To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment his Department has made of the potential merits of opening up the sale of locally produced renewable electricity.

The current licensing framework, which Ofgem operate and enforce, already allows electricity generators to apply for a licence to sell energy to consumers. A supplier licence allows the licensee to supply electricity to domestic and non-domestic premises, or non-domestic premises only. It also bestows upon them certain obligations towards consumers through standard licence conditions (SLC) and also charges to be passed onto consumers, such as network costs and the cost of Government policies. In addition, the licensee is required to maintain, become party to, or comply with the industry codes that underpin the wholesale and retail markets.

Nonetheless, Ofgem recognises that a one size fits all licensing framework may be too prescriptive for some business models and introduced a Licence Lite which allows aspiring suppliers or distributed energy generators to apply for a supply licence and receive a direction which relieves them from the obligation in SLC 11.2 – compliance with industry codes. In addition, Ofgem have introduced a regulatory sandbox in which innovators can try new products and business models.

Government and Ofgem are reviewing the licensing framework in light of changing business models and our commitment to reach Net Zero. We want to ensure that the regulatory regime continues to protect consumers and is flexible in response to a changing energy system.