title: Energy Act 2016 source: https://www.legislation.gov.uk/ukpga/2016/20 classified: primary ingested: 2026-04-10 tags: [OGA, NSTA, MER UK, offshore petroleum, onshore wind, ROC closure, decommissioning, licensing levy]

Energy Act 2016

Royal Assent: 12 May 2016 Citation: ukpga/2016/20 Primary source: legislation.gov.uk Full extraction: sources/legislation/uk/2016-energy-act.md

What this Act does

The Energy Act 2016 has two largely separate purposes that were bundled into one Bill.

The first part, which is the bulk of the Act, establishes the Oil and Gas Authority (OGA) as a standalone regulatory body and gives it teeth. The second closes the Renewables Obligation to new onshore wind in Great Britain.

Part 1: Creating the OGA

The OGA was created before this Act; it began operating in April 2015 as an executive agency. The Act converts it into a statutory body separate from government, transfers functions to it from the Secretary of State, and gives it its own funding mechanism.

The OGA is not a Crown body (s.1). It exercises its functions in its own right, not as a proxy for Ministers.

What the OGA must have regard to (s.8)

The OGA must have regard to: - minimising public expenditure on relevant activities - security of energy supply - CCS storage development (linked to Climate Change Act 2008 s.1 target) - collaboration with government, Ofgem, and industry - innovation in technology and working practices - maintaining a stable and predictable regulatory system

The Energy Act 2023 later inserted additional words into this list.

Ministerial oversight

The Secretary of State can direct the OGA on national security grounds or, in exceptional cases, in the public interest (s.9). The OGA must notify the Secretary of State of circumstances likely to warrant such directions. The Secretary of State must review OGA performance every three years and may issue guidance (s.16).

OGA funding

The OGA is funded by two mechanisms:

• Fees (s.12): charged on licence applications, tests, inspections, and sample storage. Paid into the Consolidated Fund.
• Licensing levy (ss.13–14): a cost-recovery levy on petroleum, gas unloading, and CO₂ storage licence holders. Capped at OGA's actual operating costs plus Tribunal costs. Replaces the levy previously in the Infrastructure Act 2015.

Part 2: OGA enforcement powers for offshore petroleum

Part 2 gives the OGA a toolkit for enforcing the Maximise Economic Recovery (MER UK) strategy and offshore licence obligations. This is the operational core of the OGA's regulatory authority.

Disputes (ss.19–26)

Relevant persons (broadly, those with offshore petroleum functions) can refer qualifying disputes to the OGA. The OGA can also act on its own initiative. It can accept, adjourn for negotiation, or reject references. Where it proceeds, it makes a recommendation to resolve the dispute consistently with the principal objective (MER UK). Directions and information requirements are sanctionable. Appeals lie to the First-tier Tribunal.

Information and samples (ss.27–36)

Regulations can require relevant persons to retain petroleum-related information and offshore licensees to retain samples. When a licence event occurs (transfer, surrender, expiry, or revocation), the outgoing licensee must prepare an information and samples plan agreed with the OGA. If unagreed, the OGA can impose one. The OGA can also directly require provision of information and samples. Each relevant person must appoint an information and samples coordinator.

Meetings (ss.37–41)

Relevant persons must give the OGA 14 days' notice of relevant meetings (those concerning MER UK or licence activities). The OGA can attend and participate, but not in purely commercial or voting matters. If it does not attend, arrangers must send it summaries.

Sanctions (ss.42–60)

The OGA has four sanctions for non-compliance with petroleum-related requirements:

The OGA must give a warning notice first and allow representations. Sanctions are suspended on appeal. The OGA must publish enforcement procedures and, if it imposes a penalty, publish details (but must also publish any subsequent cancellation).

Disclosure (ss.61–69)

Protected material (information and samples obtained by the OGA under Part 2) cannot be disclosed except in specified circumstances: to specified regulators and public bodies for defined purposes, in legal proceedings, with consent of the original owner, or after a time period set by regulations. The Secretary of State may require the OGA to provide it with protected material for Parliamentary or oversight purposes.

Part 3: Infrastructure and decommissioning

Upstream petroleum infrastructure (ss.70–71)

Amends the Energy Act 2011 access regime to require OGA information notices to specify compliance timing (with Tribunal appeal rights) and to handle assignment and ownership changes of pipeline applications.

Decommissioning (ss.72–73, Schedule 2)

Strengthens the Petroleum Act 1998 decommissioning regime. Key changes: - Abandonment of offshore installations requires an approved programme. Commencing decommissioning without one is an offence (new s.28A Petroleum Act 1998). - Operators and installation owners must act in accordance with the MER UK strategy when planning decommissioning (s.73). - The OGA must be consulted on programme preparation, approval, and revision, and must advise on cost-minimisation and alternatives such as reuse or preservation. - A new s.36A power allows the Secretary of State to require persons to take or refrain from actions to reduce total decommissioning costs.

Part 4: Fees (ss.76–77)

Inserts a fee-charging power for the Secretary of State for functions under the Energy Act 2008 (offshore licensing environmental functions) and for marine licensing of oil and gas activities under the Marine and Coastal Access Act 2009. Validates fees already charged before the Act on the basis of the old framework.

Part 5: Onshore wind power (ss.78–81)

This part is politically significant but legally narrow. It applies to England, Wales, and Scotland.

Planning consent (s.78)

Removes the requirement for Secretary of State consent under s.36 of the Electricity Act 1989 for construction or extension of onshore wind stations in England and Wales. Planning decisions revert to local planning authorities. In force 12 July 2016.

ROC closure (ss.79–80)

No Renewables Obligation Certificates (ROCs) may be issued for electricity generated by onshore wind after 12 May 2016 (the Act's Royal Assent date, defined as the "onshore wind closure date"), except under transitional provisions.

Transitional eligibility depends on which of five conditions is met:

The approved development condition requires planning permission granted by 18 June 2015 (or following appeal of pre-June 2015 applications), plus evidence of a grid works offer and a land interest as of that date.

The investment freezing condition requires a declaration that funding from a recognised lender was unavailable before Royal Assent due to policy uncertainty, supported by a lender letter dated within 28 days of Royal Assent.

The grid or radar delay condition requires evidence that grid or radar infrastructure works were delayed beyond planned dates for reasons not attributable to the developer.

Northern Ireland (s.81)

The Secretary of State may regulate the use of Northern Ireland ROCs by GB suppliers for RO compliance, subject to restrictions for Northern Ireland onshore wind stations accredited after the closure date.

Key dates

Current status

The OGA (now NSTA) operates under this Act. The renaming to NSTA in 2022 was achieved administratively; the Act still refers to "the OGA" and the NSTA is the same statutory body under a different trading name. The Energy Act 2023 amended s.8 to add a further duty.

The onshore wind ROC closure is now spent: all transitional windows have closed. No new onshore wind ROC eligibility is possible.

Policy significance

Offshore petroleum

The Act is the constitutional document for North Sea regulation. It operationalises the Wood Review recommendation (2014) that MER UK required an empowered independent regulator with genuine enforcement capability. The sanctions framework, including the ability to revoke licences and remove operators, was designed to ensure that the MER UK strategy could not simply be ignored by companies with declining North Sea assets. In practice, the OGA/NSTA has used financial penalties rather than revocation.

The information and samples provisions address a long-standing gap: data acquired by licensees at public expense (through Crown ownership of the resource) was being withheld or lost on licence termination. The 2016 regime ensures systematic retention and transfer.

Onshore wind

The ROC closure was a direct response to the 2015 Conservative manifesto commitment to end new subsidies for onshore wind. The planning change (returning decisions to local authorities) had the same political origin. The transitional provisions were designed to protect projects where construction or financing was already underway. The investment freezing condition in particular was added to cover projects that could have argued they were commercially stranded by the policy shift.

Related instruments

• Petroleum Act 1998 (no wiki page yet): parent statute for MER UK, OGA functions, and decommissioning
• Energy Act 2008: CO2 storage and gas unloading licensing; OGA substituted as licensing authority
• Energy Act 2011: upstream petroleum infrastructure access regime; OGA substituted as decision-maker
• Energy Act 2023: later amends s.8 of this Act
• Renewables Obligation: the scheme this Act closes to new onshore wind
• Electricity Act 1989: the consent and RO framework this Act amends