DESNZ Publishes Updated Guidance on Electricity Licence Exemptions

 On 14^th January 2026, Department for Energy Security and Net Zero (DESNZ) published updated guidance on electri

city generation, distribution and supply licence exemptions, including further clarification on the operation of the exemption under ‘Class A’ from the need to hold a supply licence.

The guidance is a helpful step forward for the market, particularly with respect to the volume limits within Class A. While it does not change the underlying legislation, it provides clearer interpretation on roles, responsibilities, and the practical operation of licence exempt supply alongside licensed suppliers.

Greater clarity for suppliers

Of particular relevance to suppliers, the guidance reinforces that:

• Class A supply relies on licensed suppliers for market participation, settlement, metering and continuity of supply

• Exempt suppliers may only supply self-generated electricity, with top-up and back-up provided under separate arrangements with a licensed supplier

• Third parties may support licence exempt supply, but do not become suppliers themselves, and responsibility for compliance remains clearly defined

This clarity supports a more consistent and lower-risk approach for suppliers engaging with licence exempt models.

Sitigrid’s approach

Sitigrid’s platform and contractual framework have always been designed to operate within the scope of the exemption regulations and no changes to our operations are required as a result of this latest guidance.

We do not act as a supplier and do not take title to electricity. Instead, we enable licensed suppliers to structure compliant Class A arrangements, with:

• Clear separation of roles

• Robust settlement and volume matching processes

• Controls to support adherence to volume limits within Class A

• Documentation to create the necessary contractual relationships between the exempt supplier and the consumer

• Licensed suppliers embedded at the core of the model

This approach allows suppliers to participate in Class A structures without taking on unintended regulatory or compliance risk.

Looking ahead

As interest in licence exempt supply continues to grow, clear guidance and consistent interpretation are essential. We welcome DESNZ’s clarification and look forward to continued engagement with suppliers, Ofgem and generators as the market develops.

If you would like to discuss how Sitigrid supports compliant Class A supply arrangements, please get in touch.