Can Community Energy Go Mainstream in the UK?
- Sep 11, 2013 3:00 pm GMTJul 7, 2018 1:03 am GMT
- 453 views
Can community energy move from being ‘soft and cuddly’ to a major force within Britain’s energy system? The belief that it can was the driver behind the UK’s first Community Energy Fortnight, which finished last weekend and aims to engage and inspire people about the benefits of community energy. Senior politicians are on board too. Earlier this year, Secretary of State for Energy Ed Davey said he wants to see “a community energy revolution”, and Greg Barker has described his vision of the “big six” becoming the “big sixty thousand”.
The origins of this movement in the UK can be traced back to the winter of 1997, when two wind turbines started spinning on Harlock Hill in Cumbria. In this pioneering moment, the UK’s first renewable energy co-op had just proven it was possible to harness hundreds of local people to raise the investment needed to turn such a project into reality. Since then, a number of similar projects have been built across the country, from Dunvegan on the Isle of Skye to Westmill in Oxfordshire, with many coalescing under the banner of Energy4All.
But despite these successes, community energy in the UK remains a niche activity. According to Cooperatives UK, only 0.5% of onshore wind capacity in the UK is owned by cooperatives. Until recently the financial framework for renewables was stacked in favour of utility scale projects and against independents, and even now a number of barriers to community energy remain, such as access to early-stage capital, complex approval processes and a lack of relevant expertise.
Compare this to Germany, where a supportive policy framework over the last decade has resulted in nearly 600 energy cooperatives owning 10% of the country’s onshore wind turbines, and ordinary Germans owning nearly half of all the country’s total renewable capacity.
Why we need community energy
There are many different types of ‘community energy’, from local volunteer groups focussed on energy demand reduction, to larger-scale multi-million pound ventures building new generating infrastructure. However a common theme across these initiatives is the mass participation of ordinary people investing themselves, their time and their money to make a difference and reap the rewards.
And it is through this personal and very often financial connection that community energy delivers one of its greatest potential benefits – deeper and more widespread public support for renewables. Given the politically contested nature of wind power in the UK, alongside local portrayals of ‘big wind’ imposed from above, this is a lesson worth learning.
The distinction between this kind of ‘deep’ involvement and more superficial financial benefit schemes such as community payments is worth highlighting. Whilst the latter may have an important role in delivering local benefits, the evidence from Spain, Germany and Denmark suggests that success is more likely to be driven when benefits are built into the fabric of wind projects, for example through direct financial participation and greater control.
Scaling up community energy
The UK Government’s Community Energy Strategy is due to be published this autumn, and this will certainly be an important moment in determining whether the Government will turn its community energy rhetoric into reality. Its recent proposed legislative amendment to increase the upper threshold for community project participation in the Feed-in-Tariff scheme from 5MW to 10MW is a promising sign that things are headed in the right direction.
But ahead of this, the movement is already rapidly evolving in ways which are already demonstrating its ability to scale up. And whilst community energy is often characterised as an alternative to big developers and utilities, there will also be opportunities for existing large industry players who are willing to adapt and work with communities and other independents.
For example, earlier this year a 4 turbine 10MW community wind farm was opened in Neilston in the central Scottish lowlands. Delivered through a joint venture between a local development trust and a renewable energy developer, the project is one of an increasing number showing how cooperatives are partnering with others to aggregate pools of finance and deliver bigger projects.
An alternative approach is for parts of utility scale projects to be opened up to community investment. This is the approach proposed to EON by the Brighton Energy Cooperative, who are asking for at least one wind turbine in the proposed Rampian offshore wind farm to be available for local ownership.
From ownership to investment
In addition to these developments, new financial innovations are offering additional viable mechanisms for ordinary people to participate in the building of new energy infrastructure. One such mechanism is crowdfunding, which uses the internet to connect thousands of people – both local and those more geographically dispersed – to invest in specific projects of their choosing and benefit from the returns as energy is generated.
Last year £1.4m was raised in this way through the Abundance platform for a 500kW wind turbine at St Briavels in Gloucestershire. And whilst this may be small fry compared to the overall amounts needed to fund the UK’s renewable transition, remember that the sector is growing rapidly. Crowdfunding also offers people the chance to invest debt as well as equity and spread investment across a number of projects, thereby reaching out to those seeking different investment risk profiles. In the future, large amounts of capital could be raised in this way.
Although such models do stretch conventional definitions of ‘community energy’, many people have already made the conceptual leap from ‘communities of place’ to include ‘communities of interest’, and there is now a case to expand our thinking beyond just ownership to include wider forms of community investment too.
Seen in this light, the potential for community energy to scale up in the next decade is clear. A recent report for the Green Investment Bank estimates that 3.5GW of onshore renewable capacity could be delivered by communities in total, but the Community Energy Coalition amongst others have argued that this could be exceeded with the right support in place.
We need community energy now more than ever – to involve people in our changing energy system, to strengthen public support, and to ensure the benefits are spread as widely as possible. It’s time for policy, industry and communities to come together to deliver this objective.