Selling electricity from CHP Schemes

Purpose of project

The Council has completed detailed feasibility studies for two district heating networks in the borough with support of the London Development Agency. In both cases, the studies identified a funding gap which would require grant funding.

The studies are based on the assumption that Combined Heat and Power (CHP) generated electricity is sold to the grid at a wholesale rate. If electricity from CHP could be sold at a retail price this could generate a return on investment sufficient to close the current grant funding gap and potentially attract private investment to deliver these schemes.

Acquiring a “Lite Supply Licence” would allow a district heating operator to sell electricity at retail rates to consumers with fewer risks and complexities. To date, no applications have been made for a Lite Licence due to uncertainty over the willingness of licensed suppliers to enter into the agreement required for the Lite Licence, along with the costs of developing the licence agreement and procuring a licensed supplier partner. This project will produce a draft Supplier Services Agreement contract and market testing of the contract will be taken forward by boroughs in 2011/12.

Project working group