Decentralised energy plants to be let off licensing rules

A major barrier to the development of decentralised energy schemes is to be removed by the Business Department (BERR) and the energy regulator Ofgem.

In June, they jointly issued for consultation proposals that take away the need for decentralised energy generators to obtain "costly, complex and time-consuming" licences.1 Decentralised energy includes renewable energy schemes connected to the local electricity networks and combined heat and power plants. Any such scheme above 10 megawatts currently requires a licence to generate, distribute or supply electricity. Licences require schemes to comply with industry codes including "balancing and settlement" requirements. Under these, a schememust pay a hefty fine if it does not generate the amount of electricity it is contracted to.

Licences haves been cited as a major barrier to the development of decentralised energy. The London Climate Change Agency estimates they add £4.80 per megawatt hour to the cost of generation.

BERR and Ofgem propose "switching off" the licensing requirements for projects provided they have "alternative arrangements in place". This could involve paying another electricity supplier to meet the licensing requirements on its behalf.

The consultation explains how this could work, and discusses other ways of incentivising decentralised energy. These include lower charges for accessing distribution networks.

The consultation closes on 31 July, and proposals will be implemented by the end of the year.

One issue complicating the future of decentralised energy is a recent European Court of Justice judgment on private wire networks (see pp 57-58 ). BERR will examine the implications of the case by the end of the year, the consultation says.

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