Is community energy on the edge of a new era?
Imagine a future where you have control over energy. You can make it, store it and sell it from your home, feeding the profits back into your local area. Actually, some people don’t have to imagine it. They’re already doing it and this model could spread, because change is coming.
Climate minister Claire Perry wrote recently that the future of energy is local. Her claim is underpinned by rapid evolution in energy technologies, making them cheaper and bringing them closer to people’s homes and neighbourhoods. From rooftop and community solar to electric vehicles and heat pumps, the UK’s low carbon transition is driving change. One study estimates that 11 million households in the country could be producing or storing energy by 2030, compared to under a million today. This will be a major disruption to the way we produce and sell energy.
Such a future raises two critical questions: who should benefit from the economic value of these local distributed technologies and what should the role of government policy be? Our new report Community Energy 2.0 looks at these questions and makes a case for community energy groups to be at the forefront of local ownership of the energy system, for a number of reasons.
They offer more than just energy
According to one study, people are three times more likely to trust a community energy company to give them a fair deal than one of the existing big suppliers. This gives them a competitive edge. As the sector grows, it is likely that it will cost community groups less to attract customers. And being embedded locally means they are well placed to reach and help fuel poor customers and those at risk of being left behind by the digitisation of energy.
Community energy groups deliver more than just energy, they can enrich their communities too, returning profits locally, creating jobs and supporting social projects. In 2017, England, Wales and Northern Ireland raised a collective total of £1.1 million in community benefit funding. While in Scotland, over the past decade, an estimated £50 million has been pumped back into communities by local energy projects.
New markets for community produced energy
The impending end to feed-in tariffs, which have been paying people for the renewable electricity they generate, has made several community scale projects unviable. But, as technology costs drop and new local energy markets emerge, there are new opportunities for community groups to provide services to the energy system. Beyond generation, this could include services like flexibility, demand response (to modify energy consumption at peak times), local supply, improving energy efficiency and education. This would be a significant departure from a subsidy driven regime to a more challenging one driven largely by market signals.
Community groups have limited ability, in both regulatory and capacity terms, to navigate these potentially complex markets. But, as more and more value is placed on providing these additional services, with help, local groups can evolve, playing to their strengths, to become a serious contender in the energy system of the future.
What’s the role of government policy?
The government is consulting right now on the design of the future energy system. It is vital that the voices of community energy groups are heard in this process and that the value they can offer is fully considered.
We think there are several ways the government could help:
1 Providing new routes to market
Community energy groups need a level playing field with value placed on the benefits they can bring not just the energy system but the wider economy. In the same way large generators have access to energy supply contracts (contracts for difference), community groups should also have ring-fenced access, through subsidy-free contracts
2 Stimulating local innovation
Community energy groups should be helped to take part in local energy trials, particularly in relation to their ability to provide services like flexibility, demand management and peer to peer trading. Their role in helping to avoid network costs should also be explored in trials.
3. Local ownership
The government should permit the community benefits of energy projects to have material weight in planning applications. And community onshore wind projects should be treated the same as other renewable technologies in the English planning system.
Claire Perry has stated that the “government would continue to offer our full support to communities who want to develop their own local energy schemes”. A first step in achieving this would be to transpose into UK law, the latest EU regulations that set out a clear function for community energy groups, calling on member states to draw up national frameworks to support them.
Today, twenty community energy and affiliated groups across the UK, including Green Alliance, have launched a manifesto calling on the government to recognise their role in meeting the UK’s aim for a low carbon energy system.
Community energy can no longer be dismissed as something operating at the fringes of the energy system. In the future low carbon energy system, and with help from the government, it could soon be on its way into the mainstream.
[Photo of Banister House Solar in Hackney, part of Repowering London]