Page type: primary-anchored (mirrors Electricity Generation Licence SLCs) Last updated: 2026-04-06

Electricity Generation Licence -- Standard Licence Conditions

The Electricity Generation Licence is granted by Ofgem under section 6(1)(a) of the Electricity Act 1989. Every person who generates electricity in Great Britain (above the exemption threshold) must hold one. The Standard Licence Conditions (SLCs) are the common set of rules that apply to all generation licensees -- they sit alongside any special conditions specific to an individual licensee.

The SLCs are organised into five sections. Sections A and B apply to every generation licensee. Sections C, D, and E are supplementary: they only apply where activated for a specific licensee by a Secretary of State scheme or an Authority direction.

Source file: generation-slc.md Consolidation date: 01 October 2024 (cover page; internal footers read 28 March 2024 -- discrepancy noted in source) Legal basis: Electricity Act 1989, s.6(1)(a)

Section A: Interpretation, Application and Payments

Section A (Conditions 1-4) provides the interpretive framework for the entire licence.

Condition 1 (Definitions and Interpretation) is the foundation. SLC 1.1 defines 60+ terms used throughout the licence, including "the Authority" (GEMA), "ISOP" (the Independent System Operator and Planner, designated under the Energy Act 2023), "generating station" (50MW+ threshold), "generation set", "electricity storage facility", and "BSC". SLC 1.2 imports definitions from the Electricity Act 1989, Utilities Act 2000, and Energy Act 2004. Importantly, SLC 1.9 provides that obligations survive missed deadlines -- a licensee cannot escape a duty by letting the clock run out. SLC 1.11 handles the interaction between general definitions and section-specific ones: a definition used only in Section C or D does not take effect until that section is activated.

Condition 2 (Application of Section C -- Scotland) and Condition 3 (Application of Section D -- Nuclear) are the activation mechanisms. They work the same way: the Secretary of State may activate the relevant section by a scheme under Utilities Act 2000, Schedule 7, or the Authority may issue a Direction (SLC 2.4 / SLC 3.4). Until activated, the supplementary conditions are suspended (SLC 2.2-2.3 / SLC 3.2-3.3). The Authority may also vary or cease the section with the licensee's consent (SLC 2.6 / SLC 3.6).

Condition 4 is not used. It formerly covered licence fee payments, which are now handled elsewhere (references to "estimated costs", "relevant proportion", and "relevant year" in SLC 1.1 still point to this condition).

Section B: General

Section B (Conditions 5-21) contains the substantive obligations that apply to all generation licensees. These fall into several clusters.

Code compliance (SLCs 5, 6, 9, 10, 19)

The licence requires generators to comply with the major industry codes:

• Grid Code (SLC 5.1): the licensee "shall comply with the requirements of the Grid Code in so far as applicable to it." The Authority may grant relief after consulting the ISOP (SLC 5.2).
• Distribution Codes (SLC 6.1): same structure -- comply, with Authority discretion to relieve.
• BSC (SLC 9.1): the licensee must be a party to the BSC Framework Agreement and comply with the Balancing and Settlement Code. SLC 9.7A adds a specific override: if the Energy Market Investigation (Electricity Transmission Losses) Order 2016 conflicts with the BSC on Transmission Loss Factor calculation, the Order prevails.
• CUSC (SLC 19.1): the licensee must be party to the CUSC Framework Agreement and comply with the CUSC.
• Change co-ordination (SLC 10.1): when the BSC is modified, the licensee must take all reasonable measures to implement consequential changes to core industry documents. SLC 19.2 mirrors this for CUSC modifications.

Security and ancillary services (SLCs 7, 11)

• Fuel Security Code (SLC 7.1): generators operating in England and Wales must comply with the Fuel Security Code, which has effect "as if set out in this licence."
• Ancillary services (SLC 11.1): upon ISOP request, the licensee must offer terms for ancillary services from any operating generation set. SLC 11.2 requires the licensee to report pricing and cost justification to the Authority on request.

Cooperation and information (SLCs 12, 13)

• Duty to cooperate (SLC 12): applies where the licensee is party to a framework agreement or Industry Code. The licensee must cooperate with the Authority during Significant Code Reviews (SLC 12.2), including sharing information, providing data for testing, meeting milestones, and escalating disputes (SLC 12.3). "Industry Code" is defined (SLC 12.4) as the Grid Code, Distribution Code, CUSC, BSC, and STC.
• Provision of information (SLC 13): the Authority may require any information needed to perform its statutory functions (SLC 13.1), subject to legal privilege (SLC 13.4). SLC 13.6 requires advance notification before constructing or operating a Scottish or nuclear generating station.

Land powers (SLCs 14, 15)

• Compulsory acquisition (SLC 14): confers Schedule 3 powers (Electricity Act 1989) for construction, extension, or operation of generating stations and connecting lines. Applies to stations of 50MW+ (SLC 14.3).
• Other powers (SLC 15): confers Schedule 4 powers (wayleaves, land entry) for authorised activities, including heat supply infrastructure (SLC 15.2(e)).

Regulatory accounts (SLCs 16, 16A, 16B)

These conditions require separate accounting for each "separate business" (generation, supply, distribution, transmission, interconnector). They are dormant until activated by Secretary of State scheme or Authority direction (SLC 16.1-16.3). Once activated, the licensee must keep separate accounting records, prepare audited statements, and deliver them to the Authority within six months of year-end (SLC 16.6). SLC 16A allows the licensee to change its financial year for statutory accounts by notice. SLC 16B is not used.

Market conduct (SLCs 17, 17A, 18)

These conditions are also dormant until activated:

• Prohibition of discrimination (SLC 17): once activated, the licensee must not sell electricity to one wholesale purchaser on terms materially more or less favourable than to comparable purchasers (SLC 17.6). The condition includes a disapplication mechanism: 18-month notice, potential Competition Commission reference (SLC 17.9-17.13).
• Prohibition of cross-subsidies (SLC 17A): the generation business must not cross-subsidise, or receive cross-subsidies from, any other business of the licensee or its affiliates (SLC 17A.6).
• Generating unit availability (SLC 18): enables the Authority to monitor whether a licensee is anti-competitively withholding capacity (SLC 18.7). Once activated, the licensee must prepare availability criteria statements (SLC 18.8), report planned vs actual availability (SLC 18.9), and give six months' notice before permanently/temporarily closing a station or materially reducing capacity (SLC 18.10). Materiality threshold: 25MW or 10%, whichever is lesser; for OCGT units, 10% (SLC 18.10(c)). The condition does not apply to units of 10MW or less (SLC 18.17(a)).

BETTA run-off (SLC 19B)

A transitional condition from the BETTA reforms (Energy Act 2004). The licensee must comply with the run-off scheme for non-GB trading and transmission arrangements (SLC 19B.1). The Authority cannot make new directions after the BETTA go-live date (SLC 19B.9).

Transmission constraint and inflexible offers (SLCs 20A, 20B)

These are the "market abuse" conditions:

• Transmission constraint (SLC 20A.1): the licensee "must not obtain an excessive benefit from electricity generation in relation to a Transmission Constraint Period." This covers both paying the ISOP an excessively low amount and being paid an excessive amount (SLC 20A.2). Interpreted and enforced via Authority guidance (SLC 20A.4).
• Inflexible offers (SLC 20B.1): targets generators who revise Physical Notifications from positive to zero MW within the Operational Day for units with Minimum Zero Time over 60 minutes, then receive excessive payments. Also enforced via guidance (SLC 20B.4).

Both conditions require the licensee to provide monitoring information to the Authority (SLC 20A.8, SLC 20B.8).

Elexon ownership (SLC 21)

If directed by the Secretary of State or Authority, the licensee must hold one share in Elexon (SLC 21.1). The licensee may delegate to a wholly-owned BSC-signatory affiliate (SLC 21.2) and must report delegation and corporate relationship changes (SLC 21.3-21.4).

Section C: Supplementary Conditions for Scotland

Section C (Conditions C1-C4) applies only to licensees activated under Condition 2.

• C1 (Definitions): defines "Settlement Agreement for Scotland" by reference to Scottish distribution licences.
• C2: not used.
• C3 (Security Arrangements -- Scotland): if directed, the licensee must enter into an agreement for compliance with Secretary of State directions under sections 34/35 of the Electricity Act 1989 (SLC C3.1(a)) and comply with it (SLC C3.1(b)).
• C4 (Compliance with Settlement Agreement for Scotland): the licensee must be party to and comply with the Settlement Agreement (SLC C4.1). Only applies if the licensee was party before the BETTA go-live date (SLC C4.3).

Section D: Supplementary Conditions for Nuclear Generators

Section D (Conditions D1-D5) applies only to licensees activated under Condition 3.

• D1 (Definitions): defines "nuclear generation business", "related nuclear activities" (waste storage, reprocessing, decommissioning), and "related nuclear research activities."
• D2 (Consultation with Nuclear Installations Inspectorate): before the Authority issues Grid Code or Distribution Code relief directions for nuclear licensees, it must consult the Nuclear Installations Inspectorate (SLC D2.1).
• D3 (Compulsory Acquisition): extends Schedule 3 powers to cover nuclear fuel/waste storage facilities (SLC D3.1).
• D4 (Other Powers): extends Schedule 4 powers similarly, including for decommissioning site assessment (SLC D4.2).
• D5 (Ancillary Services): disapplies the ancillary services obligation (SLC 11.1) where compliance would breach a Nuclear Installations Act 1965 licence (SLC D5).

Section E: Supplementary Conditions for Electricity Storage

Section E (Condition E1) is the most recent addition, addressing the growth of battery storage.

• E1 (Requirement to provide storage information): the licensee must provide to the relevant electricity supplier: confirmation of the supplier, technology type/power/capacity, network connection point, co-location arrangements with final consumers, and metering arrangements (SLC E1.1-E1.2). Must comply when the condition comes into force or the facility becomes operational, whichever is later (SLC E1.3). The Authority may direct changes to the information requirements (SLC E1.4) or grant derogations (SLC E1.5).

Defined terms

The licence defines 93 terms across SLC 1.1 (general definitions) and condition-specific definitions throughout Sections B-E. The full verbatim register is in the source file.

Key terms for orientation: - "the Authority" = GEMA (Gas and Electricity Markets Authority), i.e. Ofgem - "ISOP" = Independent System Operator and Planner (Energy Act 2023, s.162) -- the new name for what was the ESO/NGET system operator role - "generating station" = 50MW+ electricity generating station or electricity storage facility, operated by or for the licensee - "generation set" = any plant/apparatus for producing electricity, including storage - "BSC" = Balancing and Settlement Code - "CUSC" = Connection and Use of System Code - "separate business" = each of generation, supply, distribution, transmission, and interconnector businesses, consolidated where affiliates are involved

Cross-references

The Generation Licence points to the following external instruments:

Character positions

No character positions have been mapped for this instrument yet. This section will be populated when secondary sources referencing the Generation Licence are ingested in argument mode.