 5: Allow 12-36+ months for connection depending on required reinforcement
Step 6: Consider battery storage to manage grid constraints

National Grid ESO connections

Navigating the connections queue

From January 2025, the 'First Ready, First Connected' (TM04+) process applies to new transmission connection applications. Key points:

Gate 1: Submit application during open window for indicative connection date
Gate 2: Provide evidence of planning progress and land rights for firm offer
Milestones: Must meet designated milestones or risk offer termination

For smaller projects connecting via distribution networks, apply directly to your local DNO. Timelines are generally shorter but still depend on reinforcement requirements.

COMAH compliance for energy facilities

If your energy facility stores hazardous substances (including hydrogen for hydrogen-ready plant), you may need to comply with Control of Major Accident Hazards (COMAH) regulations.

COMAH Compliance for Energy Facilities

Control of Major Accident Hazards regulations for energy facilities storing hydrogen and hazardous substances.

If your energy facility stores 2 or more tonnes of hydrogen or other hazardous substances, must comply with the Control of Major Accident Hazards (COMAH) Regulations. These regulations prevent major accidents involving dangerous substances and limit their consequences for people and the environment.

COMAH has two tiers based on the quantity of hazardous substances stored on site, each with different levels of regulatory control.

Hazardous Substances Consent threshold: 2 or more tonnes of hydrogen
COMAH Lower Tier threshold: 5 or more tonnes of hydrogen
COMAH Upper Tier threshold: 50 or more tonnes of hydrogen
Hydrogen flammability range: 4-75% in air (DSEAR consideration)
Penalty for non-compliance (example): Up to £2,500 per day for lack of required insurance

COMAH tier requirements

COMAH has two tiers of regulation:

Lower Tier (5+ tonnes hydrogen): Notification, MAPP document, emergency planning
Upper Tier (50+ tonnes hydrogen): Full safety report, on-site emergency plan, land-use planning controls

Even below COMAH thresholds, DSEAR (Dangerous Substances and Explosive Atmospheres Regulations) applies to all facilities handling flammable substances.

Steps to set up electricity generation

Determine if you need a licence

Calculate your declared net capacity. Under 50MW (or under 10MW for alternative exemption), you're likely exempt. Check the specific Class Exemption conditions apply to your situation.
Choose your regulator (GB vs NI)

Great Britain generators apply to Ofgem. Northern Ireland generators apply to the Utility Regulator. Different processes and forms apply.
Apply for environmental permits

MCP (1-50MW) or Part A(1) (50MW+) permits from Environment Agency (England), SEPA (Scotland), or NRW (Wales). Apply well before construction as permits take 3-18 months.
Secure grid connection

Apply for transmission (NESO) or distribution (DNO) connection during open application windows. Allow 1-5+ years depending on reinforcement needs.
Assess COMAH requirements

If storing hydrogen or hazardous substances, determine your COMAH tier and notify the Competent Authority (HSE/EA or HSE/SEPA).
Apply for generation licence (if required)

Submit Ofgem application with technical specifications, financial information, and evidence of ability to comply with licence conditions. Allow 3-6 months.
Meet ongoing compliance obligations

Once operational: Grid Code compliance, environmental permit conditions, COMAH safety management, licence reporting requirements.

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Get an electricity generation licence

Do you need a generation licence?

Key exemption points

Applying for a licence in Great Britain

What happens after you get a licence

Applying for a licence in Northern Ireland

Northern Ireland differences

Environmental permits for combustion plant

Large combustion plant (50MW+)

Decarbonisation readiness (from February 2026)

Grid connection requirements

Navigating the connections queue

COMAH compliance for energy facilities

COMAH tier requirements

Steps to set up electricity generation

Determine if you need a licence

Choose your regulator (GB vs NI)

Apply for environmental permits

Secure grid connection

Assess COMAH requirements

Apply for generation licence (if required)

Meet ongoing compliance obligations

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Do you need a generation licence?

Key exemption points

Applying for a licence in Great Britain

What happens after you get a licence

Applying for a licence in Northern Ireland

Northern Ireland differences

Environmental permits for combustion plant

Large combustion plant (50MW+)

Decarbonisation readiness (from February 2026)

Grid connection requirements

Navigating the connections queue

COMAH compliance for energy facilities

COMAH tier requirements

Steps to set up electricity generation

Determine if you need a licence

Choose your regulator (GB vs NI)

Apply for environmental permits

Secure grid connection

Assess COMAH requirements

Apply for generation licence (if required)

Meet ongoing compliance obligations

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