Solar sector hails innovative move as even more significant than Electricity Market Reform.
London’s residents may soon be able to purchase renewable energy directly from local solar or wind power generators, after the Mayor confirmed he was seeking a new kind of “stripped down” electricity supply licence for the capital.
Boris Johnson yesterday confirmed he had applied to Ofgem for a so-called “Licence Lite”, which would allow the Greater London Authority (GLA) to sell electricity produced by decentralised energy systems.
If granted, the licence would initially allow the GLA to sell power from London boroughs and other public sector suppliers to consumers, potentially as soon as 2014.
According to the Mayor’s Office, 12 London Boroughs are already boast a total of 76MW of capacity from a mixture of gas generators and renewables that could be used in the scheme.
If the scheme proves successful it could be widened to include independent private energy generators.
The licence is designed to help meet the Mayor’s target to produce 25 per cent of London’s energy from local sources by 2025. In the short term it could bring in more than £300m worth of investment for 22 heat and power projects that are already in the pipeline.
In the longer term, the Mayor’s Office said the licence could help generate more than £8bn of investment and create around 850 jobs a year through to 2025.
“We need to do everything we can to develop a more secure, cost-effective and sustainable energy supply for the capital,” said Johnson. “By pouring more investment into locally sourced energy supplies and reducing carbon emissions we will not only save money for Londoners but drive innovation, jobs and growth in this burgeoning sector.”
The move was warmly welcomed by the solar industry, which expects the licence lite to boost demand for solar panels.
Leonie Greene of the Solar Trade Association said London was taking a “pioneering” step that could encourage other towns, cities, and communities to follow suit. London is the first to apply for a Licence Lite.
“We’re much more excited about this than anything else in the Electricity Market Reforms process going through Westminster,” she told BusinessGreen. “People who live near renewable projects often say they want a way of buying the electricity directly, and through this kind of licence they can.”
She added that the licence would allow independent generators to sell their electricity at a retail price via the GLA, rather than having to sell it much more cheaply on the wholesale market.
She also predicted that it would improve the relationship between suppliers and local communities, because users would be able to see the direct benefit of the nearby source.
Energy and Climate Change Secretary Ed Davey also described the move as “hugely encouraging”.
“Opening up our energy market to smaller companies is good news for competition and therefore good news for consumers,” he said. This is a welcome initiative that will make better use of energy produced locally and help Londoners get the best bang for their buck.”