The coalition is right to let councils sell green electricity —but they’ll need some helpby Stephen Tindale / July 21, 2010 / Leave a comment
Sacramento’s local solar power generation plant and the decommissioned nuclear facility
On becoming prime minister, David Cameron said: “I don’t want to hear warm words about the environment. I want to see real action. I want this to be the greenest government ever.” But if he is serious about this, the coalition will have to revolutionise the way Britain buys and sells low-carbon energy services. The most recent figures from the International Energy Agency show that only about 4 per cent of our energy comes from low-carbon sources—compared with 18 per cent in Germany and 12 per cent in the US.
What can be done? In keeping with Tory promises to devolve power, energy secretary Chris Huhne has announced that local government will sell low-carbon electricity to households—for the first time since 1976. The coalition also promises to allow low-carbon energy projects to keep additional business rates they generate, rather than paying that money to central government as they have done since Margaret Thatcher’s time.
Localism has often been a drag on the move towards clean energy. Under pressure from their constituents, local councils often reject wind farm applications. Yet allowing local government to sell electricity from wind farms would offer a much stronger incentive for permitting them to be built, and the evidence suggests it would be good for consumers, too: about a third of Americans get energy from municipal or co-operative companies, and their average tariff is about 20 per cent lower than those charged by private companies.
In California, for example, power production by municipal government is thriving, despite the efforts of private companies to kill it off. In a June referendum voters rejected a private utility-sponsored campaign to stop local government choosing where they source their power from.
The private utilities have cause to be fearful of municipal competitors. Take the Sacramento Municipal Utility District. Without shareholders and high corporate salaries to feed, and with cheap capital due to its good credit rating, its tariffs are well below neighbouring private utilities. It consistently provides the best customer service and among the most reliable power in California. It also lends customers money to install energy efficiency measures, and accredits reliable local installers. Similarly, in Vermont the state government—dissatisfied with the traditional utilities—handed over energy efficiency responsibility to a local not-for-profit in 2000. This has mobilised near-universal participation in localised efficiency projects—because they work. In a single…