Subsidies for renewably fuelled electricity and heat generation and embedded benefits

Introduction

This is an overview of the key content to be found in our Subsidies for renewably fuelled electricity and heat generation and embedded benefits subtopic. It briefly explains the nature of this content and provides links to it.

For more information on the Great Britain (GB) electricity regulatory regime more generally, see our subtopic Overarching GB Gas and Electricity Market Regulation.

For more information on GB renewables projects of different types, see our subtopics: Solar and Onshore Wind Projects, Offshore Renewable Projects, Fuelled renewable, hydro and other baseload renewable projects.

For more information on international renewables projects, see subtopic: International Renewables.

Renewables Obligation (RO)

This subtopic contains the following Practice Notes in relation to the RO:

•
Practice Note: Renewables Obligation (RO) scheme—key features provides a detailed introduction to the role and statutory basis of the RO and Renewable Obligation Certificates (ROCs). It explores the RO’s and ROCs’ role in the context of Great Britain renewable electricity generators and electricity suppliers. It also discusses the closure of the RO to new renewable

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Energy News

DESNZ publishes Capacity Market (Amendment) Rules 2026

The Department for Energy Security and Net Zero (DESNZ) has published the Capacity Market (Amendment) Rules 2026, which come into force on 1 July 2026. The rules set out the technical and administrative framework for operation of the Capacity Market, including day-to-day processes, pre-qualification of capacity providers and the conduct of capacity auctions. The amendments clarify the application of certain register, obligation and monitoring provisions to New Build Capacity Market Units (CMUs) and Demand Side Response (DSR) CMUs awarded capacity agreements before the 2026 rules take effect.

DESNZ publishes consultation outcome on LCCC and ESC operational cost levies

The Department for Energy Security and Net Zero (DESNZ) has published its response to the consultation on the operational cost levies for the Low Carbon Contracts Company (LCCC) and the Electricity Settlements Company (ESC) for the financial years 2026–27, 2027–28 and 2028–29. The consultation ran from 26 November 2025 to 2 January 2026 and received one response, which supported the proposals and raised no issues requiring amendments. The government has confirmed the operational cost budgets and levy rates for both companies, including updated electricity demand forecasts used in levy calculations. For LCCC, the budgets relate to its role in administering Contracts for Difference and revenue collection under the Regulated Asset Base model for new nuclear. For ESC, the government confirmed increasing settlement cost levies over the three years. Regulations to implement these levies have been laid before Parliament under the affirmative procedure, with settlement cost levy provisions taking effect the day after the regulations are made and operational cost levies applying from 1 April 2026.

DESNZ publishes consultation outcome on locational changes of capacity market units

The Department for Energy Security and Net Zero (DESNZ) has published its response to the consultation on proposals to remove the ability for Capacity Market Units (CMUs) to change location after Prequalification. Many respondents opposed the proposal but supported stronger checks on Change of Address (CoA) applications. They warned that applying the change to existing agreements could harm investor confidence, especially during ongoing grid connection reform. DESNZ has therefore decided that the removal of the CoA provisions will apply only to new agreements awarded from the 2027 auctions onwards. Existing agreements, including those prequalifying before 2026, will not be affected. DESNZ also concluded that the changes should not negatively affect Demand Side Response (DSR) CMUs, as other rules already allow DSR providers to update or reallocate components and use of CoA by DSR has been limited.

Ofgem consults on RIIO-2 re-opener licence modifications

Ofgem has opened a statutory consultation on proposed licence modifications to electricity transmission and electricity distribution licences to give effect to its RIIO-2 Re-opener Applications 2025 Final Determinations, published on 12 December 2025. The consultation proposes amendments to special licence conditions to award additional re-opener allowances and to introduce Price Control Deliverables (PCDs) linked to that funding. These include PCDs for electricity transmission Medium Sized Investment Projects (MSIPs) and for electricity distribution re-openers covering Load Related Expenditure and the Hebrides and Orkney, as well as funding for Scottish Hydro Electric Transmission’s (SHET) Gremista Grid Supply Point (Gremista GSP) project. The consultation closes on 2 March 2026.