Aiming to produce 25% of London’s energy from local sources by 2025, London is the first authority in the country to apply to Ofgem for a new type of electricity supply licence.

Initially it will allow the Greater London Authority to buy excess electricity produced by London’s boroughs and public bodies before selling it on, at cost price, to other public sector organisations, such as Transport for London, the Met Police and NHS hospitals.

If the scheme proves successful the Mayor plans to extend it to include private sector energy producers in London as well.

According to the Government, increasing revenues for smaller generators will improve the viability of local energy projects in London and spark an investment boom in the capital’s low carbon energy infrastructure.

It also said that this initiative, in the short term, could help bring in more than £300m worth of investment for 22 heat and power projects already in the pipeline, while in the longer term, it could help generate over £8bn of investment and around 850 jobs a year until 2025.

As demand for electricity in the capital is expected to grow by up to 4% a year over the next decade, the Government stresses how investment in London’s power infrastructure is crucial to help boost jobs and growth and protect the capital’s economy.

The Mayor of London, Boris Johnson, said: “We need to do everything we can to develop a more secure, cost-effective and sustainable energy supply for the capital. By pouring more investment into locally sourced energy supplies and reducing carbon emissions we will not only save money for Londoners but drive innovation, jobs and growth in this burgeoning sector.”

The Mayor is also investigating opportunities for using smart technologies to help manage peak demands on London’s power grid and make London’s energy more resilient in the future.

According to the Mayor, intelligent energy systems will help deliver secure, affordable, low carbon energies and will help meet the capitals target to cut carbon emissions by 60% by 2050.

The Mayor is pushing this new system of licencing forward and has been working with Ofgem and the Department of Energy and Climate Change since 2011 to develop it.

Secretary of State for Energy and Climate Change Edward Davey said: “This is a hugely encouraging development and I welcome the London Mayor’s announcement today and fully support councils such as Haringey with this project.

“Opening up our energy market to smaller companies is good news for competition and therefore good news for consumers. This is a welcome initiative that will make better use of energy produced locally and help Londoners get the best bang for their buck,” he added.

Leigh Stringer

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