Smart Secure Electricity System (SSES) Programme: The proposed load control regime at a glance

Background  

The Department for Energy Security and Net Zero (“DESNZ”) has published a consultation on a proposed new licensing regime for load control activities in the United Kingdom under DESNZ’s Smart Secure Electricity Systems (“SSES”) Programme, which aims to unlock domestic‑scale flexibility. It is envisaged that the regime, developed in partnership with Ofgem, will regulate entities that control the flow of electricity into or out of domestic energy smart appliances (“ESAs”) and/or private EVs in response to digital signals. The scope of the proposed new type of licence also includes certain ancillary devices used to control load on ESAs and private EVs.

DESNZ’s stated intent is to facilitate consumer-led flexibility (“CLF”), i.e. enabling households to shift electricity consumption away from peak times in order to reduce their electricity bills and ease pressure on the electricity system. 

By regulating load control activities, the Government seeks to reduce peak demand, lower electricity system costs, and pass savings to consumers, while supporting Clean Power 2030 and Net Zero targets.

The consultation is open for stakeholder input from 10 December 2025 to 18 February 2026 and is accompanied by draft legislation and licence conditions.

In parallel, the Government has launched the first‑phase Energy Smart Appliances regulations consultation, which sets minimum smart functionality, cyber security and grid‑stability requirements for a targeted set of ESAs and consolidates the existing EV smart charge point regime into a single ESA framework. The first phase focuses on electric vehicle smart charge points and smaller heating and battery energy storage systems (“BESS”), with obligations primarily on manufacturers and importers. Together, the load control licence and the first-phase ESA regulations form complementary frameworks: the licence governs service providers that control load and/or provide load control services to consumers (being domestic consumers and/or small businesses), while the ESA regulations establish baseline requirements for the devices themselves.

This Law Now provides an overview of the proposed licensable activities regulatory framework (including exemptions and transition), and main licence conditions together with some analysis of the approach and impact for businesses participating in this sector.

Scope of Licensable Activities

The proposals draw a clear distinction between who makes load control decisions and who sells load control services to consumers. The consultation therefore proposes a single licence with two limbs of licensable activity:

• Load Controllers: Entities that create, modify, or send load control signals to ESAs, private EVs or other appliances, either directly or via intermediaries. 
• Flexibility Service Providers (“FSPs”): Entities that contract with consumers (domestic consumers and/or small businesses) to provide load control services at their premises and manage the consumer relationship. 

Although it is envisaged that different licence conditions will apply to each limb, DESNZ anticipates that many organisations will undertake both roles in practice. 

Consistent with the first‑phase ESA regulations, the regime’s device scope should be understood by reference to the proposed definition of in‑scope “smart load control” device categories under the Energy Smart Appliances Regulations 2026 to be enacted alongside the load controller regime (by virtue of the proposed exemption load controllers or FSPs who exclusively deal with other types of ESAs – see below). At a high level, these cover: (i) EV smart charge points (excluding public and rapid charge points), (ii) smart electrical heating up to 45 kW thermal capacity (including relevant heat pumps, storage heaters, heat batteries, hot water heat pumps and standalone direct electric hot water cylinders), and (iii) domestic‑scale smart BESS meeting specified capacity and functionality thresholds.

Importantly, the definition of Load Controlling would extend to decision-making that determines how or when an appliance operates, even if that decision is executed via intermediaries such as home energy management systems. For example, a supplier whose platform sends a price signal prompting a home energy management system to pause EV charging during peak hours and resume later would be carrying out a Load Controlling activity.

Regulatory framework

DESNZ proposes to introduce new secondary legislation, the Electricity Act 1989 (Load Control Licence) Regulations 2026 (“the Regulations”), to establish the licensing regime. The Regulations would make it a criminal offence to carry out load control activities without a licence (unless an exemption applies), with enforcement led by Ofgem.

To give effect to this, the Government intends to amend the Electricity Act 1989, adding “carrying on a load control activity” to the list of activities prohibited unless authorised by a licence or allowed under exemption, and creating a new category of “load control licence” under section 6.

In practice, any organisation undertaking one or both limbs of load control activity would require a licence unless an exemption applies (see ‘exclusions and exemptions’ section below). A breach would attract penalties consistent with the existing Electricity Act framework, including a fine up to the statutory maximum on summary conviction or an unlimited fine on indictment.

Exclusions and Exemptions

The proposed regime will not extend to activities such as firmware updates, the provision of data feeds that do not configure devices, telecoms network management, or consumers operating their own devices.

DESNZ intends to use the existing Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (“Exemption Order”) to establish new classes of exemption for specified load control activities. The Exemption Order, which currently provides classes of exemption for other electricity activities (such as generation, supply, distribution, and transmission), would be amended to add new classes exempting certain load control activities from the requirement to hold a licence under the Electricity Act 1989. This will allow organisations undertaking exempted activities to operate lawfully without a load control licence, while leaving the existing licensing framework for other activities unaffected.

The proposed exemptions cover:

• Load Controllers and FSPs whose activities relate exclusively to ESAs other than those in-scope first phase ESAs referred to above (i.e. EV smart charge points and smaller heating and BESS apparatus) or to privately owned EVs; and  
• FSPs contracting exclusively with non-domestic consumers other than small businesses. 

There is no capacity threshold (aggregated or otherwise) applying to the requirement to hold a licence; any organisation undertaking in-scope activities must be licensed unless exempt.

Licence conditions

The proposed standard licence conditions fall into three categories:

• All Licensees: covers baseline requirements for operational capability, financial soundness, governance and information provision, and a duty to be open and co‑operative with Ofgem and ensuring adequate systems, processes and management are in place to meet licence duties.
• Load Controllers: covers duties to support system stability, maintain cyber resilience and ensure safe ESA operation, compliance with BSC, CUSC, DCUSA, Grid Code and Distribution Code, adoption of a Cyber Assessment Framework ("CAF") profile and a "load control check" to validate data/signals and avoid unintended impacts on devices or the wider system.
• FSPs: covers consumer protection standards covering fair treatment, clear information, appropriate recommendations and proportionate exit options for customers, with enhanced safeguards for vulnerable customers and complaints handling aligned to general sector practice, including reporting and participation in the Energy Ombudsman scheme.

The licence conditions are summarised in more detail in the table at the end of this Law Now.

Cyber Security

The consultation also sets out a proposed cyber security regime for Load Controllers that is split into two tiers based on aggregate load. For those controlling below 300 MW, cyber security duties will be set out in the licence, and they must implement “appropriate and proportionate” measures and an annual assessment against a tailored Tier 2 CAF. For controllers at 300 MW or above, cyber oversight moves to the national Network and Information Systems Regulations under a stricter Tier 1 CAF, with Ofgem overseeing day‑to‑day compliance. In practice, this will require Load Controllers to have trained security leads and carry out regular risk reviews and testing.

Derogations 

Energy suppliers performing load control will require a separate load control licence. Ofgem is considering derogations to avoid duplicative obligations where suppliers offer combined supply and load control services. This may include allowing licence condition derogations exempting suppliers from certain obligations that already exist under their supply licence.

Transitional Arrangements

A 12-month statutory transition period is proposed between the opening of licence applications and the legal requirement to hold a licence. DESNZ intends to lay the Regulations in Autumn 2026, with applications opening by the end of 2026 and the licence requirement coming into force by the end of 2027. During the transition, unlicensed activity will not be an offence. Once the transition period ends, anyone carrying on an in-scope load controlling activity must either hold a licence or be covered by an exemption.

Analysis

This licensing regime, taken together with additional requirements included in the proposed first phase ESA regulations (also under consultation), will have a significant impact on Load Controllers and FSPs if introduced as proposed. A wide spectrum of businesses of varying size and maturity currently participate in this sector and some will be better placed than others to adapt and accommodate the additional operational and technological requirements, including internal governance, controls and associated costs. That said, CLF is at the heart of NESO’s Clean Flexibility Roadmap and it is critical that the transition is built upon robust, well-governed businesses that can meet requirements safely and securely and enshrine consumer trust.

There is a difficult balance to be struck by DESNZ and Ofgem here alongside supporting the development of nimble and entrepreneurial businesses at the frontier of this sector and not stifling innovation and growth. We expect there will be a high degree of stakeholder engagement in these consultations. Stakeholders are invited to respond by 18 February 2026. DESNZ will consult further on the Exemption Order and finalise cyber security guidance in 2026. 

Licence Condition Overview