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From next week councils across Britain will be allowed to sell renewable electricity to the national grid in a bid to stimulate local power generation and open up a new source of income for cash strapped local authorities.

In a letter, energy secretary Chris Huhne has lifted the ban preventing councils from selling renewable electricity, which could result in up to 拢100 million a year in income for local authorities across England and Wales.

At present local authorities are able to put any renewable electricity they generate to local use, and to benefit from the associated feed in tariff for projects smaller than 5MW. But they are restricted from selling any excess renewable electricity into the grid - other than that generated from combined heat and power - and also from benefitting from the additional export component of the feed in tariff.

However, Huhne has overturned the law which was put in place at the time of electricity privatisation. He said for too long, Whitehall鈥檚 dogmatic reliance on 鈥渂ig鈥� energy has stood in the way of the vast potential role of local authorities in the UK鈥檚 green energy revolution. 鈥淭his 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.鈥�

At present only 0.01% of electricity in England is generated by local authority-owned renewables, despite the scope that exists to install projects on their land and buildings. In Germany the equivalent figure is 100 times higher.