Why isn’t community energy playing a bigger part in the UK’s energy system?

community energy1.jpgIf you passed Norwood School in Lambeth last month, you may have seen an unusual sight: a group of teenagers on the roof. Far from misbehaving, the students were taking part in Repowering Lambeth’s Schools, a community energy project installing solar panels with a total of 264 kWp capacity on five schools and a library in the London Borough of Lambeth. As well as earning the school more money, students and the local area benefit from a community fund and solar panel making workshops.

The rise of community energy projects, like this one, is one of the most exciting developments in the UK energy sector. As well as their low carbon credentials, they have the potential to offer big economic and social benefits as the income they earn can be captured and retained within the community. For the grid and energy consumers, community energy can provide a host of services and benefits, including flexibility, demand management, avoided grid reinforcement costs and cheaper bills.

What is community energy?
According to Community Energy England, community energy is an organisational body made up of members of a community, involved in energy generation, storage, efficiency or demand reduction, that work to benefit a specific group. It is largely run by Community Benefit Societies (BenComs), co-operatives, or Community Interest Companies (CICs). Energy generation focuses on using renewable energy technologies such as wind and solar power, but low carbon transport initiatives, such as electric vehicles, can also be included in the definition.

The UK saw a boom in community energy between 2010 and 2015, due to government support and incentives, such as feed-in tariffs (FiTs). The 2015 Community Energy Strategy Update, commissioned by the then Secretary of State Ed Davey, outlined the ways the government was embedding community energy into policy and regulation. These included financial frameworks and ambitions to create long term growth, innovation and an evidence base, aiming to overcome barriers and ensure the success of projects.

Projects are in decline just as the system is changing
However, since 2015, these government initiatives have slipped by the wayside or have ceased completely. FiTs will be phased out fully by 31 March 2019 for new applications, resulting in a marked drop-off in new community energy projects. Consequently, only one new community energy group was founded in 2017, compared to over 30 in both 2014 and 2015.

At the same time, the UK energy sector is changing. In our 2017 report People Power, we envisaged that, by the 2020s, falling prices and advances in technology would mean small scale energy, such as community energy, would be more economically viable for both businesses and individuals. The government has acknowledged this in its recent call for evidence for small scale low carbon generation.

Changes to the energy system in the UK in future can be summarised under three ‘d’s. It will be:

  • decentralised: non-linear energy networks will emerge, with more peer-to-peer trading;
  • digitalised: smart technology will allow for flexible systems and will manage supply and demand;
  • distributed: as well as large scale power stations, energy will be generated more and more by local or regional energy systems, located near the customer base.

Community energy complements these features well, reinforcing the need to embed it into future energy policy.

A fourth ‘d’, democratised, reflects the operational nature of community energy projects. As well as benefiting from energy generation, members of co-operative and community benefit societies can actively participate in the running of the projects in which they are invested. As highlighted in Community Energy England’s 2018 State of the sector report, over 60 per cent of community energy groups function this way, illustrating “a continued preference for mission led, democratic, social enterprise structures”.

Ownership of energy will become a major focal point in the coming years, and regulators must ensure fairness so community groups are not left out in future policy architecture, which has until now favoured the dominant Big Six energy companies.

Rebooting community energy in the UK  
Despite strong engagement where it is happening, community energy faces significant barriers to uptake and innovation. Its inherent value, not only in economic terms but also in its potential social impact, is still overlooked in the broader ambitions for energy system development in the UK.

Green Alliance’s new project, Community Energy 2.0, in partnership with the Friends Provident Foundation, aims to address this and revisit the narrative around community energy. We will be emphasising its value to a low carbon energy system in the UK, particularly looking at how it can offer financial and social benefits for clean, secure and affordable energy strategies. And we will use the evidence we gather to input into government policy processes.

Community energy fits well with the vision of a flexible, modern and sustainable UK energy system where small scale and large scale energy systems can work together in harmony, and support the shift to a low carbon economy. While the UK aims for ambitious carbon targets, community energy projects could flourish and become real contenders in the UK’s future energy system.

With this project, we will be working to make sure the value of this potential is fully acknowledged and promoted by the government. In years to come, as the energy market evolves, community energy groups will need the support of intelligent regulation, providing an equitable playing field for them to participate and thrive in the UK’s future energy system.

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