Green energy projects and subsidy control law: Frequently asked questions
22nd July, 2026
New Prime Minister Andy Burnham sees investment in clean energy as a core component of the reindustrialisation of the regions – helping create the jobs of the future, contributing to the fight against climate change and improving national energy security.
In this article, Ward Hadaway‘s Head of Public Funding, Alexander Rose, answers the main questions which arise in respect of subsidy control law compliance when public funds, rights or assets are directed towards green energy projects.
What is subsidy control law and when does it apply to energy projects?
Subsidy control is the competition law regime that regulates how public authorities in the United Kingdom may use the funds, rights and assets in their control in regard to businesses and other organisations which are engaged in economic activity.
This is a challenge regime under which interested parties (including competitors) may bring proceedings against the recipients of subsidies in the Competition Appeal Tribunal should the requirements of the Subsidy Control Act 2022 not be met. Given the judicial review risk, it is common that subsidy control advice from an expert with a detailed knowledge of this area of law is sought ahead of large awards of public funding.
Clean energy projects often require up-front public support (such as grants, tax breaks or sub-commercial loans). Each award of financial assistance will need to be assessed for the presence of subsidy. The test for subsidy applies to direct and indirect beneficiaries and therefore it is also necessary to evaluate whether a subsidy might arise to other parties as a result of the measure.
What steps need to be taken when a subsidy is identified in a proposed green energy project?
Under the Subsidy Control Act 2022 an award of subsidy needs to proceed under one of the exempt routes, otherwise it is at risk of a successful challenge.
Identifying the appropriate exemption requires the value of the subsidy to be calculated and then checks against the conditions of one of the exempt routes to be carried out. Only where all the conditions of an exempt route are satisfied will a measure have cover.
In terms of the different exempt routes, it is common for public authorities to prefer the application of a Streamlined Route, such as the Energy Usage Streamlined Route created in 2023. Some public authorities have created their own subsidy schemes, for instance the Energy Supply Chain Challenge and Property Fund which has been created by the Energy Transition Zone Limited and the Energy Intensive Industries Regulated Asset Base Exemption Scheme which has been created by the Department for Energy Security and Net Zero. Again, only where all the relevant conditions are satisfied will there be cover.
Public authorities may apply the Subsidy Control Principles to a measure, which requires an assessment to be undertaken with regard to the clarifications within the Statutory Guidance. Energy projects will also need have regard to the Energy and Environmental Principles and may, depending on the value of the award, need to be referred to the Competition and Markets Authority.
Has there been a subsidy control challenge against any energy projects?
Since the regime came into effect in 2023, the Competition Appeal Tribunal has heard two linked cases brought by Zenobē Energy, relating to battery subsidies and is due to hear another case involving subsidies to reduce the emissions of buses, but has yet to hear a case involving green energy generation.
That said, it is expected that one will arise in the coming years, given that this is a sector in which there is intense competition and awards are often of high value. The EU State aid regime has strong parallels with the subsidy control regime and has seen many challenges brought against green subsidies.
Does the “Polluter Pays” principle apply in subsidy control law?
Principle B of the Energy and Environmental Principles states that “Subsidies in relation to energy and environment shall not relieve the beneficiary from liabilities arising from its responsibilities as a polluter under the law of England and Wales, Scotland or Northern Ireland“. Where an organisation can be compelled to address pollution it is arguable that other Principles will also be difficult to satisfy.
Conclusion
Energy projects, whether using green or conventional technology, give rise to particular issues under subsidy control law and therefore we recommend taking advice early on in project development and making sure that detailed records are kept which can be produced in the event of a challenge. Ward Hadaway’s subsidy control lawyers are on hand to assist should you require expert legal advice.
Ward Hadaway has a market leading Public Funding practice and built up a national reputation for the quality of its subsidy control expertise. Examples of clean energy projects worked on by our lawyers include the public funding of new offshore wind farms, tidal energy facilities, biomass powerplants and geothermal heat networks, as well as changes to port infrastructure to enable wind farm ordinance to pass through, R&D projects to develop more efficient solar panels and the creation of facilities that will embed the skills necessary for regions to be at the forefront of the green energy revolution. If you have an ambitious clean energy project that will need public funding then please do get in touch.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.
Follow us on LinkedIn
Keep up to date with all the latest updates and insights from our expert team
