How to become a licensed gas or electricity company

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 investment.screening@cabinetoffice.gov.uk.