The Department of Energy and Climate Change (DECC) will from August 18 allow authorities to sell energy that they produce back to the grid, ending a ban that has been in place since 1976.

Energy and Climate Change Secretary, Chris Huhne, said that the change would free up councils to accelerate the roll out of community-scale renewable energy projects. He said: "For too long, Whitehall's dogmatic reliance on 'big' energy has stood in the way of the vast potential role of local authorities in the UK’s green energy revolution."

The lifting of the ban to sell energy allows councils to sell surplus energy generated by their onsite electricity projects back to the grid, providing them with an additional source of revenue. The move is the latest step in the government's plan to promote greater uptake of small and community-scale renewable energy projects.

The lifting of the ban to sell energy should make it easier for councils to overturn applications for mid-scale wind farms and other renewable energy projects

Councils began explaining, soon after the announcement, how they might benefit from the reversal in policy. Derby is due to complete a hydroelectric plant at Longbridge with a peak power output of 230Kw by the end of next year and also wants to install photovoltaic panels on two council buildings. Meanwhile, Hampshire already has three energy from waste plants in place that process unrecyclable waste and generates enough energy each year to power 50,000 homes.

However, the lifting of the ban to sell energy comes at a time when many within the UK's renewable energy industry are frustrated at changes to planning rules that should make it easier for councils to overturn applications for mid-scale wind farms and other renewable energy projects. The CBI has also issued a major report today warning that the government's failure to provide greater detail on its proposed low carbon energy policies is blocking billions of pounds of renewable energy investment.

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