If you’re working in UK power, you’ve probably heard “P442” kicking around conference rooms and WhatsApp threads.

Most explanations are written for business customers. They focus on bill savings and eligibility.

This one starts where the mechanism actually starts: with the generator. Read on to learn what this means for you and the key questions you need answered before you sign up.

What P442 Is (in plain terms)

P442 made Exempt Supply official and gave it a proper framework to run on.

Exempt Supply has been around for years, but before mid-2025 it was difficult to run, especially at scale. The process was painfully manual, which meant it broke easily with edge cases and couldn't work for more than a handful of sites at once. tem saw that firsthand - we were the first to bring Exempt Supply to a scale-ready level, offering it as an extra benefit to existing RED customers in 2024/2025 and processing over 70 applications, more than anyone had ever attempted in one go. You can read more about that in our older blog here.

Late in 2025, P442 was introduced as the framework to make it workable for the 99%:

• Independent checks through ESNA to verify everything's legit.

• A central system that tracks all the exempt volumes so nothing gets lost.

• Clear rules and limits - like the cap of 2.5 MWh per half-hour period - so everyone knows where they stand.

Here's what Exempt Supply actually does: it strips away some of the extra charges (Non-Commodity Costs) from the electricity a business uses when that electricity comes directly from a matched generator.

That's what creates the savings for the business. And those savings only happen because you're generating the power.

A simple way to picture it: pizza

The easiest way to think about this is pizza.

The generator makes the pizza. The pizza itself is the renewable energy. The businesses are sitting around sharing it.

The scheme is the plan for how the slices get shared: who gets what slice, and how much. Each business in the scheme gets a portion of the renewable power, and the savings and earnings linked to that portion.

What you’re agreeing to when you consent

When you participate in a P442-backed exempt supply arrangement, you are not just “selling power as usual”. You are agreeing to:

• Explicit consent per business customer. Your consent needs to be documented and kept up to date for each participant.

• Operational coupling to matching and caps. Your output can create the opportunity for more business customer volume to be matched and exempted, but matching has to stay within the 2.5 MWh cap per settlement period and within scheme rules.

• Ongoing scheme hygiene. Buyers joining, leaving, changing usage, and changes in your output all require the scheme to be kept in balance so it remains compliant.

None of this is a reason not to do it. It is a reason to understand the commercial model you’re being asked to sign up to.

Where generators often get squeezed

Many structures still look like this:

• A licensed supplier sits in the middle.

• The business customer receives the exemption benefit.

• The generator is offered wholesale pricing plus a small premium.

The problem is not that the supplier does operational work. The problem is that it can be hard to see whether the value created by your consent and your generation is reaching you in a meaningful way.

How to evaluate any P442 proposal (quick checklist)

Before consenting, ask for clear answers to these:

1. Who is the ESNA and what is being verified? There should be an official ESNA process in the loop. (ESNA verification supports the scheme, but it is not a substitute for having proper contracts and consents in place)

2. What do I get paid per MWh, and what drives that price? Ask for the actual price mechanics and how frequently it can change. Knowing how the pie gets allocated to all involved is important upfront.

3. What visibility will I have? You should be able to see matched volumes to linked businesses, cap utilisation, and how changes in output or demand are handled. If you can't see how the scheme is performing, you're contributing generation without transparency. Ask for it.

4. What happens when conditions change? Get a concrete explanation of what happens when:

   • Output drops sharply

   • A business customer’s demand shifts

   • A site joins or leaves

The answer should not be “we’ll sort it out”. It should be an operational process.

1. What liability am I taking on if exemption is lost or a cap is breached? Make sure obligations and remedies are proportionate to what you control.

How this can work well (and where tem fits)

It is possible to structure this so:

• The generator retains commercial alignment with the end customer, or at least has transparent pricing and clear value share.

• Operational delivery is handled by teams and systems that actually run the scheme day to day: consent management, matching, monitoring, and keeping within caps.

At tem, we treat P442 as an additional ongoing benefit of our current customers eligible for the scheme, not a one-off “bonus”. We work with ESNA-verified processes and we focus on making performance clear and recordable: what is matched, what is exempt, and how it behaves when output or demand changes.

If you are considering a P442 structure, the key is simple: make sure the operational reality is clear, and make sure the value split reflects the role your generation plays in creating the benefit.

Why This Matters Now

P442 has made exempt supply operational at scale for the first time. That's a genuine shift, and we’re proud to be the first to drive its scale and implementation. That means generators have an additional route to revenue that reflects the value of their renewable electricity, not just its commodity price.

But the mechanism alone doesn't guarantee that value reaches you. The commercial structure around it determines that. Some structures pass value through. Some capture it along the way.

Understanding the difference is worth the time. The energy market has a long history of complexity working against the people who produce the electricity. P442 doesn't have to follow that pattern - but only if generators know what to look for.