Licence Lite Update

October 2013: There has been little news recently on progress being made for the first ‘license lite’ license to ┬ábe awarded – however – discussions do continue and below some recent references to the initiative are gathered together.

First, DECC’s Community Energy – Call for Evidence paper published in June 2013 covered the issue stating:

“96. Community renewable electricity projects typically sell their electricity through Power Purchase Agreements (PPAs), whereby an energy supply company agrees to buy electricity from a generator over a fixed period of time at a fixed rate. For community electricity generators it can be difficult to negotiate with large energy supply companies. Aggregators such as Smartest Energy have in the past helped community groups overcome this hurdle. We also recognise that the move from the Renewables Obligation to the Contracts for Difference (CfDs) is a significant one and that the structure of PPAs will need to change, to reflect the changes to the risk profile and the structure of CfDs. The Government has initiated a process to support the market in preparing for the CfD in order to speed this transition and reduce costs.

97. Another route to market for community-generated electricity is Licence Lite, a new form of electricity supply licence, which was proposed by Ofgem in February 2009. The purpose of the licence is to enable smaller scale electricity generators to overcome the costs, risks and complexities of operating in the electricity supply market. If successfully implemented, it will enable them to supply electricity into the retail electricity market and earn a higher market rate than at present for the power they produce.

98. Although no Licence Lite has yet been granted, initial applications have recently been made, including by the Mayor of London, through the Greater London Authority. We hope this will help resolve some of the issues around selling community-generated electricity, and we will be keen to see what evidence comes out of these cases.

And two recent workshops also provided some information on the background to Licence Lite. At Ofgem’s community energy workshop held in September, Ofgem officials provided a short presentation on the basic benefits of being ‘License Lite’. And law firm Nabarro – who have undertaken significant work in this area for the GLA – held an event in July with a strong focus on licence lite where a helpful presentation was provided by the GLA providing information of their work to date and anticipated further actions. Some previous posts also go into further detail.

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