10 August 2010 | Lindsay Clark

UK local authorities could soon become suppliers as well as buyers of energy.

By lifting legal restraints, the government could enable councils to make money from their estates by building green energy production facilities such as wind farms or roofs with solar panels and selling the energy these generate.

Chris Huhne, energy and climate change secretary, said: “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.”

He said the government would overturn the law banning councils from selling renewable electricity. The full benefit of renewable incentives would spur a local power revolution and make money, he said.  

At present only 0.01 per cent of electricity in England is generated by local authorities, despite the scope that exists to install projects on their land and buildings. In Germany this figure is 100 times higher, the Department of Energy and Climate Change (DECC) said.

The 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 were introduced in April and guarantee payment to organisations generating low-carbon electricity. It could mean up to £100 million a year in income for local authorities across England and Wales, DECC said.

Huhne added: “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.

“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 projects.”

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.