Julian Jackson finds out how communities are taking control of their own sources of energy
Decc unveiled its community energy strategy at the start of the year. In his foreword, energy and climate change secretary Ed Davey said there was the potential in the UK for community schemes to generate enough electricity for one million homes by 2020. The strategy notes that, as well generating energy, putting communities in control can be more effective in reducing consumption and managing energy demand.
Although Decc confirms that more than 5,000 groups across the UK are already working to transform how their communities are using energy, the country has a very poor track record in this area compared to some others.
In the UK, communities own less than 1% of renewables capacity, whereas in Germany, for example, it is more than 40%. And, in Denmark, the majority of wind turbines are wholly or jointly owned by citizens, communities, landowners and farmers, rather than exclusively owned large energy firms.
The German and Danish experience can be replicated in the UK, but the pioneers of community energy in this country need to be very dedicated to battle the bureaucracy, as well as a tendency for top-down institutions to regard a cooperative, participatory model with suspicion. This has made it a rough ride so far. However, from the brooks of Abergwyngregyn in Wales to the roofs of Brixton in south London, determined people have found ways to make community energy schemes a reality.
Benefits in kind
Baywind was the first community-owned wind project in the UK. It was registered as an Industrial and Provident Society in 1996. This is a form of limited liability company and is often used for cooperatives and community-owned mutual organisations, as it can balance such ownership with the legal protection of limited liability. Baywind owns six wind turbines in Cumbria, having raised around £2 million to purchase the turbines.
The cooperative currently has over 1,300 shareholders, most of whom reside in the north of England. Its governing body is an elected board of nine members; one of these is Baywind’s only full-time staff member. Investors in the scheme have been paid back between 7% and 8.2% interest per annum. Founder and community shareholder Richard Scott says: “When you look up the hill and see the turbines going round, it gives you satisfaction and a feeling of ownership.”
The Decc strategy says independent modelling estimates that community electricity could generate between 0.5GW and 3GW from a mixture of solar PV, onshore wind and hydro projects by the end of the decade. This represents between 2.2% and 14% of the total installed capacity of these technologies, and between 0.3% and 1.4% of the UK’s entire electricity consumption in 2020. The analysis also suggests that beyond 2020, community electricity has the potential to make an even greater contribution.
Above and beyond the potential for community-owned energy schemes to help tackle climate change, Decc has identified several other likely benefits. These include:
Stronger communities: Community energy activity can bring local people together to achieve something for their community and take action on issues that matter to them.
Skills, education and work experience: Community members can benefit from opportunities to learn new skills through involvement in community energy activity; some schemes have specifically engaged young people in work experience or energy and climate change education activities. Community energy projects can build confidence and skills both within the group and more widely.
Financial benefits: In addition to saving money on energy, locally-owned energy can present opportunities to generate income for the community, through feed-in tariffs (FITs) for generation of renewable electricity and renewable heat incentive (RHI) payments for generation of heat; or through part ownership of larger commercial energy developments.
The money
Often, individual investors buy shares in community projects and obtain tax relief via the enterprise investment scheme or the seed enterprise investment scheme. This is the method used to raise capital for the Brixton solar projects run by Repowering London. Chief executive Agamemnon Otero says that Repowering London is more than just installing solar panels. “It is about creating social, financial and environmental returns in the local community,” he explains.
Brixton solar is on its fourth project. The previous three projects put 134.5KW of solar panels on the roofs of council flat-blocks in Brixton estates. After operating costs are deducted, profits resulting from the sale of energy are used to support local energy efficiency initiatives and provide cooperative members with an annual return on their investment. Otero says that Decc’s support was crucial to the project and it is good that Davey has now set up a unit specifically to promote community energy.
Local residents can apply for paid internships, lasting between six and eight months. They receive training about the financial, legal, information technology and technical elements of renewable energy. Young people have been particularly enthusiastic to join, says Otero, but there have also been a number of older people who want to reskill in renewable energy technologies. Initially sceptical, Lambeth council now backs the project, having observed the impressive results. Repowering London sees itself as an umbrella organisation, and is now mentoring and supporting projects in Hackney, Vauxhall and Haringey. Otero is bullishly positive about community energy, but even he admits that it can be a hard road to follow.
The opposite end of the community scale is Abergwyngregyn, a tiny village in Snowdonia national park in Wales. It has a population of around 250 people and contains about 100 properties. Like many similar rural areas, it has suffered the loss of local amenities, including its pub and shops. The Abergwyngregyn Regeneration Company (ARC) was established in order to improve the social and economic wellbeing of residents. Over the past 10 years, it has successfully developed a range of community projects, including the purchase and renovation of an old mill, which now houses a café and community centre.
In 2011, the ARC started the development of a community-managed hydroelectric scheme called the Anafon hydro scheme. This is intended to generate around 275KW from Aber Valley river water. The main funding is being delivered by a commercial lender (see panel, above) and will be paid back over five to 10 years. Planning permission has been granted and the scheme is expected to start construction this year. Another project, the Talybont-on-Usk hydro scheme delivers an annual income of about £25,000 per year and the Anafon project is likely to make a similar return.
Working together
Energy4All is the umbrella organisation that runs Westmill Wind Farm cooperative and Westmill Solar, on an organic farm in the south east of England. Each year, the wind farm produces enough green electricity to power 2,500 homes, avoiding 5,000 tonnes of carbon dioxide emissions. The 5MW solar farm, meanwhile, consists of 20,000 solar panels, which generate enough power for 1,400 homes and prevent 2,000 tonnes of carbon.
The cooperative has 1,650 members. Philip Wolfe is chair of the cooperative’s board and is a pioneer of UK renewable energy. He is the former chief executive of what is now BP Solar and was director general of the Renewable Energy Association from 2003 to 2009. Wolfe comments: “Westmill’s solar park has performed ahead of expectation and we have been able to make our first member interest payment this year as scheduled. We are also making a partial return of capital.”
He is confident that the solar park will continue to operate until the end of the FIT period – another 22 years. Wolfe explains that Westmill Wind Farm set up a local charitable trust called Westmill Sustainable Energy Trust (WeSET), which supports energy efficiency and sustainable energy projects in the local community. Westmill Solar is expected to contribute to WeSET also.
Community-owned projects are able to deliver value for local communities, over and above the revenue provided by electricity generation. Research by Community Energy England reveals that community-owned renewable energy businesses deliver £137 of social investment for every £100 of tax relief given to their members. The question is, as usual, whether the government and policymakers are committed enough to deliver an overall framework as we see in Germany and Denmark, or whether things will amble along with piecemeal developments so that the sector fails to realise its full potential.
Companies and councils come to the aid of community energy
A number of companies and several local authorities are helping communities to realise their ambitions to develop local energy generation. This includes firms in the energy sector, such as Northern Powergrid. It launched a £50,000 community energy seed fund in August, which offers grants of up £10,000 to help get community energy projects off the ground in its licence areas – the North East, Yorkshire and Humber, and parts of north Lincolnshire. The money is available for purchasing expert advice and feasibility studies.
Meanwhile, Ovo Energy published a community energy white paper and launched its platform for community energy in April. The platform provides community projects with access to Ovo expertise, infrastructure and systems. Scottish and Southern Energy (SSE) helped to finance the first projects developed by Bath & West Community Energy. SSE’s £1 million loan is to fund 400kW of solar photovoltaic (PV) installations in up to 12 projects, mainly local schools, in the area.
The Co-operative Group’s community energy challenge was launched in 2012 and seven community groups, including the Abergwyngregyn Regeneration Company (see main text), were selected to receive money from a £1 million pot to set up and run their own renewable energy schemes. Successful schemes are assigned an expert mentor and receive support for project planning, community facilitation and enterprise development, as well as technical assistance.
Lewes-based Harveys Brewery joined forces with OVESCO (the Ouse Valley Energy Services Company) in 2011 to install a 98kW solar PV array on the roof of brewer’s main storage and distribution warehouse in the town. The 544 PV panels will generate 93,000kWh of green electricity each year – enough to save more than 40 tonnes of carbon annually. Community shares funded the project. The John Lewis Partnership, which operates the John Lewis stores and Waitrose supermarkets, is buying energy from SmartestEnergy, the leading purchaser of independently generated electricity in Great Britain. Its suppliers include the Undy Community Turbine, the first wholly community-owned, built, financed and operated wind turbine on the Scottish mainland.
Local authorities providing support for community energy projects include Oxford city council. In June, the council provided the Low Carbon Hub with a loan of £2.3 million to enable the Oxfordshire-based social enterprise to install solar panels on more than 25 schools and businesses in the area. The projects together will generate over 1MW electricity and save
750 tonnes of carbon a year, and are part of a pipeline of community solar and micro hydro energy projects that the hub is developing across the region. Bristol city council provided Bristol Energy Cooperative with initial seed funding through its community energy catalyst fund. The £50,000 “revolving” fund is to help community projects make the transition from a well-thought-through idea to a successful working enterprise, and grew from a recognition that access to finance and expertise are often the main barriers to realising a community energy scheme.
Engineering company Siemens has offered its backing for community energy projects by providing products and services for such initiatives. Its decentralised energy management system has been developed to connect and pool small-scale distributed energy sources so they can be operated as a single “virtual power plant”.
