14 March 2013: The GLA has recently approved a process to secure a junior – or ‘lite’ – electricity supply licence – the benefits of which are set out in an earlier post here.
The Mayor recently updated progress on this work stating that:
“Technical assessments of the services to be procured from the electricity market and regulatory matters needing to be addressed have been made. The GLA met Ofgem (the electricity regulator) at the beginning of February 2013 to enable a formal application for a licence.”
And the FT has today reported on this work stating: “The GLA is the first public authority to apply for a so-called Licence Lite, an electricity supply permit that would allow it to buy excess electricity from London’s boroughs and sell it back at cost price to other public bodies in the capital, such as the police or NHS hospitals.” The GLA press release is available here.
The report goes that:
“Several London boroughs run generators to power public buildings, such as Islington’s Bunhill Heat and Power project, which uses a gas-fired generator to heat homes and local swimming pools. Westminster operates two gas-fired generators in Pimlico that heat homes, businesses and three schools. Excess energy produced at these sites is returned to the National Grid through a mainstream supplier at a variable wholesale rate of about 5 pence per kWh. The GLA would offer 20 to 30 per cent more for the boroughs’ excess as a way of encouraging growth in the low-carbon energy infrastructure. Ofgem, the energy regulator, brought in Licence Lite in 2009 but no permit has yet been issued. Some blame uncertainty over the legal obligations a new supplier would face, as well as lack of interest from existing industry suppliers. Licence Lite holders are required to contract with a mainstream supplier to provide regulatory and operational support.”
“A dozen London boroughs, which together are capable of producing 76MW, could benefit from the scheme, which is intended for launch in 2014, the GLA said. If the measure is a success it would also be considered for private sector energy producers in London. By raising the returns on the energy produced by small suppliers, the GLA said, the move could help attract more than £8bn of investment in electricity infrastructure in the capital up to 2025.“