Solar generators in London may soon be able to sell electricity to the market at an increased rate following the city’s application for a Licence Lite.

The Greater London Authority is the first authority to apply to Ofgem for the new type of electricity supply licence. Initially, the licence will allow the GLA 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.

However, London Mayor Boris Johnson is actively exploring the possibility of widening the licence to include private sector small energy producers as well, including solar PV arrays.

The mayor hopes that better rates for small energy suppliers will help stimulate investment and growth in low carbon developments in order to help London meet its target of producing 25% of its energy locally by 2025.   

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 London Assembly estimates that in the short term, the move could attract more than £300 million worth of investment for 22 heat and power projects already in the pipeline. In the longer term, it could help generate over £8 billion of investment and around 850 jobs a year until 2025.

Energy Secretary Edward Davey added: “This is a hugely encouraging development and I welcome the London Mayor’s announcement and fully support councils 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.”