Community Energy groups call on government to revive abandoned vision for the sector
It was to be at the heart of the renewable energy revolution. Projects owned and operated by the communities in which they were located would make clean energy accessible to millions of people, boosting economic growth, public engagement, and renewables capacity all at the same time. Solar panels on schools and churches and community centres, or wind turbines on the edge of villages, would give everyone a stake in the power they use. There was even the heartwarming story of a community at the heart of a fracking row embracing solar power instead.
The first wave of projects proved hugely popular, as members of the public flocked to invest and developers identified an encouraging new route to market. Millions of homes could one day be provided with power from community-owned wind and solar projects, Ministers said.
That was the vision just five short years ago. It is fair to say things have gone awry in the interim.
Today the government will face fresh calls to come forward with a new community energy strategy, having effectively "abandoned" a 2014 package which aimed to power a million homes through community energy schemes by 2020.
A coalition of 20 community energy projects and affiliated groups will publish a new Community Energy Manifesto, which warns the government's controversial decision to axe the feed-in tariff incentive scheme could prove the final nail in the coffin for the sector. Having previously cut incentives and then denied community energy projects the tax relief that helped make them viable financial propositions, the decision to axe the feed-in tariff altogether risks leaving proposed community energy projects with no clear route to market.
"In 2014, the government set out a strategy for a million homes to be powered by community energy schemes by 2020," the Manifesto states. "Four years on, that vision has been abandoned with only 67,000 homes powered by community energy. The scrapping of the strategy and the reduction in feed-in tariffs means community energy groups are now struggling to develop viable projects."
Struggling is putting it mildly. Since 2015 the number of new community energy schemes has fallen dramatically from 33 in 2015 to just one in 2017, bringing to an end years of steady growth. In 2017 at least 66 community projects are said to have stalled or failed.
The government may insist smaller scale renewables projects should be able to find a route to market as falling renewables costs combine with new flexible grid services and energy storage solutions to make onshore projects financially viable without resort to subsidy. But while a number of pioneering projects are experimenting with such approaches, community projects lack the portfolio approach or appetite for risk that commercial developers can deploy to get new models off the ground. The net result is a market that has largely ground to a halt, despite still high levels of public interest and support.
The manifesto is intended to contribute to government's consultation on the design of the future energy system and as such it puts forward a series of recommendations designed to provide community-owned projects with a route to market, including proposals for 'subsidy free' price contracts for onshore wind and solar projects, 'social impact riders' to encourage businesses to purchase power from community projects, and incentives to encourage grid operators to work with community projects.
It also calls for the government to account for the wider economic and social value of community-scale projects to be considered by the government in its energy market design review, and requests new pilot programmes and capacity building initiatives to help the sector scale up.
Advocates of community energy projects, where the public or local community bodies own some or all of a renewable energy project, argue they could play a major role in the UK's decarbonisation efforts by both accessing new sources of capital, driving economic growth, and engaging people with the renewable energy revolution.
"Community energy businesses will be important players in the management of the smaller, distributed energy technologies that are coming into our homes and neighbourhoods," the manifesto states. "As they are embedded in communities, they are trusted intermediaries who can communicate directly with people around these changes. Community energy groups have brought significant economic benefits to their local areas. In England, in 2017, they raised a collective total of £1.1m in community benefit funding, while in Scotland, over the past decade, an estimated £50m has been pumped back into the community."
The manifesto launch is set to be accompanied by the publication of a new report on the value of the Community Energy sector from think tank Green Alliance. This will run alongside a letter to Energy and Clean Growth Minister Claire Perry from the Friends Provident Foundation and other leading investors, arguing that "community energy has an important role to play as part of a 'just transition' to a decarbonised and more decentralised energy system".
"We welcome the minister's recent statement that "community energy is a key cornerstone of government ambition for transition to a low-carbon, smart energy system" but note that community energy groups are currently struggling to develop viable projects," the letter states.
Emma Bridge, CEO of Community Energy England, said the new manifesto was "a clear set of asks for government, none of which cost the earth but all can help communities do their bit to reduce carbon emissions and help avert climate catastrophe".
"Community energy schemes break down barriers, showing local people how renewable energy can work and benefit everyone, they're an opportunity to practically demonstrate what a green future can look like," she added. "We urge the government to respond to this manifesto and allow everyone to play their part in a decentralised and digitised energy system fit for the future."
Chaitanya Kumar, senior policy adviser at Green Alliance, said that without government action the sector faced an uncertain future. "Community energy is at a crossroads," he said. "The government can either choose to ignore consumer preferences and the community led energy revolution or support it and its clear role in helping to accelerate decarbonisation."
The growing trend for impact investing should provide community energy projects with a ready source of capital if they can only overcome the barriers that are stopping developments getting off the ground. Colin Baines, investment engagement manager at Friends Provident Foundation, which funded the report and organised the impact investor letter, said it remains "very supportive" of community energy due to the environmental, social and local economic value it brings, and the role it can play in a 'just transition'. "However, changes in government policy in recent years have somewhat stacked the system against communities," he added. "We hope the Manifesto can assist government in bringing about a regulatory environment that supports community energy to survive and thrive."
The situation is further complicated by Brexit. The manifesto notes that "recently adopted EU rules have instituted a new role for 'citizens energy communities', allowing them greater participation in emerging local energy markets". But given the current full spectrum confusion about the precise nature of the UK's future relationship with the EU, it remains unclear whether those EU rules will ever make it onto the UK statute book.
The big question is whether the government is willing to make changes to enable the development of smaller scale projects when much of its focus is currently on mobilising investment in major new offshore wind and nuclear projects. Ministers have given notably short shrift to repeated calls from the private sector for the governmenyt to provide a clearer route to market for onshore wind and solar projects. But at the same time they have expressed support for community energy projects in the past and are taking steps to provide a new policy regime for households and businesses that would have previously qualified for the feed-in tariff scheme.
Responding to the new manifesto a government spokesperson said "small-scale low carbon generation is an important part of the evolution of a modern energy system, and the government continues to offer its full support to communities who want to develop their own local energy schemes".
They added that government was providing £15m of funding for feasibility studies, and has funded the establishment of five new regional centres of excellence, to "drive the development, ambition, and scale of local energy projects in partnership with local government". The government is now expected to respond to today's report and letter in due course.
However, the sector remains convinced more action is needed to stop the Community Energy vision, and all it once promised, fading away over the next few years. Can the promise of a million homes being powered by community energy projects be revived? The sector hopes it can, but it is the government's response to its manifesto that will show whether or not Ministers agree.
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