How to become a licensed gas or electricity company
Application steps for a gas or electricity licence in Great Britain
A detailed overview of the application process can be found in the guidance document and application regulations, below.
We also operate an alternative route to obtaining an electricity supply licence which we call Licence Lite - you can read more on this further down the page.
For supply licence applications, please note that Ofgem has published the following open letters which we recommend that you review before applying for a supply licence:
- Rising wholesale energy prices and implications for the regulatory framework (29 October 2021)
- Building Energy Market Resilience – including Supply licence applications: reasons for the decision to amend the time period for assessment and to remove tacit authorisation (15 December 2021).
Consult the guidance documents and the application regulations
Prior to filling out the application form you must read our licence application guidance document. The guidance includes an outline of the criteria we use when deciding whether to grant a licence. The Application Regulations can be found here:
- The Gas (Applications for Licences and Extensions and Restrictions of Licences) Regulations 2019
- The Electricity (Applications for Licences, Modifications of an Area and Extensions and Restrictions of Licences) Regulations 2019
You must send your signed application containing all the information and documentation as set out in the relevant application regulations together with payment of the fee. The application forms include information on the relevant fees that should accompany applications.
Please note: Companies operating in the downstream gas and electricity sector should be aware of the National Security and Investment Act 2021 (NSI Act) when acquiring, selling and developing qualifying entities and assets. The NSI Act gives the government the power to call in acquisitions where there is a reasonable suspicion that the acquisition has given, or may give, rise to a national security risk.
If an entity you are acquiring performs a certain activity in the energy sector, you may be legally required to submit a mandatory notification to the Investment Security Unit (ISU) who administer the NSI Act. For further information on whether your acquisition is in scope of the mandatory notification requirement, refer to this guidance on gov.uk: National Security and Investment Act: details of the 17 types of notifiable acquisitions.
You can also submit a voluntary notification to the ISU if you are a party to a planned qualifying acquisition that is not covered by mandatory notification and want to find out if the government is going to call it in. For further information on Applicability of the NSI Act to New Build Downstream Gas and Electricity Assets, refer to this industry guidance note published on gov.uk: Applicability of the National Security and Investment Act 2021 to new build downstream gas and electricity assets.
You must inform us if your qualifying acquisition has been called in for assessment under the NSI Act. We will then contact you to advise that your gas or electricity licence application is no longer duly made. We will ‘stop the clock’ on the processing time period until you have informed us of the outcome of the NSI assessment. The NSI assessment can have three outcomes: a Final Notification clearing the acquisition to proceed; a Final Order allowing the acquisition to proceed with certain conditions; or a Final Order blocking the acquisition. Any conditions put in place under the NSI Act could have an effect on your licence application.
We strongly suggest that you engage with the ISU if you believe that your application may be affected by the NSI Act prior to sending in an application to Ofgem. You can contact the ISU by email at firstname.lastname@example.org.
Complete and submit your written application and fee
Please download and complete the relevant gas and electricity licence application form.
You must send your signed application containing all the information and documentation as set out in the relevant application regulations together with payment of the fee.
Submit your application via email or post to:
Industry Codes & Licensing
10 South Colonnade
Submit your payment via BACS or CHAPS to:
Bank Name: National Westminster Bank
Account name: OFGEM
Sort code: 60-70-80
Account number: 10006001
Your submission is acknowledged and checked for completeness and payment
We acknowledge receipt of your application as soon as reasonably practical. We then review the application for completeness and confirm receipt of payment for the application.
If any information is missing, we require further information, or the payment has not cleared into our account we will inform you and request the further information or payment. If you fail to supply the missing material, your application will be cancelled.
When your application is complete and we have received confirmation that your payment has cleared, we will write to confirm your application as ‘duly made’.
Once the application is made, you will be asked to complete and submit a notice of application
Once your application is confirmed as duly made, you will need to publish an application notice within 10 working days. We will send a template notice for you to complete and sign.
The notice must be published (on our website or your own) and remain accessible for at least 28 days to allow any representations to be made.
In addition to the checks we make on your application, we consider any representations received in response to your notice.
Your licence will be granted, or refused, or you may be asked for further information
We operate a tiered, risk-based application process. If the results of our checks are satisfactory and the notice period has expired your licence is likely to be issued. If the results are unsatisfactory or give rise to further questions, further information may be requested and your application may be processed through a higher tier (Tier 2).
If we propose to refuse your licence application, reasons for this will be given to you. You will have the opportunity to make representations if you disagree with our proposal to refuse the application.
Timeframes for reaching a decision on whether to grant or refuse licences can be found in the application guidance document. The process may take longer if further questions are necessary, or there is a delay in receiving information from you.
Alongside your licence application, you should be in contact with the appropriate organisations in respect of the industry codes that you must comply with / become party to under the licence.
Licence Lite is a way to apply for a licence to supply electricity and to get a direction which will relieve you from your obligation to directly fulfil Standard Licence Condition (SLC) 11.2.
It aims to ease potential barriers faced by aspiring suppliers or distributed energy generators.
As a Licence Lite supplier, you’ll need to have robust alternative arrangements in place for a third party licensed supplier to manage your code compliance in these areas.
Who’s it for?
Both prospective and existing electricity supply licensees can apply for a Licence Lite (SLC 11.3) direction.
You can read more details of the Licence Lite policy, and how to apply, in our Licence Lite guidance publication.
If you can’t find the information you need about Licence Lite here, please contact us.
Exemptions from requiring a licence
There are some instances when you will not need to apply for a licence. Exemptions can apply to individual cases or a class of activity and may be unconditional or subject to certain conditions including length of time.
The Gas Act 1986 and the Electricity Act 1989 allow the Secretary of State to make orders giving exemptions from the need to hold licences. This means that some activities that fall within the definitions of a licensable activity are, in fact, exempt from the need to hold licences.
We are unable to advise you on exemptions and recommend you consult the Gas Act 1986, the Electricity Act 1989, your legal counsel and the Department for Energy Security & Net Zero. You may wish to view examples of gas exemption orders and electricity exemption orders.
Exceptions (gas only)
Schedule 2A of The Gas Act 1986 (as amended) sets out certain exceptions to the need to hold a licence. It is for the applicant to ascertain whether the proposed activity falls within the scope of an exception.
We cannot advise whether a person carrying on an activity or proposing to carry on an activity will be exempt or excepted from the requirement to hold a licence.
Complying with the industry codes
The licences set out that the licensee must become party to and/or comply with certain industry codes. You will need to make contact with the appropriate organisations directly in order to sign up to the relevant industry codes.