Licence exemptions
Licensing
An electricity generation licence allows the licensee to generate electricity for the purpose of giving a supply to any premises or enabling a supply to be given.
The Application Regulations set out the manner and form in which applications for licences should be made and the fee payable for each type of licence application. They also specify the minimum information that applicants must provide in order for Ofgem to consider an application as duly made (complete).
The current Electricity Application Regulations are The Electricity (Applications for Licences, Modification of an Area and Extensions and Restrictions of Licences)(No. 2) Regulations 2004, SI No 2952.
Exemptions from requiring a licence
Some activities, whilst falling within the definitions of a licensable activity given in the Electricity Act 1989, are exempt from the need to hold a licence. The Act allows the Secretary of State to make orders giving exemptions from the need to hold a licence.
Exemptions can apply to individual cases or can be on the basis of a class (type) of activity. Exemptions, when granted, can be unconditional or subject to certain conditions including length of time. It is for the applicant, seeking legal advice as required, to ascertain whether their proposed business activity falls within the scope of an exemption order.
The Electricity (Class Exemptions from the requirement for a licence) Order 2001 SI 3270 can be downloaded from the HMSO website. Broadly the Exemptions Order 2001 provides the following classes of exemptions for generation:
• Class A(1) – provide less than 10 MW;
• Class A(2) – declared net capacity of less than 100MW with less than 50 MW being exported to the system;
• Class B - offshore;
• Class C - those connected at 30 September 2000 not normally capable of exporting more that 100MW to the total system; and
• Class D – generators never subject to central despatch.
Advice on Exemptions
Ofgem cannot comment on whether a person carrying on an activity or proposing to carry on an activity will require a licence. It is for the person carrying on, or proposing to carry on an activity to decide whether they require a licence or benefit from an exemption or exception.
The Department of Trade and Industry (DTI) may be able to provide guidance on the interpretation of the Exemption Order.