Exempt supply opportunities: What are they and are you making the most of them?

New renewable energy opportunities are emerging through supplier-led initiatives for businesses looking to power their decarbonisation ambitions on a shorter-term contract basis. 

These initiatives allow UK businesses to benefit directly from savings through exempt supply (or peer-to-peer) trading. 

What is exempt supply (or peer-to-peer trading)?

Exempt supply refers to energy generation or services that operate under specific regulatory exemptions. These are usually applied for small-scale 5MW generation.   

While exempt from certain rules, these supplies still deliver measurable value, such as: 

• Flexibility services.
• Distributed generation contributions. 
• Operational efficiency improvements. 

Peer-to-peer trading allows clients to align with UK generators under 5 MW, obtain traceable power and benefit from £/MWh discounts on specific non-energy costs such as Renewable Obligations (ROs), Feed-In Tariffs (FITs), Capacity Mechanism (CM),  Contracts for Difference (CfDs) and Climate Change Levy (CCL) through matching their supply volumes to the generation assets at as high a percentage as possible. 

This market is expected to gain more traction as we enter the final quarter of 2025: suppliers are launching partnerships with UK Exempt Supply Notification Agents (ESNAs) to provide scalable market offerings following the P442 amendment. 

What does the P442 amendment mean for exempt supply trading?

P442 is a market framework which helps ensure the benefits of exempt supply are properly recognised. It clarifies how these suppliers can participate in settlements and balancing mechanisms.  

The P442 amendment has given businesses more options to purchase renewable power while supporting small-scale generators that have lost funding from previous schemes such as the FIT and RO schemes. 

This means the electricity supply procured in this manner is exempt from certain levies that fund the UK Government’s Electricity Market Reform (EMR) program, such as Contracts for Difference and the Capacity Mechanism. EMR regulations apply only to licensed supply.  

The modification allows for reporting these exempt supply volumes, ensuring they can be excluded from determined non-energy calculations facilitated by authorised energy suppliers where available.  

In practice, this means: 

• Renewable generators can receive recognition for the services they provide. 
• Generators and end-users alike can unlock financial revenue shares.  
• Both generators and end-users can receive an equal share of the values created from exempt supply.  

This opportunity is not available to organisations that receive levy discounts or exemptions via the Energy Intensive Industries (EII) or Climate Change Agreements (CCA) schemes or generators that are accredited under the Renewables Obligation scheme and receive Renewables Obligation Certificates (ROCs) as a subsidy.