With the success of our article giving an overview of the community energy sector, we decided to devote a series of features to the community energy sector in the UK. The sector was recently described to me by one community energy group as a ‘coiled spring’, full of passionate people with lots of experience of developing projects, which just needs the right support to really take off. So what are the obstacles currently impeding this potential growth?
At the AGM of local community energy group SE24 which I attended recently, Community Energy London chair Syed Ahmed revealed that his group believed that London had the capacity to reach 1GW of community energy capacity by 2030. Yet the sector is currently lagging far behind this.
Community Energy England’s State of the Sector 2022 report makes clear the potential growth of the community energy sector, but also how far behind we are in achieving this.
The closure of the Feed in Tariff system for funding community energy projects has contributed to stalling the growth of the sector, yet the government does not seem minded to propose a different way of funding what it apparently agrees is a good idea.
The regulations that govern the market arrangements for energy production in the UK are tailored for a situation where there are a small number of big power plants connecting to the national grid. Community energy projects could help create local energy grids to supply people and institutions in the vicinity of the projects. Yet at the moment, they cannot operate as energy suppliers on their own, even if some community energy groups now manage more than 10MW of solar deployment.
Advocacy group Power for People have helped draft, and are campaigning for, the Local Electricity Bill, which would “guarantee small energy generators a stable tariff for selling their energy based on current market rates” and “establish a local energy supply mechanism to enable community renewable generation schemes to sell directly to local people”.
The group says that “If you want to buy your electricity from local renewable sources, such as the local school or sports hall that have solar panels on their roofs, you cannot. We all buy our electricity from a utility company that sources it from anything connected to the National Grid.”
“This means that a community with local renewable generation, e.g. housing estates with solar panels or a local wind farm – cannot sell the energy they generate directly to local people, but must sell it to a utility company who sells it on to customers.”
Power for People’s 2021 report on community energy projects also says that “The current financial, technical and operational challenges involved in supplying energy put initial supply costs at over £1 million – an insurmountable amount for the majority of community energy groups.”
Andy O’Brien from Bristol Energy Cooperative, says: ”Some big energy companies are already helping community energy groups sell their energy locally. Younity (a joint venture between Octopus and MidCounties Coop) is a good example. If the Power for People proposals became law all the big suppliers would have to offer something similar.”
In 2011, a small group of passionate activists with little experience – but no shortage of commitment – founded Bristol Energy Cooperative.
— Bristol Energy Coop (@briznrg) June 13, 2023
12 years later, we’ve raised £8.5M & number 1,500 members!
To celebrate #CEF2023 and our 9th Share Offer, we thought we’d tell our story. pic.twitter.com/S4EorcZ2pj
Ultimately, the energy produced by community energy groups will need to use the local distribution networks to reach customers, and the DNOs will need to be reimbursed for that somehow. What the government seems to be worried about with reforms to allow community energy groups to expand is placing some of the cost on DNOs.
O’Brien also noted that even if the bill did become law, the electricity from the community energy projects still wouldn’t be going directly to local households: “It would have to go onto the wider electricity network first then be distributed back out to people’s homes. The distribution network operators charge to maintain this network, and this cost is about a quarter of a typical energy bill.”
But he felt this shouldn’t block the Power to People bill: “We keep hearing the government is worried about community energy groups having an unfair advantage if they were to pay only a proportion of these distribution costs. Meanwhile the government is allowing the big fossil fuel suppliers to claim over 90% tax relief on their energy windfall tax contributions if they plough that money into developing new oil and gas projects. Even though they know we can’t even afford to burn all our existing fossil fuel reserves if we’re to meet the Paris Agreement target of keeping the global temperature increase below 1.5C. This approach isn’t just hypocritical, it’s madness bordering on the criminal.”
Power for People have also been lobbying to include some of the text of the Local Electricity Bill in the Energy Bill. “Clauses 272 and 273 [of the Energy Bill] are based on the Local Electricity Bill, that we authored, and would permit community schemes to sell their clean power locally,” the group says. These clauses have significant cross-party support, with many MPs speaking in favour of them at the Bill’s second reading.
Yet unfortunately, the government whipped their MPs to vote to remove these clauses, with no alternative arrangements in place.
SNP MP Alan Brown recently asked in parliament “What are their proposals for facilitating community energy generation and providing the certainty of price that groups and companies need to be able to move forward? The minister must be aware that the smart energy guarantee does not deliver at present and, as I say, there has been no growth in community energy schemes in six years.”
Government Minister for the Department for Energy Security and Net Zero (DESNZ), Andrew Bowie said he believed that while “community energy projects can have real benefits for the communities in which they are based, which is why so many members supported the private Member’s Bill on the issue… the government and I do not believe that every consumer should have to bear the cost of such projects. That does not seem a fair way to fund them.”
However, in a response to a parliamentary question this week, minister Bowie said that “we are proactively working with parliamentarians and the community energy sector to discuss whether further support from the government for the sector is needed, and if so, what might be feasible.”
Thank you @BenPBradshaw for asking the Government what plans they have to support the development of #communityenergy projects during Open Questions on Tuesday.
— Power for People (@Power4PeopleUK) July 6, 2023
Read the Ministers answer below👇https://t.co/JGHxBlyPvM#EnergyBill #Power4PeopleUK #Renewables #CoalMines
“The government believe it is more beneficial to the community energy sector for the government to continue our approach to help local authorities and community energy groups to work together to develop funding for projects across the net zero agenda, with funding from existing sources such as UK growth funding schemes. […] We continue to look at what more the government can do to support community energy projects across the United Kingdom, and I will commit to provide an update on the next steps ahead of Report [stage],” Bowie added.
Power for People responded saying that “With the government’s commitment, we look forward to their planned proposition to help community energy groups flourish during Report Stage commencing next week.”
And so community energy companies find themselves the victim of political limbo, with a government that supports them in principle but is reluctant to legislate in a material way to support them. The UK’s renewable energy sector is crying out for a government which is committed to its development, has a concrete plan for achieving it, and isn’t constantly distracted by infighting and scandal.
We can create a new idea of Britain as a global renewable energy superpower if we have the right legislative and financial incentives to get our whole economy working on achieving the goals of Net Zero. Doing so will make us stronger, richer, and more energy secure. It’s a no brainer, if only there was a government with the political capital and legislative drive to make it happen.