Benefits of council electricity sale plans questioned

The comments from waste and recycling trade bodies – including the Chartered Institution for Wastes Management (CIWM) and the Environmental Services Association (ESA) – come in the wake of the energy secretary Chris Huhne announcing last week (July 7) that he planned to repeal legislation that prevents councils from accruing revenue from electricity generated independently of heat (see letsrecycle.com story).

When announcing the proposal, Mr Huhne stressed the impact that the repeal of the 1976 Local Government (Miscellaneous Provisions) Act could have on helping councils perform the transition to a low-carbon economy.

But, speaking to letsrecycle.com, a range of concerns were raised by waste industry trade bodies and commentators over what, if any, impact this would have on addressing the lack of funding available to councils to actually build plants to recover energy from waste.

Doubts were also raised over whether local authorities were best placed to develop facilities and manage the sale of electricity themselves, rather than through contractors.

Pressure

Steve Lee, chief executive of the CIWM, told letsrecycle.com that, while he expected to see the public and private sector continuing to work together to develop facilities on a commercial scale, Mr Huhne's plans could help encourage “community buy-in to new infrastructure”.

However, he noted that the move came at a time of increased budgetary pressures on local authorities and as such questioned whether Mr Huhne's announcement would force the hand of councils into developing their own plants.

He said: “With the need to substantially increase our renewable energy capacity, freeing up local authorities to sell electricity to the grid is a positive step. However, given the budgetary pressures that local authorities are facing, what we don't know is whether this move will persuade any or many to develop their own energy from waste facilities.”

“Soften the blow”

Echoing his sentiments, Julia Barrett, chair of waste panel at the Association of Directors for Economic, Environment, Planning and Transport (ADEPT), said: “It is not a silver bullet and it doesn't matter whether we are talking about solar panels or AD, as we have got to raise capital for the infrastructure.

Ms Barrett did state that the proposal would “lessen the payback time” but councils would still need capital funding to cover any developments undertaken by councils. She said: “This softens the blow in terms of planning development but the economic downturn has been a big blow to developing infrastructure.”

Respected waste and recycling commentator Andrew Craig told letsrecycle.com that the proposal could lead to more councils working together to develop facilities. Mr Craig added that these partnerships could be funded through avenues such as prudential borrowing.

Mr Craig, who is also waste development officer at regional development body Tees Valley Unlimited, said: “I think that the legislation regarding electricity that was previously in place was outdated. These issues are becoming increasingly relevant and it will enable local authorities to do a number of things that would have been more difficult to do than before.”

The Local Authority Recycling Advisory Committee, of whom Mr Craig is also a principal policy officer, declined to comment on the issue.

Expertise

But, while the option has been seen as potentially giving councils greater autonomy over waste treatment infrastructure development, some industry bodies have said that the private sector is better placed to deal with the issue of selling renewable electricity.

A spokesman for the ESA – which represents waste management, recycling and environmental companies – told letsrecycle.com: “ESA notes that many local authorities already benefit indirectly from energy from waste revenues both through offsetting reductions in the unitary charge they face for their waste services and also through revenue sharing agreements reached with their contractors.

“The private sector has the appropriate skill-set for managing electricity price risk as part of energy from waste projects and it is wholly appropriate that this is outsourced by local authorities through partnerships with waste management operators.”

The ESA also expressed doubt that the revenues from waste-generated electricity would have a “significant impact” on Council Tax bills, as suggested by Mr Huhne, and stressed that private sector companies were better positioned to cater for the sale of renewable energy.

Plans

A spokesman for the Department for Energy and Climate Change confirmed to letsrecycle.com that Mr Huhne intended to repeal the legislation by the end of the year. And, he said this could be carried out using secondary legislation. This means it would not require an Act of Parliament, and as such could be introduced more quickly than if it had to follow this route.

The 1976 Local Government (Miscellaneous Provisions) Act was amended in 1989 by the advent of the Electricity Act to prohibit councils from selling renewable electricity to the grid. The restriction was put in place to galvanise the privatisation of the electricity sector.