Councils can now sell green energy back to the national grid, as a restriction banning the practise will be repealed next week.
On Monday, energy and climate secretary Chris Huhne announced the ban will end on 18 August. The government estimates the change in law could generate up to £100m a year in income for local authorities.
"This is a vital step to making community renewable projects commercially viable, to bring in long-term income to benefit local areas, and to secure local acceptance for low carbon energy projects," Huhne said in a statement.
Prior to the announcement from the government, councils could currently benefit from the associated feed-in tariff, which sees people paid for using renewable energy as part of their electricity consumption, for projects smaller than 5mW. However, they could not sell excess renewable electricity — other than that generated from combined heat and power — back into the national grid.
The restriction was a 1989 amendment to the Local Government (Miscellaneous Provisions) Act of 1976. It was put in place during electricity privatisation under Thatcher's government and was intended to incentivise the shift of the electricity industry into the private sector.
According to the government, local authorities across England and Wales generated 600,000 kilowatt hours (kW h) from on-site wind or solar power and 33,800,000 kW h from biomass projects in the 2008-2009 financial year. Because each kilowatt hour is worth 3p under the export tariff, local authorities could theoretically make £1m from export-tariff benefits alone.
"This move will allow councils to take a central role in greening the nation," the Renewable Energy Association said in a statement responding to the restriction's lift. "Government needs to remove barriers across the board, so that councils, the public sector and businesses are encouraged to install renewables."