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Councils freed to sell renewables electricity to the Grid

Councils across Britain will from next week be allowed to sell renewable electricity to the grid, energy and climate change secretary Chris Huhne will say today in a letter to all local authorities.

At present only 0.01% of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings.

In one of the first energy policy actions of the coalition government, a ban on local authorities selling renewable electricity will end on 18 August.

This will open new sources of income including the full benefit of the feed in tariff which incentivises renewable electricity. It could mean up to £100M a year in income for local authorities across England and Wales.

“For too long, Whitehall’s dogmatic reliance on ‘big’ energy has stood in the way of the vast potential role of local authorities in the UK’s green energy revolution,” said Huhne.

“I’ve taken the early step of overturning the ban on local authorities selling renewable electricity to the grid. I’ve today written to all councils urging them to take advantage and lead a local energy revolution.

Currently local authorities are able to put any renewable electricity they generate to local use, and to benefit from the associated feed in tariff for projects smaller than 5MW. But they are restricted from selling any excess renewable electricity into the grid (other than that generated from combined heat and power) and also from benefiting from the additional export component of the feed in tariff.

The restriction is a 1989 amendment to the Local Government (Miscellaneous Provisions) Act 1976. It was put in place at the time of electricity privatisation to ensure the transfer of the electricity industry to the private sector.

“Lifting this ban will help drive forward essential renewable energy projects in the UK, giving local authorities an incentive to invest in local projects,” said ICE director general Tom Foulkes. “While a focus on large scale energy projects is essential, smaller community projects also have an important role to play in the UK’s future energy mix.”

Readers' comments (2)

  • Bearing in mind the current reappearance of some semblence of control on public authority expenditure in the present period of austerity, I reasonably assume that any such Public Authority Capital Works investment as this for renewable energy will be assessed up front of any expenditure and commitment SOLELY on the basis of an acceptable NPV return over, say, 10 years and necessary prior written commitments as set out below including for:

    all initial capital works costs inc. any replacement or repaired items necessary covered by full period bonding and/or insurance cover by the Supplier
    all other repair and all maintenance costs by organisations authorised by the equipment supplier
    all installation and connection costs including panels and cabling etc.
    all Planning Application costs and similar administrative costs
    all finance charges for the investment
    all mains power generated during the period at a minimum guaranteed by the equipment supplier, at forecast selling rates as agreed with the Mains Power Supplier chosen
    all benefits from penalties paid by the equipment suppliers for underperformance compared to guaranteed minimum outputs, say over each 3 monthly period, and adjusted in total continuously, within the overall schemes period.

    and that from this analysis the investment will only be sanctioned if a sufficiently high positive NPV is demonstrated and that the venture's viability and outcome is fully covered by approved prior detailed estimates, Suppliers Guarantees and Penalties and necessary Sales Agreements with the local Power Suppliers - as indicated above.

    I won't hold my breath!

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  • Perhaps a number of Local Authorities may join together and build a waste to energy incinerator remote from their council,s area. This would burn at least a million tonnes of waste a year and supply 100MW into the grid. Landfill costs would dissappear and the army of people wasting our money on recyclicing projects could be employed to use the bottom ash from the incinerator to fill the pot holes in our local roads. Sorry about the length of this comment. I am quite out of breath?

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