Community energy is, I hope, an idea whose time has come. I’ve worked on it for a long time: a scary seven years ago, I published this report, Grid 2.0, which argued that the energy system needed to be reshaped to put people at the centre, rather than placing them as consumers at the end of a long chain that starts from distant power stations.
At the time, we didn’t have much of an audience. But of late, it’s become politically fashionable to call for radical reform of the energy market. There are all sorts of reasons why it might be a good idea to reduce the market share, power and influence of the biggest players. But, although both sides of the House profess a desire to open up the energy system, until now, there’s been precious little detail about how that might be done.
I confess a bit of a bias, as I have helped DECC to develop their Community Energy Strategy, launched today – as part of DECC’s Community Energy Contact Group, which forms part of my work for Co-operatives UK. But I do think that the Strategy is a significant step toward creating a more diverse energy system, through increasing the role of communities in buying, selling, generating and saving energy. It’s the product of more than a year’s worth of discussions with the community energy sector – not a group that DECC has engaged with much at all in the past.
Up until now, it’s been difficult, risky and expensive to get community renewables projects off the ground, as anyone who has battled with a local scheme will tell you. The system just isn’t designed for small players, and the complications involved in planning, permitting, grid connection and finance have proved insurmountable to many projects. Not surprising, then, that less than one per cent of renewables capacity is community-owned, compared to around a quarter in Denmark.
Today’s strategy isn’t perfect, but it makes a start on tackling the trickiest issues facing community schemes. There’s some straightforward support: a government-backed advice service and loan scheme for communities. But the more interesting changes are those which, if successful, could challenge energy market orthodoxy.
First, government is stating that it wants commercial renewables developers to offer local communities an ownership share in local projects. In Denmark, by law, developers have to offer 20% of the scheme for local people to buy into. DECC hasn’t gone that far, but there’s a hint that it will legislate if the industry doesn’t co-operate. So expect to see a rush of interest, particularly from wind developers, in all things community.
Second, DECC is asking Ofgem to work out whether communities could actually supply energy directly to consumers, rather than selling wholesale to the grid. There’s nothing definite here yet, but if this idea takes off, it could provide a radical challenge to the current Big Six supply model.
Third, DECC has set up a series of working groups to try to deal with the bureaucratic hurdles surrounding community projects – including planning, permitting issues for hydro projects, and grid connection. All of these can stop a project in its tracks. It is also looking into Green Investment Bank support for community projects, which could help with tricky financing issues.
There are also a series of measures to support community heat, energy saving and switching intiatives, which to date have been less well developed than renewables.
As you can see from this list, there’s still a lot of ifs and maybes. Today’s Strategy may yet turn out to be a damp squib, if the initial enthusiasm gets lost in a quagmire of working groups and taskforces.
There’s lots of reasons why enthusiasm will remain high, though, in government and beyond. Poll after poll shows that community energy is astonishingly popular. Schemes often have strong social benefits too, combatting fuel poverty and providing an income stream for local projects. Local schemes help build awareness of climate change, and support for renewables. Most importantly, they provide a genuine, workable alternative to our broken energy market. Ultimately, buying power (or insulation) from a local, community-owned project is so much more satisfying than switching from one large supplier to another.