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Search Results for: licence lite
25 June 2013: DECC Minister Greg Minister, during a Guardian Environment Q&A on local energy earlier today, set out his ambitions on where he’d like the ‘license lite‘ activities, currently being tested by the Greater London Authority (GLA), to go:
Responding to the following question:
“Here is Cornwall we would like to develop the concept of a local energy market (through possibly using the licence lite framework) that builds in community benefit through local ownership, generation and supply. Does this concept fit in with your thoughts about the future of energy markets?”
The Minister replied:
“You bet! I want local energy markets to take off just in the way the local food economy is growing. Just as people shop local, eat seasonal and fresh and look to procure with in a certain distance, so I want people to adopt a local mindset for community scale renewables. Hydro schemes, active coppicing for bio fuels (that can help bring local woodland back into active management – great for flowers & wildlife!) solar on community buildings or brown field sites, community heat neworks based on CHP as well as wind and other technologies all have a place.
“Licence Lite is being pioneered now by the GLA but I want to use that learning to be able to roll this out around the country, to allow a new generation of small scale local power producers to cut through the current complex electricity market regulations and sell direct to customers. Cutting red tape and bureaucracy to let in the electricity entrepreneurs is the future!”
- The excellent Cornwall Energy were commissioned by the GLA and others to look at this issue and have produced the following summary article; and
- The output of Cornwall Energy & law firm Nabarros work – undertaken for Haringey – can be found on Haringey 4020 website here
And some more tricky detail on the issue in the following helpful blog. Energy for London will monitoring process on this development over the coming months.
June 2014: Progress continues by the Mayor to obtain a junior electricity supply license – otherwise known as ‘license lite’. A tender was issued in March to start the process of attracting support from a fully licensed electricity supplier to help with the Mayor’s application to Ofgem (details here) and further information was issued by the Mayor in a recent press release ‘Mayor to become London’s smallest electricity supplier‘ which stated that “The ground-breaking move will permit him to offer the capital’s small electricity producers up to 30 per cent more for their excess energy than existing suppliers do, which he will then sell on to TfL, the Met and others at cost price.” The Mayor’s announcement attracted significant media interest including this piece in the Guardian,
A very good paper presented at the GLA’s Investment & Performance Board last week provides some further detail on issues that need to be considered as the ‘License Lite’ process progresses. The paper highlights that:
- A principal risk remains timing because the type of licence application is new to all parties and therefore timing remains difficult to predict.
- There is strong government support for the Mayor’s Licence Lite project. In May 2014 Matthew Pencharz and a GLA officer attended a round table discussion on licence lite chaired by the Secretary of State for Energy and Climate Change, Ed Davey to discuss progress of licence lite.
- A detailed draft economic model has been prepared in consultation with Transport for London, with whom discussions are in train for the purchase by it of electricity supplied from decentralised energy systems by the GLA under its licence.
- The financial outcome of the model is positive, but cannot be confirmed until tenders for the provision of the market services have been received from tenderers who have responded to the preliminary questionnaire during August of this year.
- Selected London boroughs have been briefed and provisionally identified the electricity capacity best sold under licence lite, together with other suitable public sector electricity generating capacity in London.
- The objective is for submission for a Mayoral Decision to approve the grant of the licence to the GLA by Ofgem and to approve entering into the necessary contracts to enable the project to proceed to completion in October 2014. Subject to that, the licence may be granted to the GLA in November 2014, operations commencing in April 2015.
May 2013: A recent question to the Mayor provides some useful information on the Mayor’s application to the energy regulator Ofgem for the Greater London Authority to be classed as ‘license lite’ under the electricity supply regulations (see previous post for background). Asked what the process would be if the GLA were successful, the Mayor response was as follows:
“Following grant of the licence the Greater London Authority will enter into agreements with the owners /operators of decentralised electricity generating capacity in London for delivery to the GLA of the electricity to be supplied under the licence, supply agreements with the parties who will consume it and an agreement with a fully licensed electricity supplier for the provision of the necessary technical electricity market services to enable the licence to be operated.”
All of this is conditional however on internal approval within the GLA for the organisation to take on electricity supply operations:
“Acceptance of the licence and commencing operations is conditional on a positive and commercially prudent business model being approved by Mayoral Decision .”
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.“
29 October 2012: The GLA are apply to the energy regulator Ofgem for a ‘junior or sometimes known as ‘lite ‘ electricity supply licence. This allows for smaller electricity generators to sell their electricity at market value. The approval form sets out that “the application to Ofgem [is] for a licence lite licence so the GLA can buy the electricity produced by London boroughs and other public sector decentralised energy generators in London and sell it at proper market rates”. This project builds on an earlier GLA project (details here).
The background to this issue is actually quite simple but solutions complex! Luckily some helpful commentaries are posted on the web by Carbon Limited and also law firm Nabarros. At the heart of the argument is that smaller generators are often in poor bargaining positions with the electricity retail market when wanting to sell their electricity. The true value of the electricity generated by a decentralised CHP, or PV array, could be realised by selling the electricity direct to consumers (very roughly say, around 12-14 pence per unit) rather than the wholesale market (again roughly, but say 4-6 pence per unit).
However, to do this, an electricity supply licence (for generators exporting more that 2.5 MW) is, in most instances required, and holding such a licence places a number of very complex and costly requirements on the licence holder, effectively creating a barrier to entry for smaller generators in this market. Recognising this situation, Ofgem introduced arrangements for a new ‘lite supply licence’ which – in theory – would allow the holder to sell their electricity more widely but provided exemptions to these smaller generators from the requirement to be involved in a number of complex electricity market processes, as would normally be required under a ‘full’ supply licence conditions (see the ‘Final Proposals document by Ofgem posted here for more on this).
In practice however, though a project with a number of London boroughs looked at this issue earlier this year, no participants have applied to hold such a licence. Hence, with this action, the GLA is looking to test Ofgem’s process and apply for this new licence and support the development and production of decentralised energy supply in London.
January 2012: The GLA have approved to fund a project to explore opportunities to introduce a junior electricity supply licensing system for smaller electricity generators, thus enabling London boroughs and their energy services companies to supply electricity they generate retail to their housing tenants and others. Further details on work to be commissioned here. This work will follow on from analysis already undertaken for Haringey – looking at how the council could have greater flexibility in relation to selling electricity from local CHP plants.
October 2016: Really interesting interview by BusinessGreen with TfL Board Member Michael Liebreich. Michael, who is the founder of Bloomberg New Energy Finance and an industry expert on clean energy, has recently been reappointed to the Board by new Mayor Sadiq Khan. In addition to Michael’s expertise, in a further positive move, Dr Nina Skorupska, Chief Executive of the Renewable Energy Association has been newly appointed to the Board. In his interview Michael highlights some of the challenges he has experienced as a Board member:
“…Liebreich does admit engagement with environmental issues has not always been as prevalent as he would have hoped. “The board as a whole, I’ll be honest, has never had a conversation about climate change,” he reveals. “And to the extent we’ve had conversations about carbon at the board or finance committee or even safety and sustainability panel it has only been because I’ve initiated them. During the four years I’ve been on the board we’ve never had a briefing on climate change at the board level. We’ve never brought an expert in and said ‘where are we going to be in 50 years on sea level or rainfall or whatever it is. What is going to happen here and what do we need to know to future proof the assets’?”
“Thankfully, he is confident the board’s approach to climate issues is about to change. Khan and Deputy Mayor for Transport Val Shawcross will set the agenda for the new board, but Liebreich has no doubts action on climate change and air pollution will be more central. “I started to push for a briefing on climate change and was told we are going to have a new board so wait until we have a new board,” he says. “I am delighted there will be more focus on these issues.”
A report Energy for London prepared earlier this year for former London Assembly Green Party member Jenny Jones, highlighted the incredibly slow progress TfL has made in securing cleaner power supplies for London Underground (see report here – in particular page 15 onwards). Similar points made in the report are echoed by Michael in his interview:
“As such a large and predictable energy consumer, TfL would be well placed to take advantage of highly competitive long term contracts with clean energy suppliers, Liebreich predicts. “We could enter into a 40 year PPA [Power Purchase Agreement],” he says. “We are going to be running trains on electricity for ever. We are a fantastic potential purchaser of renewable energy for a long period. If you went back a few years we would be a great purchaser but it would still be more expensive than the generic mix of electricity, [but now] could we enter a very long term contract which would be cheaper? You could imagine a scenario where the first onshore wind farm built without subsidy in the UK is built as a deal between some farmer who has a chunk of land and TfL which wants to lock in a deal that is cheaper than what we are paying currently for electricity. Do I know that can be done, no? But it is something we should be exploring.”
However, the Licence Lite project, led by the GLA, now appears the main action to try to source low carbon electricity for the tube – with the Mayor anticipating an announcement that the licence was to be granted in September (see para 2 of following GLA press release).
June 2016: Positive to see the focus on energy and climate issues by a number of London Assembly members at the first question time of the new Mayor, Sadiq Khan. This month’s questions included the following issues:
the quantity of electricity supplied to TfL through the Mayor’s Licence Lite operation and few other questions on Licence Lite (here and here); supporting the growth of London community energy schemes; the London Energy Strategy; committing to London’s 25 per cent decentralised energy target; the 2020 nearly zero energy buildings target; the publication of the annual update to the GLA Energy and Climate Change Mitigation Strategy; London Energy Plan supporting studies; supporting the growth of district heating projects; support for London’s 2025 60 per cent carbon reduction target; the future of the RE:NEW and RE:FIT building retrofit programmes; the number of domestic energy efficiency retrofits supported by RE:NEW since January 2015; numbers on the GLA’s boiler scrappage list; ring fencing London’s Zero Carbon Homes offset fund; the number of zero carbon homes that could be built by 2020; zero carbon buildings planning requirements will come into force in 2019; how much money could be raised through the Zero Carbon Homes offset fund; interim targets to the Mayor’s manifesto commitment for London to be a zero carbon city by 2050; climate change and water vapour; how the Mayor will support London’s low carbon economy; emissions from river traffic (and another); zero emission cabs and PHVs abd if CO2 is a pollutant – and finally:
whether the Mayor understands “that further increases in carbon dioxide levels will not significantly increase average global temperatures due to near saturation absorption by CO2 in the 13 – 17 µm band of the infra-red spectrum”.
Previous months questions to the Mayor can be found here.
April 2016: With the publication last week of the manifesto of the Liberal Democrat’s Caroline Pidgeon, all four major London Mayoral candidates have now set out their proposals in relation to energy and climate if they were to become Mayor. I’ve produced a summary of these proposals, across various categories of interest, in the following document.
The first thing to notice is the welcome inclusion of energy and climate proposals across all manifestoes: a wide number issues are addressed, but some common themes do emerge:
- The first – and most significant – pledge around energy to emerge from the manifestoes is that all four main candidates have set out their intention to establish a new London government based energy business. Zac Goldsmith references the work that Boris has taken forward over the past few years in advancing Licence Lite – but states he “will go further to set up ‘Energy for London – a new clean energy company'”. Sadiq Khan will establish ‘Energy for Londoners’ and both Caroline Pidgeon and Sian Berry state the will establish a new London energy company – Sian saying that this new business concern will be linked to Transport for London (the detail of which has been previously set out in a Jenny Jones commissioned report).
- N.B. There has been a previous attempt during Ken Livingstone’s tenure as Mayor to establish a municipal energy operation. The London Climate Change Agency (LCCA) (see wiki entry here) operated for a few years before made defunct as part of a restructure of the then London Development Agency.
- Worryingly, no candidate commits to working to achieve two long standing London climate targets: the 60 per cent 2025 carbon reduction target and the 25 per cent 2025 decentralised energy target.
- All candidates are keen on electric cars, with Zac Goldsmith pledging to introduce Paris’s Autolib electric car rental scheme to London – something Boris has talked about doing since 2009.
- There are warm words for support for developing community energy projects in London – with most detail set out in Zac Goldsmith’s manifesto.
- Sian Berry and Zac Goldsmith haven’t given up on the Green Deal model – both propose to investigate a London pay-as-you-save energy efficiency retrofit initiative. Caroline Pidgeon interestingly supports working with London councils to introduce a ‘consequential improvements’ policy – a proposal that Government scrapped back in 2012 – a decision which significantly contributed to the eventual demise of the Green Deal.
- All candidates support increasing the number of solar power installations in London with Caroline Pidgeon and Zac Goldsmith committing to specific targets – PV capacity equivalent to 200,000 homes/750MW/a 10 fold increase in solar – all of which amounts to around the same thing (see Greenpeace’s London solar report) which has contributed to candidates consideration on the future of solar in the capital.
All in all, it’s massively encouraging that energy concerns and their relevancy to the future of London have been recognised across all main manifestoes. Issues such as reducing the city’s contribution and response to climate change, increasing energy affordability, and accelerating the deployment of measures to enhance energy efficiency and decentralised energy are promoted by all candidates, which gives confidence that GLA programmes in place, such as RE:NEW, RE:FIT, DEPDU and others will continue to be supported by an incoming Mayor.
Some omissions from the manifestoes which it would have been good to have seen including advancing smarter energy initiatives (such as building on the work the GLA are doing with Tempus Energy and Kiwi Power), addressing potential energy security of supply issues in the capital (an issue previously raised by the Mayor and an area of GLA activity through the Mayor’s High Level Electricity Working Group), energy efficiency in the commercial building sector (a significant and difficult issue for Mayor, with next to no regulatory powers over existing buildings…), and how new sustainable energy activities going forward will be financed. However – despite these concerns – this has been a great start providing much to build upon!
March 2016: This month Mayor’s Question Time – the last in Boris Johnson’s eight year tenure as Mayor – once again included a wide range of questions on energy and climate, which included:
capturing waste heat from London Crossrail stations; the Mayor’s record on climate change; London based generators and Licenced Lite; the ability for Londoners connected to a district heating scheme to complain about poor service performance; anticipated prices of district energy heat tariffs; announcing the start of the Licence Lite programme; improvements in electricity export sales price for generators through Licence Lite; the number of Excess Winter Deaths amongst Londoners; challenges in promoting gasification technologies at the Olympic Park; the GLA’s Environment Team budget over the last 8 years; targets associated with the Boiler Scrappage Scheme; publication of London district energy schemes heat tariffs; the publication of London Energy Plan studies; guaranteeing that there are no plans for an incineration plan at Old Oak Common; the Mayor’s Boiler Scrappage scheme and fraud; RE:NEW energy efficiency retrofit programme delivery problems; how government energy efficiency programmes have helped Londoners; the amount of London’s (non transport) energy is supplied through local decentralised energy systems; cuts to the Energy Company Obligation (ECO); the Mayor’s recent meeting with the Secretary of State for Energy; the absence of London Fuel Poverty Strategy; the roll out of smart meters in London
Sutton district heating scheme; embodied carbon; annual progress on decentralised energy growth in London; anticipated savings from the new GLA boiler ‘cashback’ scheme; visits by the Mayor to RE:NEW energy efficiency retrofit projects; TfL future energy costs and the Mayor’s meeting with the National Infrastructure Commission.
Previous months questions to the Mayor can be found here.