Over the years there have been many grass-roots community energy projects in the UK and elsewhere, often with an emphasis on local ownership. This provides an economic reward and incentive for investing in local projects and the opportunity for direct local control as well as wider local economic, social and environmental benefits. Local ownership has also helped to avoid opposition at the local level to wind farms elsewhere, as is evident from Denmark, where most wind projects are locally-owned and usually welcomed and, indeed, sought after. As the Danes say, “your own pigs don’t smell”.
There are, of course, a range of factors shaping how easy it is to move to local ownership, including the availability of suitable support schemes and local orientations. Although there are many constraints, there are also opportunities, and across the EU there are many community energy projects.
Some of these involve local ownership. In addition to the wind co-ops in Denmark, nearly 40% of German renewable capacity is now locally owned, some by household domestic photovoltaic (PV) “prosumers”, some by local co-ops, with many hundreds of village and town-based schemes in place. Some see this as prefiguring a new form of decentralized socio-economic power, with local social entrepreneurship challenging the existing energy market system. Certainly, in some countries, local ownership and self-generation mean that the existing power utilities are losing control of some parts of their market and local ownership clearly opens up a wide range of technical, social and political issues.
Community capacity
The situation in the UK, however, is not quite so dramatic. There is maybe nearly 4 GW of FiT-backed small, privately-owned “prosumer” PV. But in terms of community ownership, although local energy projects have involved a lot of people in local activism and networking — 48,000 according to a recent “State of the Sector” report — in all, there is only around 249 MW of locally-owned/community project capacity so far.
After the FIT
What’s more, the prognosis for the future is mixed. The second edition of the “State of the Sector” review by Community Energy England and Community Energy Wales notes that, while there was 168 MW of locally-owned project capacity in England, Wales and Northern Ireland, only one new community organization was constituted in 2017, with 30 fewer successful projects and 31% less generation capacity installed or acquired than in 2016. The cuts to the Feed-In Tariff (FiT) were a major problem.
The UK government has only made limited commitment to local projects, following the publication of DECC’s Community Energy Strategy report in 2104. The situation in Scotland is better, given its more supportive government, with 666 MW of local power in place. Following the early attainment of the Scottish Government’s 500 MW target for community and locally owned energy in 2017, Scotland, which has a Community & Renewables Energy Scheme (CARES), set an increased target of 1 GW by 2020. And it seems to be well on the way to reaching that. Although only 81 MW of the 666 MW of local power capacity in place so far was community-owned, it did represent a 12% increase in community-owned renewables capacity between 2016 and 2017 across more than 500 separate installations.
With ideas for smart-grid demand management in development, it could be that local energy projects will at long last come into their own
Dave Elliott
However, while CARES has clearly helped in Scotland, the Feed-Tariff has been a key element in all of this, and with that cut back and soon to go entirely, the prognosis does not look good. The State of the Sector review noted that: “At present it seems likely that the slowdown in the sector will continue into 2018. Despite ongoing innovation, the greater risks and hurdles associated with such projects mean that the number of financially viable projects in 2017 has been low. Communities are calling for better support for renewable energy projects, as well as reduced barriers to project development. Critically, clearer and more supportive government strategy is required, with greater support at the regional and local levels from local authorities.”
External support
The point is that, while self-help is important, there is also a need for external assistance. The State of the Sector review said, “improved policy support must be offered throughout the sector to improve project margins and viability and realize the benefits of local low-carbon projects. Whether through financial interventions — including reviewed subsidies, investment incentives, innovative support and early stage funding — or through greater engagement with the community energy sector (e.g. local authority partnerships), the public sector must play a central role in enabling community energy. Improved strategies and support will allow communities to continue to develop their low-carbon ideas to the benefit of local people and areas, whether through traditional routes or by establishing more innovative paths towards low-carbon community development”.
Nevertheless, looking to the future, the sector review concluded on a hopeful note: “An increasing focus on new business models, including behind-the-meter renewables, direct or local energy supply and a more collaborative approach to community energy, is driving forward a new agenda in the community energy sector”. That might include branching out from power generation via PV solar, which has been the main focus so far. There have also been 1.9 MW of local heat-supply projects and many energy efficiency/demand management projects. With ideas for smart-grid demand management in development, it could be that local energy projects will at long last come into their own. That’s what seems to be happening in some places in Germany, with attempts to move into distribution as well as generation, in some cases via municipal schemes.
In the UK context, some local councils have been exploring local power project options, developing out of the pioneering schemes in place in Nottingham and Bristol and that idea is part of the Labour party’s proposals for “public power”, with municipal projects running alongside community energy co-operatives. The prescription of local cooperative/community ownership does assume there would be demand for this form of involvement. That may not be the case. Most people may be happy just to buy whatever power is offered. Certainly, few people, wherever they lived, have in the past shown much interest in where their energy came from. However, issues relating to the costs, as well as the health and environmental impacts of power generation, as currently organized, have led to political pressures for change, with co-operatives and local ownership, along with other forms of democratic control, being one approach.
The loss of the FiT may make it harder for local projects of any kind to get going but, as I noted in my last post, the government is now proposing a “Smart Export Guarantee” as a replacement for the FiT export tariff, creating a local market for excess electricity. That might help community energy projects. But it’s still some way off, and not everyone will welcome the replacement of the FiT with a competitive market. The proposed new system is based on the power utilities, who run the trades and set the market prices, not on “peer to peer” transactions between prosumers, which some see as a potentially more progressive way ahead, possibly expanded to include community groups.
