An energy boost for London

Written by Elena Collins on 9 May 2013

Last March, The Mayor of London made an application to Ofgem for a new type of electricity supply licence, known as Licence Lite. This will enable, for the first time, the Greater London Authority to sell electricity produced by London boroughs and other public sector owners of systems producing heat and power locally (decentralised energy systems). The licence may be widened in the future to include private sector small energy producers as well.

Greater London Authority plan to offer London’s small electricity producers a better rate than they can obtain currently in the market. In theory, better rates for small energy suppliers will stimulate investment and growth, leading to more small energy centres, and help to secure London’s energy future.

The Mayor, who has a target to produce 25 per cent of London’s energy from local sources by 2025, is the first authority in the country to apply to Ofgem for a new type of electricity supply licence. it will allow the Greater London Authority to buy excess electricity produced by London’s boroughs and public bodies before selling it on, at cost price, to other public sector organisations, such as Transport for London, the Met Police and NHS hospitals. If the scheme proves successful the Mayor plans to extend it to include private sector energy producers in London as well.

According to the Greater London Authority, the new scheme could help bring in more than £300 million worth of investment for 22 heat and power projects already in the pipeline. In the longer term, it could help generate over £8 billion of investment and around 850 jobs a year until 2025.

Demand for electricity in the capital is expected to grow by up to four per cent a year over the next decade so investment in London's power infrastructure is crucial to help boost jobs and growth and protect the capital's economy.

Twelve boroughs already have schemes which could benefit. Together they are capable of generating around 76 megawatts of electricity – that’s equivalent to the power used by about 76,000 homes. These types of schemes primarily heat local buildings through the electricity generating process. For example, Islington's Bunhill Heat and Power project uses a gas engine to warm hundreds of homes and local swimming baths. Westminster’s Pimlico District Heating Undertaking heats thousands of homes, commercial premises and three schools through two gas engines.

Boris Johnson, said: “We need to do everything we can to develop a more secure, cost-effective and sustainable energy supply for the capital. 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.”

In the long term it could will improve the viability of local energy projects in London and spark an investment boom in the capital’s low carbon energy infrastructure

Secretary of State for Energy and Climate Change Edward Davey said: “This is a hugely encouraging development and I welcome the London Mayor’s announcement and fully support councils such as Haringey with this project.  Opening up our energy market to smaller companies is good news for competition and therefore good news for consumers. This is a welcome initiative that will make better use of energy produced locally and help Londoners get the best bang for their buck.”

The Mayor is working with Ofgem and the Department of Energy and Climate Change to bring this new route to market by early 2014. 

Categories: Energy and water