Energy Act 2023

The Energy Act 2023 is a wide-ranging UK Act with 15 Parts and multiple Schedules. It updates existing energy law and creates new legal frameworks across carbon dioxide transport and storage, hydrogen, low-carbon heat, heat networks, smart appliances, energy performance, energy savings schemes, fuel resilience, electricity market reform, offshore wind, oil and gas, and civil nuclear matters.

For business owners, the main point is that this is not one simple compliance regime. Different Parts affect different sectors. Some provisions create direct prohibitions, licensing requirements, enforcement powers and offences. Others mainly create powers for later regulations, licence conditions, directions, codes or designated documents.

That means you should not ask only whether the Act exists. You should ask which Part affects your business, whether that Part is in force, whether later regulations have been made, and whether a regulator or licensing body has issued related requirements.

The businesses most directly affected are regulated energy market participants and developers of major energy infrastructure. The Act includes detailed Parts on licensing of carbon dioxide transport and storage, revenue support contracts for carbon capture and hydrogen activities, hydrogen pipeline projects, governance of gas and electricity industry codes, market reform and core fuel sector resilience.

But the Act also reaches beyond the traditional energy sector. Property businesses may be affected by heat network regulation, heat network zones and energy performance of premises. Product businesses may be affected by energy smart appliance rules and load control licensing. Large businesses and groups may be affected by Energy Savings Opportunity Schemes.

If your business signs long-term utility, infrastructure, building services or technology contracts, the Act may change the compliance assumptions behind those deals even if you are not a licensed energy company yourself.

You do not need to be building a power station for this Act to matter. Common trigger points include operating a communal or district heating system, connecting premises to a heat network, selling connected devices that manage energy use, planning a low-carbon heat project, or running a business with substantial energy consumption.

Another trigger point is business change. Expansion, acquisitions, new developments, product launches, major refurbishments, utility outsourcing and long-term energy contracts can all bring a business into a part of the Act that was not previously relevant.

The Act also repeatedly refers to information powers, enforcement, appeals, reporting and licence conditions. So if your business falls within a regulated area, you should expect compliance to depend on systems and evidence, not just good intentions.

One of the most important practical features of the Act is that some Parts create direct legal controls, while others mainly create a structure for later rules. Businesses should keep those two categories separate when assessing risk.

For example, Part 1 includes a prohibition on unlicensed activities in relation to carbon dioxide transport and storage. It also covers licence applications, licence conditions, transfer of licences, information powers, enforcement and appeals. Part 7 requires a licence for operation of a multi-purpose interconnector. Schedule 18 also refers to a prohibition on carrying on regulated activity in the heat network context.

By contrast, some areas are framed around powers to make regulations or modify licences. Part 10 gives power to make energy performance regulations. Part 11 establishes Energy Savings Opportunity Schemes through regulations. Part 12 includes powers for directions, regulations and information requirements in the core fuel sector resilience regime.

The practical risk is different in each case. If your activity is already placed behind a licence or prohibition, the risk is acting without permission. If the Act mainly creates a regulation-making power, the risk is failing to track and prepare for the later rules that will set the detailed operating standard.

Part 8 is likely to be one of the most practical Parts for property and utility-adjacent businesses. Chapter 1 covers regulation of heat networks. The Act refers to a regulator, alternative dispute resolution for consumer disputes, heat networks regulations, consultation, recovery of costs, and separate arrangements for Scotland and Northern Ireland.

Chapter 2 covers heat network zones. It includes regulations about zones, a Heat Network Zones Authority, zone coordinators, identification and designation of zones, zoning methodology, requests for information, delivery of district heat networks within zones, enforcement, penalties, and records, information and reporting.

Schedule 18 adds more detail about the shape of the regime. It refers to regulator objectives and duties, monitoring, records and information, restrictions on disclosure, heat network authorisations, a prohibition on carrying on regulated activity, consumer complaints and dispute resolution arrangements, financial arrangements and offences.

If you own, operate or develop buildings served by communal or district heating, this is an area to review early. The legal issues are likely to go beyond engineering. They may affect customer terms, billing, complaints handling, service standards, records and project planning.

Part 9 deals with energy smart appliances and load control. The Act includes energy smart regulations, supplemental prohibitions and requirements, enforcement, sanctions, offences, recovery of costs and appeals. It also includes powers to amend licence conditions in relation to load control and licensing of activities relating to load control.

This matters for businesses that make, import, integrate, install or sell connected devices that manage energy use. Examples may include smart heating controls, connected appliances, or systems that can alter demand or timing of energy use.

The Act does not mean every connected product is immediately subject to one final rule set. But it clearly creates a framework for product-related and activity-related regulation. Businesses in this space should review product documentation, update controls, customer information, technical specifications and supply chain responsibilities.

Part 10 gives power to make energy performance regulations, including regulations relating to new premises. It also includes sanctions and procedural provisions. For developers, landlords, occupiers, facilities managers and building services businesses, this means the Act can affect the wider compliance picture around premises, not just standalone energy products.

Part 11 establishes Energy Savings Opportunity Schemes. The Act covers application of schemes, assessment of energy consumption, assessors, ESOS action plans, action to achieve energy savings or emissions reductions, administration, enforcement, penalties, offences and appeals.

This Part is most likely to matter directly to larger businesses and groups. But SMEs can still be affected where they sit inside a larger corporate structure, provide energy data to a parent group, or are asked to implement site-level action plans.

In practice, businesses should treat energy data quality as a legal issue as well as an operational one. If a scheme applies, poor records can make compliance harder and more expensive.

Several Parts of the Act are aimed mainly at regulated sectors and major projects, but they are still commercially important for businesses in those supply chains. Part 2 covers revenue support contracts for carbon dioxide capture, storage and transport, hydrogen transport, hydrogen storage, hydrogen production and carbon capture. It also includes a hydrogen levy framework, allocation bodies, standard terms, enforcement and information powers.

Part 3 covers licensing of hydrogen pipeline projects. Part 4 includes low-carbon heat schemes, hydrogen grid conversion trials and consumer protection regulations, as well as provisions on fusion energy and certain fuel-related topics. Part 12 covers core fuel sector resilience, including directions, regulations, information powers, incident reporting, offences, appeals, enforcement undertakings and guidance.

Part 13 also covers offshore wind electricity generation and oil and gas matters, including strategic compensation for adverse environmental effects, marine recovery funding, environmental effects, marine oil pollution response, habitats and change in control provisions for petroleum licences. Part 14 covers a range of civil nuclear matters, including licensing, decommissioning, compensation convention implementation, the Civil Nuclear Constabulary, pension matters and Great British Nuclear.

If your business develops projects, supplies critical services, or depends on regulated support structures in these sectors, the Act should be part of your project risk review, financing assumptions and contract planning.

The Act repeatedly points businesses towards licences, standard terms, designated documents, information powers, reporting, enforcement and appeals. That means compliance will often sit in the documents and systems around your operations, not only in the wording of the Act.

For example, a heat network operator may need stronger customer terms and complaints processes. A smart appliance business may need clearer product information and update controls. A large occupier may need better energy consumption records. A fuel sector participant may need stronger incident reporting and continuity planning.

If your business is affected, the best first step is a scoped review. Match the relevant Part of the Act to your activities, then test whether your contracts, policies, technical documents and records would support compliance if a regulator, customer or counterparty challenged them.

The Act received Royal Assent on 26 October 2023. The legislation also refers to a correction slip dated 23 February 2024. The legislation shows both the latest available revised version and the original as-enacted version.

Part 15 includes the commencement provision. Because this is a large Act with many different regimes, businesses should check the status of the specific Part they want to rely on, together with any later regulations, licence changes, directions or designated documents made under it.