The strategy for community energy pioneers

Following the release of the government’s Community Energy Strategy, Co-operative News dissects and summarises the report …

Definition of community energy

Community energy includes projects or initiatives that focus on reducing energy use, managing energy better, generating energy or purchasing energy. This includes communities of place and communities of interest. These projects or initiatives shared an emphasis on community ownership, leadership or control where the community benefits.

In the initial call for evidence, many said an important characteristic of ‘community energy’ was the sharing of benefits and a focus on social outcomes, rather than only financial benefit for shareholders. Others noted the importance of including activities combining several strands of community energy carried out alongside a wider interest in sustainability. It was also felt that the focus of ‘community energy’ should be wider than specific projects, ideally supporting ongoing energy-related activities.

The current scale of community energy in the UK

A systematic assessment for the strategy found at least 5,000 community energy groups active in the UK since 2008. Groups vary in size, although many have a small core of dedicated volunteers who organise activities.

Projects are geographically dispersed, and further research found the south west of England and Scotland home to a larger proportion of groups than would be expected based on population size.

More community energy activities occur per person in rural areas. Work by Seyfang found that 65% of the respondents to their survey were rurally located, and of the Local Energy Assessment Fund (LEAF) projects funded by DECC, 54% were rurally located. In Community Energy in the UK, 41% of groups were found to be in rural areas, which have an 18% share of the population.

Community energy in the UK is currently focused largely on renewable electricity generation, with the most prevalent technologies being solar PV and onshore wind. At least 60MW of community-owned renewable electricity generation capacity is currently in operation. While this remains a small fraction of the UK’s installed renewable electricity generation capacity, the growth potential for the sector is potentially significant when both wholly and partly community-owned renewable installations are considered.

Community energy projects have also begun to develop new approaches to renewable heat, reducing energy use, purchasing energy and managing demand.

Community energy internationally

Community energy – particularly renewable electricity generation – is often reported to play a prominent role in the energy systems of other European countries, such as Germany, Denmark and Austria. There are also examples of community energy providing alternative models of energy provision and distribution across the world, from North America to Nepal. In some of these countries, the definition of ‘community energy’ used is broader and includes locally-owned energy of all types, for example by municipal authorities or landowners.

Unlocking the potential

Community energy may be a relatively small sector today, but it is growing rapidly and has significant scope for further growth, making a real contribution to meeting the UK’s need for clean, secure and affordable energy and helping keep energy bills down.

The government says its vision starts from the position that every community that wants to form an energy group or take forward an energy project should be able to do so, regardless of background or location. Government will back these pioneers, working to dismantle unnecessary barriers, and helping create partnerships to deliver important energy and climate change objectives.

To help drive this growth in community energy, the government will work with the community energy sector to set a clear level of ambition for community electricity generation. In Scotland, the government has already set a target of 500MW of renewables to be locally-owned or community owned by 2020.

Some of the issues faced by community energy are common across all four strands of generate, reduce, manage and purchase. These are: Helping communities build strong partnerships with local authorities, businesses and others; building community capability and capacity, to ensure communities have the skills, knowledge and advice they need to develop successful projects; supporting communities to build up evidence of their achievements so that they can demonstrate the impact of community energy activity.

What’s next – who can help energy pioneers?

• Regulators that processes community energy groups need to ensure that processes are as simple as possible for the sector.

• Local Authorities must back community energy projects in their areas. Their support can make a big difference to the success of community energy projects by providing them with support at key stages in their development.

• Developers of energy infrastructure need to involve communities more. This can involve offering a share of ownership of wind turbines or a solar array.

• Investment is required. The government acknowledges the many successful community share offers, which should continue, but other sources of investment are needed, and finance providers need to consider the benefits of supporting community energy.

International case study

In Germany, Energiewende – the transformation from fossil fuels and nuclear power to renewable energy – builds on a tradition of local energy activism. Municipal energy companies and citizens’ energy co-operatives are providing a sizeable contribution to this change in Germany’s energy system.

By the end of 2010, ‘community’ energy made up 40% of Germany’s total renewable energy capacity, largely through private citizens investing in energy cooperatives. A further 11% was owned by farmers and 14% by project developers with the ‘Big Four’ utility companies – E.ON, RWE, EnBW and Vattenfall – only controlling a 13.5% share of the market. Community and shared ownership of wind turbines and increasingly solar PV installations are the most common forms.

There has also been a move towards community ownership and management of local electricity grids. Municipal energy companies already control more than half of the low voltage distribution system operators in the country and some energy cooperatives are now running their own local grids too. Over the five years to 2012, approximately 150 distribution grids have been taken over in this way with some 450 new energy co-operatives formed to generate and manage energy across the country.

The success of community energy in Germany can be attributed to a number of factors. These include: a well-established environmental and alternative energy movement and a general tradition of forming co-operatives and other associations to achieve change at a local level; a high level of leadership and support from municipalities; and macro-level institutional factors such as the feed-in tariff system, first introduced in 1991, and the state owned bank, the KfW, that has been running for over 60 years and is able to provide loan capital at preferential rates.