Energy Storage and Subsidy Control: CAT Judgment in Zenobē v GEMA

The Competition Appeal Tribunal’s (“CAT“) judgment in Zenobē Energy Ltd v Gas and Electricity Markets Authority, handed down on 23 June 2026, provides important guidance on the scope of the CAT’s jurisdiction under the Subsidy Control Act 2022 (the “Act“). The CAT dismissed Zenobē’s applications under section 70 on the basis that the decisions challenged did not amount to reviewable “subsidy decisions” within the meaning of the Act. Commercial Senior Associate breaks down how the CAT arrived at this decision and the implications for energy businesses operating similar schemes.

Background: The LDES Cap and Floor Scheme Challenge

The case concerned the development of the long duration electricity storage (“LDES“) cap and floor scheme by the Gas and Electricity Markets Authority (“GEMA“). Zenobē, a provider of shorter-duration battery electricity storage services, challenged steps taken by GEMA in progressing the scheme. It argued, among other things, that the arrangements involved the use of “public resources”, that the scheme would constitute a subsidy scheme under the Act and that GEMA had acted unlawfully in developing the scheme.

Section 70: When Can the CAT Review a Decision?

Section 70 of the Act provides a route for interested parties to apply to the CAT for review of a subsidy decision, with the CAT applying judicial review principles. The question before the CAT was therefore whether the purported decisions challenged by Zenobē fell within that statutory framework.

The CAT held that GEMA’s publication in September 2025 of the documents challenged by Zenobē (the “September Publications“) did not constitute a subsidy decision. The CAT considered that those publications formed part of the ongoing development of the LDES scheme and did not amount to a decision capable of review under section 70 of the Act. The CAT therefore had no jurisdiction to review that decision.

The February 2026 Adoption Decision

The CAT reached the same conclusion in relation to GEMA’s decision in February 2026 adopting the September Publications (the “Adoption“). The CAT held that the Adoption did not itself constitute a subsidy decision within the meaning of the Act and therefore also fell outside the Tribunal’s jurisdiction.

Although unnecessary to the outcome, the CAT also considered the legal effect of the Adoption. It found that the Adoption had been properly made pursuant to section 10P of the Electricity Act 1989 (as in force at the relevant time) and that it superseded the September Publications. The CAT concluded that, even if the Adoption had amounted to a subsidy decision, it would in any event have fallen outside the CAT’s jurisdiction by virtue of section 78 and Schedule 3 of the Act, which exclude certain subsidy schemes established pursuant to duties imposed by primary legislation.

Issues Left Open: Subsidy Schemes and Public Resources

Having concluded that there was no reviewable subsidy decision, the CAT declined to determine the remaining substantive issues raised by Zenobē. In particular, it did not decide whether the LDES arrangements would constitute a “subsidy scheme” under the Act. The CAT considered it inappropriate to resolve that issue where the factual basis on which the legal question would fall to be determined was not yet finally settled.

The CAT also declined to determine whether the proposed funding arrangements involved the use of “public resources” for the purposes of section 2 of the Act. Section 2 is relevant because a measure will only constitute a subsidy under the Act if, among other things, it involves a financial contribution from public resources. It recognised the difficult questions of interpretation raised by that issue, including the relationship between the Act and the concept of “State resources” in EU state aid law. However, given its conclusion that there was no reviewable subsidy decision, the CAT considered it unnecessary to decide the point.

The CAT’s Judicial Review Jurisdiction

The judgment also provides an important clarification on the scope of the CAT’s judicial review jurisdiction. GEMA argued that the CAT’s role was confined to “subsidy control” issues and that separate public law challenges, including vires arguments (that GEMA had acted outside its legal powers), would need to be brought in the Administrative Court. The CAT rejected that submission. It held that, where it has jurisdiction under section 70, it may consider wider public law grounds applying judicial review principles alongside arguments arising under the Act.

In this case, however, that issue did not arise because the CAT concluded that there was no subsidy decision capable of review. The question of vires therefore fell away.

Implications for the Energy Sector

The judgment is therefore primarily a decision about jurisdiction rather than the substantive application of the subsidy control regime. For the energy sector, it confirms that challenges under section 70 depend on the existence of an identifiable subsidy decision and cannot be used to challenge earlier stages of policy development or scheme design.

The decision also leaves important questions open for future cases, including when funding mechanisms involving network charges may amount to the use of “public resources” and when an energy-sector support mechanism will crystallise into a reviewable subsidy decision under the Act.

For legal support on subsidy control compliance and challenges, contact Stacey Gray, Commercial Senior Associate.