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.