In this contributed article, Steve Hoy, CEO of newly appointed Exempt Supply Notification Agent (ESNA) Enosi, explains how the P442 rule change levels the playing field between local producers and major utilities.
In Britain, permit-free clean energy supply has been a great idea for 20 years that has never been scaled up. The intention was right – to enable companies to manage supply directly from smaller sustainable projects – but the market lacked the systems to do this in a clean and confident way.
The new P442 ruling, endorsed by Ofgem and Elexon, changes that. It levels the playing field for small clean energy producers by recognizing direct trade outside the wholesale market, putting community solar and local wind energy projects on an equal footing with large utilities. These transactions must be matched over time and meet a threshold of less than 5 MW, creating a framework for accurate and responsible local energy transactions.
A rule that unlocks practical direct delivery
P442 makes it technically and commercially feasible for smaller producers to supply electricity directly to customers, provided these transactions are properly metered and settled. This precision creates confidence among both regulators and customers.
The economics are also improving: if structured correctly, direct supply can avoid some market costs, creating potential savings of up to £60/MWh, which can be shared between producers and consumers.
And because smaller projects can now be sold at fairer prices, communities also benefit. Local solar or wind farms achieve higher returns, encourage further investment and help companies access verifiable, cheaper clean energy with a clear time stamp of its use.
Lessons from markets that have done this before
This model is not untested. Similar approaches have already been implemented in Australia, Singapore and Italy, proving that time-sensitive supply and settlement can work at scale.
In Sydney, for example, EG Funds introduced one Matched Energy Supply Agreement (MESA)where the production of regional solar parks is timed every 30 minutes to the load on the building. Importantly, MESA is structured as a clause within a standard energy supply agreement, rather than a bespoke PPA – making it easier for organizations to adopt and replicate. In practice, EG now covers up to 85% of its energy consumption with timed renewable energy sources, at lower costs than standard rates.
The same underlying approach now applies under P442, where accredited agents can provide the matching and settlement required for licence-free supply arrangements. The process ensures that generation and consumption are matched cleanly and transparently, balancing unparalleled energy through existing retail supply contracts.
The result is a clear audit trail from source to outlet, avoiding double counting and creating trust for all participants.
What it means for the UK market
For generators, P442 offers a clearer route to market by valuing electricity in real time rather than through annualized abstractions.
For retail suppliers, it provides a framework to integrate time registration and billing within existing contracts and billing systems.
For large energy consumers, it delivers a verifiable clean energy supply and the ability to align operations with actual generation periods – rather than relying on averages or offsets.
A basis for scaling up local clean energy
P442 represents a practical step forward in how clean energy can be traded, tracked and trusted. Standardizing the rules for timed direct supply will open up participation to a wider range of smaller producers and customers, making the local energy market more dynamic and transparent.
If implemented simply and consistently, this framework can take direct clean energy supply from a niche to mainstream levels, allowing communities, businesses and suppliers alike to benefit from a more open and responsible energy system.
