This week’s UK Solar Summit, hosted by our publisher Solar Media, has been celebrating community energy projects, with a panel titled ‘How is the Community Energy Sector in the UK Growing?’. The sector may still be small in comparison to the commercial solar industry, but the potential is great, and the industry can play an important part in helping bring the energy transition into peoples’ daily lives.
Industry body Community Energy England says that, “Community energy refers to the delivery of community led renewable energy, energy demand reduction and energy supply projects, whether wholly owned and/or controlled by communities or through partnership with commercial or public sector partners”.
According to Community Energy England’s 2022 annual report, community energy projects in the UK had a total installed capacity of 331 MW in 2021, with 495 different groups helping to save £3.35m from people’s energy bills. Additionally, £21.5m of investment was raised for new projects across the UK and £15m of community energy income was spent locally in 2021.
Setting up Community Energy Groups
Across the UK there are hundreds of public buildings which could be sites for rooftop solar panels. Groups like SE24, who I will look at in a coming edition of this series, work with schools in South London to install solar panels which save them money, while investors in the community energy share offer receive a modest return on their capital outlay.
Community energy groups are usually set up as a Community Benefit Society, which “serve the broader interests of the community, in contrast to co-operative societies that serve the interests of members,” according to Cooperatives UK. Most of the work is done by volunteers who are trained to do assessments of buildings to make sure that any potential project is financially viable.
Alan Jones from SE24 says setting up a community energy group isn’t hard. It needs to be an incorporated legal entity with a bank account and a set of company rules registered with the FCA, and Coops UK can help with setting up rules using standard templates. This status is necessary to enable the group to apply for grants, enter into contracts, agree power purchase agreements, submit annual accounts, make VAT returns and pay corporation tax.
“Once the society is set up then it can start approaching sites for potential solar PV, retro LED and other types of decarbonisation projects. This takes time and patience. With the ending of Feed-In Tariffs, smaller projects are often not financially viable to take through the community energy route. We generally look for solar projects of over 50kWp. The best sites are those where the host can use most of the PV generation and exports are small, as grid export rates are generally low,” Jones says.
“Once the business case has been established and the site is prepared to contract, then it is usual to agree a licence or lease to use the roof space for 15-20 years. This is followed by a structural survey of the roof, an array layout design, DNO application, procuring an installer, installation, commissioning, and then putting in place an O&M contract to monitor performance 24/7 and provide maintenance,” Jones added.
Emma Bridge, chief executive of Community Energy England, chairs a panel on community energy at UK Solar Summit with Connie Muir (community renewables manager at Younity & Founder of Croydon Community Energy), Amandine Tetot (head of project finance, Triodos Bank UK), Matthew Clayton (managing director, Thrive Renewables) and Nadia Smith, (director, Community Energy London, and South East London Community Energy).
Regulatory and financing barriers
The governing Conservative Party is careful not to alienate some of its core rural supporters who often see solar and wind farms as unsightly, but if there was a strategy for expanding smaller scale renewable projects, placing solar panels on urban rooftops would be an ideal solution to the problem of NIMBYism. Yet there is intransigence from the government on policy in the area.
The importance of engaging communities, decentralising the electricity grid and encouraging community energy projects have been referred to in a number of government policy papers and by government bodies, but regulatory barriers and future uncertainty are preventing growth.
“Community Energy was mentioned in the Energy White Paper and Net Zero Strategy but no plan was offered, no recognition given of its key importance to achieving net zero and no ‘practical support measures’ were provided as recommended by the Environmental Audit Committee,” Community Energy England says.
Advocacy group Power for People was set up to lobby for changes which would incentivise community energy projects by allowing them to sell power to local people, not just back to the grid. The nonprofit group has helped write and campaign for the Local Electricity Bill, being proposed in Parliament by Conservative MP David Johnston. The next article in this series will explore these regulatory issues in more depth.
Financing for community energy projects also remains a barrier, though many London councils have a carbon offset fund, and groups like SE24 say that they are able to raise share funds largely from individual investors. There have also been some accelerator funds set up like the Mayor of London’s Local Energy Accelerator (LEA), a £6m programme providing expertise and support to organisations to develop clean and locally generated energy projects. A Local Low Carbon Accelerator (LLCA) project was also set up by Lloyds Bank, Octopus, Shell and National Grid in November 2022.
But community energy groups say that piecemeal support isn’t enough to expand the sector dramatically, and the national government should also invest more in funding projects.
The potential of community energy
Community solar projects also have the potential to be an important outreach tool, showing school children first hand how their school is saving money and the environment. Energy production in the past has been remote from people’s lives, resulting in a widespread lack of public understanding of the importance and reality of the economics and politics of energy production.
Having lots of small, community owned energy projects brings energy production into public visibility, creates grid flexibility and security from a distributed system, and can help increase public support for Net Zero goals by showing people tangible local benefits. There is also a reduction in conversion and transmission loss, when energy is converted from one form to another and transmitted over long distances.
The Energy and Climate Change Committee says that “Greater use of local energy would also enhance the security and efficiency of the energy system as a whole by increasing the diversity of generating capacity available and reducing the energy lost in transmission or wasted as unused heat.”
Community energy projects often also have a fund from surplus revenues which is invested back into the local community, with groups like SE24 and CREW Energy also offering community financial support and advice to people struggling with the cost of living.
Gareth Simkins, senior communications advisor at Solar Energy UK, and who is also director of Croydon Community Energy, told me that “Community Energy is and will continue to be a vital aspect of decarbonising the public realm, whether it is schools, church halls, or even solar farms. With the advent of the Solar Taskforce, the solar industry now has a direct line into government policy, which I am sure will benefit community energy groups and draw the government’s attention to its enormous potential.”
Community energy has the potential to contribute greatly to the UK’s ability to meet its Net Zero targets, but it needs legislation which will actively incentivise it and funding for projects. Community energy can help schools, NHS trusts or other institutions decarbonise and use their roof space to save them money and contribute to our energy security.
In the government’s rush to concentrate on big renewable projects, we sometimes forget that it will take the efforts of people in diverse communities across the UK to kick our economy’s addiction to fossil fuels. The fight for Net Zero needs to happen at local levels, as well as national ones.