February 2025 saw several landmark moments, with the CCC’s newest carbon budget recommendations, updates to significant grid connection reforms and new energy efficiency commitments for renters. This February Energy Industry Roundup summarises what Engage feels are last month’s notable developments.
Government Policies and Initiatives
Consultation on a reformed Contracts for Difference
On 21st February, DESNZ published a consultation on reforms to the Contracts for Difference Scheme (CfD), which has facilitated investments in 29.4 gigawatts of renewable energy since it was established in 2014. The proposed reforms, which would be implemented for Allocation Round 7, include the relaxation of certain planning criteria for offshore wind projects, an extension of 15-year contract terms and changes to offshore wind budget setting. These reforms align with the messaging within the government’s December 2024 Clean Power 2030 Action Plan, placing emphasis on investment certainty and streamlined infrastructure development.
EPC and UK Landlords – 15th February 2025
On 7th February, the government launched a consultation on raising the Minimum Energy Efficiency Standards (MEES) for private rentals from Energy Performance Certificate (EPC) E to EPC C by 2030. The MEES have been in place since 2018 and prevent landlords from letting out private home rentals without appropriate energy efficiency measures in place. This change will impact approximately 52% of private rented homes, driving substantial improvements in energy efficiency and emissions reduction.
These proposals are underpinned by the December 2024 consultation on reforms to the energy performance of buildings regime. As well as refining requirements for EPCs, the proposals draw attention to smart readiness metrics, which could help users understand their building’s potential to optimise energy usage and participate in demand-side response enabled by smart meters and tariffs through equipment such as EV charge points, Solar PV battery storage and heat pumps.
Industry Milestones
Climate Change Committee publishes 7th Carbon Budget
The Climate Change Committee (CCC) published its 7th Carbon Budget on the 26th of February, providing a detailed plan with recommendations to the UK government to reach its legally binding net-zero targets. The budget covers the period of 2038-2042 and calls for UK-wide emissions to be cut 87% by 2040 against 1990 levels. 
The UK has met its first 3 carbon budgets, in large part due to generation emission reductions, but the CCC has emphasised that greater policy changes are required to decarbonise other sectors to hit emission targets, including through accelerating the adoption of electric vehicles, decarbonising heat and enhancing energy efficiency in buildings. The Government will review the recommendations to propose a level for the Seventh Carbon Budget to Parliament by 30 June 2026. Later this year, government has committed to publish a Carbon Budget Delivery Plan, which will set out plans to deliver Carbon Budget 6.
Ofgem publishes guidance for NESO Future Energy Pathways
On 28th February Ofgem published new Future Energy Pathways (FEP) guidance, which outlines methodologies for NESO’s future energy pathways, an annual publication on the whole-system planning and operation of the energy sector. The new guidance, consulted upon in August 2024, provides details on new methodologies, engagement processes and Ofgem’s role. The changes have been made as the yearly publication is moving from a scenario-based to a strategic pathways approach. The last publication using the Future Energy Scenarios methodology was published in July 2024.
Grid Connection Reform Transition in Spring 2025
On the 14th of February, Ofgem released a consultation on grid connection reforms reflecting its ‘minded-to’ support for NESO’s TM04+ reform package. The TM04+ proposals are the result of several years of industry collaboration to overhaul the ‘first-come, first-connected’ approach to the country’s grid connections queue. The queue currently has project capacities that far exceed what is needed for Net Zero, and many of these projects are considered ‘zombies’ with little likelihood of progression, blocking progress for stronger projects.
The proposed TMO04+ reforms seek to move to a ‘first ready, first needed, first connected’ approach, supporting projects by readiness and alignment with the government’s wider policy priorities, including Clean Power 2030. Ofgem has said it expects new arrangements for the grid, which would apply to new and already-queued projects, to be in place for Spring 2025. This comes after NESO announced it was pausing connection applications from 29th January until these new arrangements are implemented.
Ofgem provides direction on the Market-wide Half-Hourly Settlement programme
On 28th February, Ofgem provided direction to Elexon as the Market-wide Half-Hourly Settlement (MHHS) Implementation Manager. The direction places additional reporting responsibilities on Elexon to minimise further delays to the implementation of the MHHS programme. This comes after change request CR055 was approved in November 2024, delaying MHHS ‘go live’ by 6.5 months to allow for more robust Systems Integration Testing.
The MHHS programme will unlock a flexible, clean retail electricity market by moving all market trading in domestic and non-domestic settings to a half-hourly data basis by October 2026. Engage offers specialist advisory and programme management services for MHHS implementation, which you can read more about in greater detail on our website.
Engage News
Lorenzo Wong Shares Key Insights on Heat Network Zoning
Lorenzo Wong recently spoke at Energy UK’s recent Breakfast Briefing, contributing to a wider discussion on the role of zoning in shaping the future of heat networks. Our latest blog explores one of the event’s key themes: how aligning energy system planning with zoning could support more coordinated, low-carbon heat delivery. – Read the full blog
