Along with the controversial announcements for the future of the large-scale solar industry this week, DECC put out plans for consultation into new ways to support community energy projects. The consultation looks at developing two actions in relation to renewable electricity generation under the feed-in tariff scheme: first, the possibility of doubling the maximum size of community energy projects from five to 10MW, with a further 5MW available for commercial partners (as long as community ownership is maintained) and second, the option to combine FiTs with grants.
I sincerely hope there are enough people in the wider community with the right experience to engage with this particular consultation process. The response forms are extremely detailed and I encourage anyone with experience in renewable energy generation to engage with the process. Given the government’s habit of tinkering with the formulae and sowing confusion in the renewables industry for political gain, we desperately need to get this right from the outset.
A well-known community solar development came unstuck recently when they realised that the deal agreed with an inexperienced solar developer to have the ownership of one of the inverters as their ‘community buy-in’ was completely impossible under OFGEM regulations. As a result the project was undeliverable. Community groups desperately need skilled assistance to run this process, so it’s comforting to read in the DECC statement that “separate generation units and separate grid connections” would be required for joint ventures. However, before we all get too excited, this step would require complicated changes in DECC/OFGEM/DNO rules and regulations, and I could do a lengthy piece on that very difficult process.
As things stand at the moment, the onus is on renewable energy developers to ensure communities benefit from schemes in their area and if there isn’t sufficient progress over the next year or so, the government may legislate to require this. I think we’re past the point of requiring legislation now – in our experience, most renewable energy developers are willing to engage with communities and are going to increasing lengths to do so. But here too, their understanding of the consequences of their choices is limited.
We met with a developer recently who is planning a medium sized project and has engaged a relationship management company to arrange several community events to discuss the different technical and environmental issues often raised by a community. They were perfectly clear about the level of community benefit on offer, and enthusiastically suggested ways of distributing it, including an annual payment to those living in properties closest to the development, described as an ‘energy rebate’, which would be deducted from the overall community benefit payment. They were unclear who would receive the remainder of the cash, how it would be used, or even if it would be secure over the lifetime of the project.
My heart sank. The four key aims of the Community Energy strategy are clear – we need to produce more clean energy, reduce our consumption, manage both of these things through smart technology and energy efficiency measures, and ensure the energy we purchase is clean and affordable, both for ourselves AND for the planet. How does a straightforward cash payment to a community address any one of these aims? Cheaper energy and cash payments might actually encourage people to be more careless about their energy consumption. My response to their suggestion was not entirely positive.
It’s a mistake to think that the future will be like the past. Those days are gone and we need radical, well-planned, all-embracing change. The DECC proposals could be a golden opportunity for the future of community energy in this country and we urgently need to bring people up-to-speed. We find that many people, including local authorities and some developers, haven’t yet got their heads round the difference between ‘community benefit’ and ‘community buy-in’. If we don’t help communities, local authorities and developers to address these complex issues, there is a danger that this golden opportunity will be lost, not because developers are unwilling to contribute, or communities are apathetic, but because a system that relies on community take-up cannot work if we leave it to local authorities and developers to manage the process.
For a community, the prospect of taking a two-thirds share of a 15MW renewable energy project is a big challenge. At a current build price of £900,000 per MW, the numbers alone are staggering. The legal costs will be six figures. If the project is left to local authorities to manage it may either never happen (their legal departments are notoriously risk averse) or it will become a local political football. With only a one-third share, the developer is likely to have his profits squeezed and may be forced to find ways to cut corners on labour and the quality of raw materials. There will be local authorities with dollar signs in their eyes, parish councillors and volunteers caught like rabbits in the headlights, and expensive, low-quality energy projects running the risk of going bust at any moment, with everyone desperately trying to complete the project and throw the power switch before the next round of FiT cuts. The only people to benefit will be the funders and the lawyers. A gloomy outlook? Possibly, but in my experience if you don’t plan for the worse, it will surely happen.
There is a recommendation in the DECC strategy for ‘intermediary organisations’ to assist communities to manage these commercial, financial, and legal relationships. “Little in the way of intermediary platforms to broker connections between communities and potential partners currently exist.”
Community Heat & Power Ltd is an intermediary organisation. We sit between developers and communities to address the needs of both, so we exist between a rock and a hard place. Funding to develop the initial relationships is non-existent, leading to perceived conflicts of interest if our funding comes from the developer, so in order to maintain our independence, we fund the first public meeting ourselves. If we could ask for anything to help communities at this stage, it would be some central funding to help us get the message out there.
We have plenty to learn from the experience of communities in Scotland. Their government has encouraged greater consistency across Scotland in order to maximise the returns to communities from renewable energy developments and the associated voluntary packages, recognizing that ‘no one size fits all’ when it comes to community benefits and that decisions on the details are best led locally, which in turn creates unique outcomes. (The LEADER process in action again.)
The Scottish government has also said, “We know that the processes and administration of community benefits are evolving, and will be shaped by the local context, but we do think there is scope to encourage models that allow communities to invest strategically in order to maximise local gains.” Building on their experience, we need to develop our own good practice principles as a starting point for developers and communities in understanding the complex nature of community benefits from renewable energy developments, and appropriate ways of approaching and delivering those benefits.