Introduction to selling electricity locally

Insights for local authorities interested in generating value from clean energy

Local authorities across the UK are sitting on a growing opportunity. Many already own renewable energy assets, including solar panels, wind turbines, hydroelectric schemes. But most of that electricity flows straight into the national grid and is sold back to consumers at a premium.

This video presentation, produced and presented by The Carbon Trust as part of the Net Zero Living Programme, sets out how local authorities can sell electricity directly to nearby consumers. It explains the current rules, the available schemes, and what is changing that could make local electricity sales easier and more common.

The UK’s electricity system was built around large power stations sending energy across long distances, rather than small-scale, local generation. This can create barriers for local authorities. However options do exist and the presentation goes on to explain the various benefits of:

• direct connections between a generator and a consumer via private wire
• commercial agreements known as power purchase agreements (PPAs)
• microgrids
• local energy cooperatives
• peer-to-peer trading
• local tariffs

The presentation also covers flexibility markets. This is where local authorities can earn revenue by adjusting how and when they generate or use electricity, helping the wider network run more efficiently.

With upcoming regulatory changes, the hope is that local electricity trading could become significantly more straightforward. The Carbon Trust advises local authorities to stay informed about these developments so they are better placed to unlock new revenue, reduce energy costs, support decarbonisation, and benefit their local communities.

Key takeaways

• Local authorities that own renewable energy assets and engage early with licensed electricity suppliers are better placed to access local electricity trading schemes.
• Emerging regulatory changes, such as the proposed P441 code change, should make it easier for local authorities to access new opportunities to sell local electricity.
• Local flexibility markets allow local authorities to earn extra income by adjusting when they generate or use electricity. Demand for this is expected to grow significantly by 2030.