By Claire West

Councils across Britain will from next week be allowed to sell renewable electricity to the grid and should assume their rightful place leading a local power revolution, 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 Germany the equivalent figure is 100 times higher.

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 £100 million a year in income for local authorities across England and Wales.

In advance of a visit to Woking Borough Council’s clean energy projects, the Energy and Climate Change Secretary said:

“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.

“Forward thinking local authorities such as Woking in Surrey have been quietly getting on with it, but against the odds, their efforts frustrated by the law.

“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.

“This is 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.”

Ray Morgan, Woking Borough Council’s Chief Executive, said:

“The Council welcomes the announcement by the Energy Secretary, and the commitment shown by the Coalition Government, to enabling local authorities to provide and support low or zero carbon energy production.

“Woking has made strenuous efforts over the years to produce energy locally and hopes that this strong signal from the Government will be supported by the regulator, Ofgem, to remove other barriers which frustrate the delivery of local energy solutions.”

At present 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 benefitting 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. It no longer makes sense given the acute need to shift the UK’s power sector to low carbon, and the potential contribution that small scale renewables can make.

Woking Borough Council 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 local authority, green electricity is generated across the Borough and provided to local customers by way of private wires. The Secretary of State will visit the state-of-the-art photovoltaic canopy over Albion Square outside Woking railway station, the town centre’s combined heat and power network, Brookwood Farm high efficiency housing project and a series of community buildings fitted with small scale renewables.