In 2014, the government set out a strategy for a million homes to be powered by community energy schemes by 2020, according to the Community Energy Manifesto produced by a coalition of 20 community energy projects and affiliated groups. “Four years on, that vision has been abandoned with only 67,000 homes powered by community energy,” the manifesto says. “The scrapping of the strategy and the reduction in feed-in tariffs means community energy groups are now struggling to develop viable projects.”
As I noted in an earlier post, local energy projects are having problems, but the positive vision remains clear. As Community Energy England says, “community energy schemes break down barriers, showing local people how renewable energy can work and benefit everyone.” The Manifesto calls on the government to account for the wider economic and social value of community-scale projects in its review of energy market design, and wants new pilot programmes and capacity-building to help scale it all up.
Even if the big utilities can be kept at bay, will many community groups want to participate?
A linked Green Alliance report, Community Energy 2.0, looks at specific ways ahead, offering something of a new approach. “The UK’s energy transition, spurred by regulation, is moving fast and disrupting the existing centralised energy system,” it says. “New economic value in this emerging order will lie in providing clean, flexible, cheap and local energy to households and businesses.” Community projects can help. “As trusted intermediaries between consumers and the energy system, they can ensure consumers get maximum value from the transition,” the report says. “By targeting energy programmes, particularly energy efficiency, at the right households, they can protect the poor and the vulnerable from being left behind. By aggregating domestic energy assets and providing ancillary services to grid operators, they can generate new revenue to benefit local communities. And, as active owners and partners of renewable energy generation, they can develop new business models to accelerate the decarbonisation of the UK economy.”
Local microgrid trading
The Green Alliance is big on innovative smart grid systems, using blockchain cyber-ledger systems and the like to allow local peer-to-peer (P2P) microgrid trading to flourish. It notes that “the peer to peer market in Germany, enabled by the high uptake of rooftop solar, is estimated at £4 billion a year”. Microgrids are platforms where consumers pay local prosumers to generate their energy. This “stimulates the adoption of decentralised renewables and contributes to faster decarbonisation,” the alliance says. “Community-scale microgrids benefit the local economy as trading profits stay in the community instead of transferring to large utilities.”
The Green Alliance report looks at the Brooklyn Microgrid (BMG) blockchain-based system that facilitates data transfer and energy trading alongside a physical grid of wires that connects the homes participating in the trade. “The microgrid remains connected to the larger grid to ensure reliability but can decouple during times of system stress,” it says. “In the BMG, trades occur within short time windows with consumers and prosumers bidding into the market with their maximum and minimum buying and selling prices. In effect, this model is a miniature version of the wider energy market.”
Community energy: a local solution?
Following this approach, “in the future, the UK’s homes will be able to function as integrated units, actively participating in the energy system and responding to real time price signals,” the report says. It also looks at what’s happening in that direction. For example, SmartKlub’s energy balancing service offers to optimize community-level distributed energy systems, including some seeking to link up electric vehicle use, batteries and rooftop solar. The Alliance also notes that Energise Barnsley has won the Ofgem Sandbox competition to establish whether it is possible to develop a tariff or trading system to allow households without solar PV to purchase exported solar energy generated by their neighbours. It says the Northern Powergrid could act as a balance and checking mechanism for such a P2P retail energy platform.
There are issues with using blockchain bitcoin-type systems, however. They are energy hungry and there’s much general debate about the viability of blockchain. However some variants may use less energy, and clearly there is a lot of enthusiasm.
Nevertheless, this all means a new, as yet untried, approach. And not just in relation to the integration technology. In terms of communities, the Green Alliance vision for 2030 is very different from the grass roots voluntary DIY tradition, with a lot of emphasis on business plans and power-trading market relations. The vision looks forward to a time when “most businesses and homes across Britain own or manage some form of distributed generation like energy storage, electric vehicles, smart meters or demand controllers, and are actively participating in new markets and services to help to balance a highly electrified and flexible energy system” and “distributed generation assets are shared between community energy operators and grid operators”. In such a system, “Ofgem should regulate system operators to include community projects in their flexibility and capacity procurement strategies”.
A new market
Basically, the Green Alliance seems to want to create a new market, just as energy minister Claire Perry has proposed in her ‘Smart Export Guarantee’ (SEG) replacement for the export tariff part of the now abolished Feed-In Tariff. The main difference seems to be that the Green Alliance wants to ensure full access by community groups for direct P2P trading. Fair enough. As it is currently proposed, SEG will be managed by (and probably for) the power system operators. But, even if the big utilities can be kept at bay, will many community groups want to participate? There will be individual prosumers keen to sell surplus power and play with market prices, but is that what community groups should and can do well? Are we to become a nation of small entrepreneurs, buying and selling in aggregated P2P micro-markets?
Maybe, but there are problems with relying on markets to link individual and community interests — they are not always the same. And some groups can corner and control markets. That’s arguably, in part, how we got in this high price, non-optimum technology mess to start with — the market power of the energy utilities let them dominate, setting prices and defining energy paths that best suited their economic interests, with governments usually just holding the ring, maintaining market order and imposing some limits.
In theory, community groups can improve on that, reflecting their own values, with hopefully a local democracy bonus. But they still have to operate in a market defined by others, and also have to compete with other groups, including those with different values. It’s the problem faced by co-ops in any market economy. They must play by the same rules, even if they may be able to play a little differently. Of course, if the bulk of the economy becomes socialized, in theory the problems lessen, at least within that economy. Although there will still be global markets to face.
These big intractable political issues have been around for a while. What may have changed is that, arguably, the new smart energy technology is more suited to local control. Will that make decentralized operation, and more democratic management, easier? Let’s hope so.
Will it happen?
The technology is certainly going that way. The Green Alliance says that today, 30% of the UK’s energy capacity is decentralised and connected at the distribution level and much of this has been installed over the past five years. “National Grid, in a recent future scenario, estimated that 65% of all energy capacity could be distributed by 2050,” it adds. “According to a recent study, 11 million households could be producing or storing their own energy in the UK by 2030, compared to just over a million today.”
100% renewable electricity is viable
The alliance also said that consumer support for renewable energy was growing, with 85% of the UK public backing it, and 80% agreeing that renewable energy should provide direct benefit to their local communities. “Consumer trust in the Big Six energy suppliers is at an all-time low, with more now choosing alternative, smaller suppliers,” it says. “This trend is also causing a shift, by some, towards using more decentralised technologies, offering the promise of greater democratic control of energy, led by consumers. Community energy has been an important part of this shift and, since 2008, the sector has grown considerably. The motivations are varied, ranging from addressing climate change to tackling local fuel poverty and providing more affordable energy. As energy technologies get smaller and can be more consumer driven, these motivations are increasing.”
We will see. It would certainly be a positive alternative to simply railing against energy price increases. Several local test projects are going ahead, some using blockchain. And some may be heading off into new territory — powering trains.
