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London paving the way for Isles energy switch?

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It may come as a surprise but moves afoot in London to make the city more self sufficient may help deliver an energy revolution in the isles.

Boris Johnson is bidding to make the Greater London Authority the first in the UK to hold a new type of electricity supply licence, allowing them to trade in electricity generated in the city.

If the London Mayor is successful the venture could provide a blue print for other local authorities to enter the energy market, and change the landscape of electricity supply here in the Western Isles.

The aspirations of Local Authorities to provide an alternative to the big six energy companies, selling energy generated in the islands to local households and businesses at a reduced price, are not new.

But these ambitions have been stalled by the complexity of the energy market and the significant costs and regulations encompassing suppliers.

The ‘Licence-Lite’ arrangement being sought in London however, may provide the break through local authorities need .

Ed Reed of Cornwall Energy, who recently addressed Renewable stakeholders in the Western Isles, explained: “The rules [of electricity supply] have been designed from the premise that if you want to be a retailer of electricity you are going to be a national provider, another SSE or Scottish Power or whatever, that you are there to sell to millions of customers not just a few hundred or thousand locally.”

He said the way the market is designed has led to “frustration” as the rules have “worked against” bodies who want to supply energy locally.

The ‘Licence-Lite’ route would, however, help to by-pass the costs of becoming a supplier, allowing bodies to sell electricity without signing up to the industry codes in full. Arrangements would be entered into with a third-party supplier, which would, in effect, sub-contract industry code compliance.

Electricity, generated by island wind turbines for example, could be sold at a cheaper price as the transmission network (used to carry energy over large distances) would be avoided.

Electricity could also be sold at a below-market tariff to local customers, instead of making profits for the company.

A Comhairle spokesman said the experiences of the Greater London Authority are of “particular interest”.

He said: “The Comhairle is exploring ways in which crippling Fuel Poverty levels in the Outer Hebrides can be reduced.

“In the longer term (2019 and beyond), there may be the option for the local community to acquire a share in one or more of the commercial Wind Farms planned for the islands. This would allow a community consortium to become an electricity generator in its own right and the creation of an Energy Supply Company for the Outer Hebrides would allow this consortium to retail electricity on to the local market.”

Dr Ruairi MacIver, of Lews Castle College UHI, commented: “The Greater London Authority foresees significant benefit in the concept of Licence-Lite and has been the principal organisation considering the detail of how it might be implemented in practice.”

He added: “As a result of this work, a lot of the uncertainties and unknowns surrounding practical implementation have been identified and reduced or removed. Organisations following behind will be starting the process from a position of some knowledge although each organisation will have unique circumstances that will require attention.”

 

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