MPs ask government to support community energy sector

The Environmental Audit Select Committee says the rules should be changed to let energy co-ops sell direct to their communities

MPs on the Environmental Audit Select Committee have written to energy minister Kwasi Kwarteng urging him to bring in a range of measures to support energy co-ops, such as allowing them sell power direct to their communities.

The letter, signed by committee chair Philip Dunne – the Conservative MP for Ludlow, who declared his support for Ludlow Hydro Co-op – highlighted a number of barriers to the sector, which have long been a bone of contention to the UK co-op movement.

These include the closure of Feed-in Tariff applications in 2019, the end
of both the Urban Community Energy Fund in 2016 and Non-Domestic RHI at the end of March this year, and the exclusion of community energy from Social Investment Tax Relief since 2017.

The current regulatory regime for energy distribution acts is also a hampering the growth of community energy, added Mr Dunne, with high grid connection costs and access charges which “do not account for the wider decarbonisation benefits, including education and social support, that the projects bring to their communities compared to commercial renewable projects”.

Related: Community energy sector meets to discuss life after feed-in tarrifs?

There are also issues around planning barriers and inconsistent levels of local authority support, he said.

MPs on the committee had held consultations across the community energy sector, said Mr Dunne. “We heard that there is no lack of local skills or motivation to address the climate emergency on a community level, but that there is no longer a UK strategy to harness the potential of communities.

“Devolved policy is variable, and evidence suggested that Scotland and Wales have much stronger policy frameworks supporting community energy than England and Northern Ireland.”

And he highlighted benefits brought by community energy. “In many projects, profits generated from community energy groups are invested into community benefit funds which, across the UK, support wider environmental and biodiversity improvements.

Committee chair Philip Dunne has written to energy minister Kwasi Kwarteng

“Projects create local jobs and boost the local economies of communities, address fuel poverty and encourage a just transition to net zero across all social groups, by empowering communities to be involved in their own energy. We heard that the same benefits will not be achieved if energy decarbonisation is only achieved via commercial, large-scale renewable projects.

“Due to the urgency of the climate crisis and the vital roles communities will have to play in reaching net zero, it is essential that a timely solution to support the long-term growth of community energy across the UK is found.”

He added: “Given the level of behaviour change the Climate Change Committee has said is required to meet net zero, it is disappointing that your recent Energy White Paper only mentions community energy once and local energy only twice.

“We recommend that the forthcoming Net Zero Strategy emphasises the importance of community energy, and that BEIS [the Department for Business, Energy & Industrial Strategy] develops, with the support of the devolved administrations, a complementary UK-wide community energy strategy, to include practical support measures to harness the potential of community energy.”

The MPs also want BEIS to bring in a minimum Smart Export Guarantee floor price. The letter adds: “We recommend the reinstatement of the Urban Community Energy Fund, or a combined fund with the Rural Community Energy Fund when it ends in 2022; reinstating Social Investment Tax Relief for investments in community energy; and a replacement non-domestic Renewable Heat Incentive, designed to support community projects.”

And they want the government to scrap regulatory barriers which prevent community energy projects from selling power to their local communities.

“We recommend taking guidance from countries with widespread community energy development, including the Netherlands, on how to
successfully harness the potential of community energy,” writes Mr Dunne. “Ofgem should improve its support of community-led renewable energy projects.

“It should acknowledge the vital benefits beyond energy decarbonisation, not provided by commercial projects, that community energy brings, for example by minimising connection charges for community projects that address grid and/or climate problems.

“We recommend Ofgem provides guidance to Distribution Network Operators on how to incorporate community energy into the energy network.”

In terms of local support, the MPs found that this can vary from one council to another – but found evidence that local authority backing can help secure funding, provide business support, and legal toolkits.

“However, despite the climate emergencies declared by over 70% of local authorities and the vital role community energy can play in supporting decarbonisation targets, we heard that there is inconsistency in the support provided by local authorities to community energy projects,” the letter days.

“This is due to a lack of financial resources and expertise, fragmented
policy (including the lack of a national strategy) and variable knowledge about the importance of community energy in developing local energy plans.”

The committee says the government should help local authorities develop local area energy plans to harness the potential of community energy, and improve levels of participation by changing National Planning Policy to allow to prioritisation of community owned energy developments.

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