Ofgem has announced that the code modification CMP432 has been rejected

CMP432 was a proposal presented to the National Energy System Operator (NESO) aimed at improving the fairness and accuracy of locational transmission charges under the Transmission Network Use of System (TNUoS) framework.

This proposal aimed to reform the calculation of location-based electricity transmission costs, making the system fairer, more predictable and more supportive of renewable energy growth across Britain. 

The code modification would have aligned charges more closely with actual network planning needs, reducing volatility and improving cost reflectivity — especially critical for renewable energy developers preparing bids for the Contracts for Difference (CfD) Allocation Round 7 (AR7).

Ofgem’s decision comes just days before the AR7 sealed bidding window opens, leaving renewable energy developers in Scotland exposed to the continued volatility of transmission charges. 

Responding to the announcement, Stephen McKellar, Head of Grid and Networks at Scottish Renewables, said:

“The decision to reject CMP432 is yet another failure from Ofgem to address the damaging and long-standing impact of TNUoS charges on Scottish renewable energy projects which are unfairly penalised by the current system.

“Rejecting the proposal sends a deeply concerning signal to developers in Scotland already grappling with disproportionate and unpredictable costs. With the latest CfD auction around the corner, the decision worsens an already challenging environment for investment.

“CMP432 would have aligned charges more closely with actual network planning needs, making the system fairer and more predictable. Whilst only an interim measure, this proposal would have benefited consumers, our economy and energy security in the long-term by offering much needed confidence to Scottish projects.

“Scottish Renewables is urging Ofgem, NESO and the UK Government to urgently create interim provisions that balance the regional impacts of transmission charging while aligning with the next phase of long-term electricity market reform.”

Ends

Notes to editors

• The rejection of CMP432 follows Ofgem’s earlier dismissal of CMP444 (cap and floor mechanism), compounding uncertainty for developers during the critical 2025–2029 transition to the enduring reform period.
• The decision has been met with disappointment across the renewable energy industry in Scotland, where developers face the highest locational charges in Britain. CMP432 was regarded as a pragmatic component of a solution that could have improved cost reflectivity and supported the competitiveness of Scottish projects.
• While Ofgem cites long-term reform ambitions under the RNP programme, industry urgently needs near-term certainty.
• Scottish Renewables will continue to work collaboratively with industry and Ofgem to ensure the TNUoS charging regime supports Scotland’s energy ambitions—engaging on transitional arrangements to provide near-term certainty for developers, while driving towards enduring reform aligned with the Reformed National Pricing programme.