While instinctively many community energy generators are interested in selling their electricity to local households, this is challenging under current regulatory and market arrangements. It is expensive, complex and legally difficult to become a fully licenced supplier, which means that most community generators will rely on a licenced supplier to facilitate this under a sleeved or ‘white label’ arrangement. This could be done via a sleeved PPA, where the supplier then offers a local tariff for local households to sign up to as outlined above.
In this model, the licenced supplier is responsible for establishing a local tariff and making this available to domestic consumers, based on agreement between the licenced supplier and the community generator. However, Regen are not aware of any community energy groups successfully establishing such a model.
Under a sleeved PPA, there is also no inherent ‘local’ element; that is, the electricity generated by the community energy generator is not the same electricity that is physically sold to the end buyer, whether a household or otherwise. This means that a supplier can technically offer any community tariff to any consumer who approaches them regardless of where they are in the country.
Regen understand that UK government and Ofgem are reconsidering current market arrangements to enable local supply for community generators, with consultation expected later this year.
