The ban on councils selling renewable electricity will end on 18 August 2010. 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 £100 million a year in income for local authorities across England and Wales.
Currently councils 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 and also from benefitting from the additional export component of the feed in tariff. This restriction was put in place at the time of electricity privatisation to ensure the transfer of the electricity industry to the private sector.
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 Germany the equivalent figure is 100 times higher.
Lifting the ban is considered a vital step to making community renewable projects commercially viable, to bring in long-term income to benefit local areas, and to secure local acceptance for low carbon energy projects.
Councils such as Woking have made strenuous efforts over the years to produce energy locally. It is at the forefront of local authorities already investing in clean energy projects, and will be able to benefit from the change in the law. Through Thameswey Limited, a company wholly owned by the council, green electricity is generated across the Borough and provided to local customers by way of private wires.
The Government is committed to encouraging community-owned renewable energy schemes where local people benefit from the power produced. It is actively working on proposals to allow communities that host renewable energy projects to keep the additional business rates they generate. An online portal, Community Energy Online, will be launched in the autumn to support the development and deployment of low carbon community-scale energy infrastructure.