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The Government must radically overhaul the ‘closed shop’ energy market by unleashing the community sector to enable more people across the country to play their part in developing a clean energy future, says a new think-tank report.
The publication warns that failure to recognise and back the UK’s huge community energy potential will have serious consequences on the Government’s climate change, emissions and fuel poverty targets. Community generation in Germany contributes one-quarter of all renewable energy - in the UK it’s less than one per cent.
The report, Re-energising our Communities: Transforming the energy market through local energy production, which is backed by Friends of the Earth, is being launched in response to the Government's feed-in tariff consultation, which saw industry groups and green charities unite against proposals to reform renewable energy subsidies that threatened tens of thousands of jobs.
The report sets out a series of recommendations designed to open up the energy market which is dominated by the Big Six energy companies who currently produce and supply a staggering 99 per cent of the UK’s energy needs.
It says that the Government must “broker in the social, environmental and economic benefits of community energy” by putting local communities at the heart of the development of new projects and ensuring that they enjoy more of the economic benefits from sustainable energy production, which could culminate in communities owning their own local grid network.
It also points to successful schemes in the UK including the Isle of Eigg Heritage Trust off the west coast of Scotland, Torrs Hydro Ltd in New Mills, Sheffield and Fintry Renewable Energy Enterprise in Stirling, which is it says could be replicated across the UK.
Ed Mayo, ResPublica Fellow and Director General of Co-operatives UK, said: "The beauty of co-operatively-owned, community-level renewable energy is that it solves the twin issues of social acceptance and economic efficiency.
"This report is right to call for intelligent nudges to make it easier for people to come together, reversing decades of energy policies limited to 'big is beautiful'. Everyone benefits if we can draw community energy production into the centre of the new energy economy."
Friends of the Earth’s Executive Director, Andy Atkins added: “Boosting community energy schemes will enable more cash-strapped households to free themselves from the power of the Big Six and earn money from clean British energy.
“It’s time for Ministers to really give power to the people.”
The report’s authors, Caroline Julian, the Senior Researcher at ResPublica, and Julian Dobson, a Research Associate at the think tank, acknowledge the Government’s desire to reform current market and increase community production, but argue the current approach to market reform is piecemeal and doomed to fail.
“There is currently no coherent mechanism for applying this aspiration within the energy sector. Instead DECC relies on ad-hoc announcements of support for community renewable scheme.”
And the report’s author’s are equally critical of the regulator.
“Ofgem’s approach to regulation largely ignores the social and economic potential of the community energy. Its review of the retail energy market recommended simplifying tariffs to make pricing clearer to consumers, and proposed that suppliers should auction off 20% of power generation in order to help new suppliers enter the market. This will not help community organisations, which are not in a position to buy bulk supplies, and will not change the type of energy that is generated.”
The report says that local people should be empowered to move beyond the status of passive users and consumers and instead become producers and distributors of their own energy supplies.
It concludes by arguing that to take community energy projects to a sustainable level, a new hybrid company structure should be introduced and accordingly incentivised.
Phillip Blond, Director of ResPublica, added: “Current politics places an unhealthy focus on either grandiose schemes that squeeze out small scale production, or an obsession with regulation with no pro-active solutions. To address the 'closed shop' energy market in any productive sense, Government must unleash community production and help small groups to either partner with the big energy providers, or make it easier for them to access finance to develop local solutions.
“The Government can rectify the mistakes of the past by recognising the potential of community-owned and led energy production and their ability to contribute towards a more efficient and effective market.”
Key recommendations of the paper include:
• The Government’s approach to promoting ‘community energy’ must extend to ensuring that communities are part of wider energy policy formation.
• DECC should recognise the need for a co-ordinated support programme for community energy. This could build upon existing coalitions, such as the Low Carbon Communities Network, or the recently established ‘coalition for community energy’ spearheaded by Co-operatives UK, Friends of the Earth, Forum for the Future and others.
• DECC and DCLG should produce guidance on how the new ‘rights’ within the Localism Act 2011 could be used to support community energy.
• DECC, the Cabinet Office and Treasury should conduct a cross-departmental review to examine the potential for community energy projects to significantly contribute toward achieving national renewable targets, reductions in fuel poverty and local and national energy market reform.
• Communities should have the right or entitlement to own their own local grid. Through upcoming reforms to the electricity market, communities should be entitled to bid for the ownership of their local grid by contractually partnering with energy suppliers.
• Local authorities should work with communities, local asset holders and the energy industry (private developers and suppliers) to highlight underused assets and space that could be utilised for community energy projects.
• DECC should work with DCLG to develop models of co-operation between local authorities and community energy projects, businesses, developers and private suppliers by using tools such as neighbourhood planning and community and area based budgets.
• Commissioning authorities should explore incentives and obligations on larger businesses and new developer entrants into the community to receive a certain portion of energy supply from community production.
• A new hybrid community-private company structure should be introduced, with accompanying tax incentives offered by the Treasury.
• The Treasury should extend the Community Interest Tax Relief, which could be made more effective for a variety of socially important schemes, including the promotion of direct investment in community energy.
Shann Turnbull, Sydney, Australia around 3 months ago