What P442 means for corporate energy buyers and local energy generation
As businesses look to cut carbon and gain greater control over energy costs, regulatory changes are quietly reshaping what’s possible. One of the most important of these is Balancing and Settlement Code (BSC) Modification P442.
Whilst it may sound technical, P442 has very practical implications for commercial energy buyers. It makes it easier for businesses to buy power directly from renewable generators, improves cost transparency, and supports more flexible, local and low-carbon procurement strategies.
In this article, we explain what P442 actually is, why it matters to business energy buyers, the benefits and recommended next steps.
What is P442?
P442 is a change to the UK electricity settlement system that allows licence-exempt electricity supply to be properly recognised and accounted for.
Historically, the market was built around large, licensed suppliers. When smaller generators, such as solar farms or community energy schemes, wanted to sell power directly to businesses, the settlement system struggled to separate between:
- Power supplied through a licensed supplier, and
- Power supplied directly under licence-exempt arrangements.
This created complexity, cost and risk for both generators and corporate buyers. P442 introduces a new settlement role, the Exempt Supply Notification Agent (ESNA), whose job is to clearly identify which electricity volumes are exempt and ensure they are settled correctly. This prevents exempt supply from being incorrectly charged for certain policies and balancing costs, and brings much-needed clarity to billing and reporting.
Why P442 matters to business energy buyers
1. Access to a more direct renewable supply
P442 supports the growth of direct and local power purchasing, enabling businesses to source electricity straight from renewable and local generators.
This aligns with the wider shift highlighted in Ofgem’s forward work program and industry consultations, which emphasise decentralisation, flexibility and local energy markets.
For businesses, this means:
- More choice beyond traditional utility supply
- Opportunities to contract with local solar, wind or community energy projects
- Stronger sustainability credentials that are traceable, clean power
2. Impactful cost reductions
One of the commercial advantages of licence-exempt supply is the potential to avoid certain non-commodity charges that are built into standard tariffs. P442 ensures that these exempt volumes are correctly identified in settlement, reducing the risk of misallocation of costs and improving invoice accuracy.
This is particularly relevant for energy-intensive companies, where even small improvements in cost allocation can have a meaningful impact on budgets.
3. A more competitive and flexible market
By removing technical barriers, P442 enables smaller generators and innovative supply models to compete more effectively. For corporate buyers, that translates into:
- More competitive pricing
- Greater flexibility in contract structures
- Increased ability to align procurement with net-zero and ESG strategies
What does this mean for energy procurement strategy?
From a procurement perspective, P442 is not just a regulatory update – it provides a new commercial model, including:
- Direct power purchase agreements (PPAs)
- Sleeved and private-wire arrangements
- Local and on-site generation partnerships
- Community and decentralised energy sourcing
The key is understanding how these structures interact with settlement, compliance and risk – and how to design contracts that deliver both commercial value and sustainability outcomes.
Basically, P442 allows for more tracking and clean energy trading possibilities and is a big step towards cleaner energy procurement in the UK. This is where experienced energy procurement support becomes critical.
How we can help
At Unyfi, we work with businesses to cut through the noise and build energy strategies that are commercially robust, future-proof and aligned with your business’ sustainability goals. Whether you are exploring direct renewable supply, or reviewing existing contracts, our team provides independent, expert guidance.
If you’re considering:
- Renewable or direct-from-generator procurement
- Reducing non-commodity costs
- Improving visibility and control over your energy contracts
- Aligning energy strategy with sustainability targets
Let’s chat
Schedule a free consultation with our energy procurement specialists and explore how smarter procurement can support both your bottom line and your sustainability goals.
