Burning with passion: A new movement of energy co-operatives to lead the way

Reducing energy consumption in order to cut carbon emissions – thereby mitigating climate change – is one of the major political, social and economic challenges of our age....

Reducing energy consumption in order to cut carbon emissions – thereby mitigating climate change – is one of the major political, social and economic challenges of our age.

Creating a system that persuades people to invest in energy efficiency in their own homes is a big part of the problem. The collapse of the Energy Saving Co-operative in January proves the point. Problems nationally with the Green Deal underline this.

It is an international issue, too – the domestic political crisis in the Ukraine is mostly about the country’s relationships with Russia and the European Union, but behind this lies the cost of energy. Ukraine has consumed too much energy, for too long – and now the cost is prohibitive, requiring either lower-cost sources of energy, or else a massive programme of energy conservation measures to upgrade hundreds of thousands of homes that are badly energy-inefficient.

But whether we are talking about Ukraine, the Green Deal or the Energy Saving Co-operative, the challenge is the same. Over the long run for most older, unimproved, properties, it is worth investing now to achieve a substantial return on capital. But how many households consider the return on capital in the same way that a major corporation does? Come to that, how many households are confident that they will stay in their homes long enough to achieve that return on capital? Energy conservation measures seldom achieve even a pound-for-pound improvement in the valuation of a domestic property.

It is an even bigger problem for rented properties. Private landlords have next to no incentive to make properties more energy-efficient, when it is tenants who pay the heating bills. Meanwhile, tenants locked into six-month tenancies will not make even medium-term investments in energy conservation. Only social landlords are likely to commit to energy conservation measures.

Consequently, while energy conservation is the best way to reduce carbon emissions, market dynamics work against the necessary steps being taken. This is a serious problem across much of the world. (It is different – it should be noted – in those countries that can benefit from geothermal energy. I am just back from Iceland, where energy costs are supremely low through the substantial adoption of geothermal heating of space and water – making spending on energy conservation unnecessary.)

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The focus, therefore, of commercial interventions in the energy market in the UK is most appropriately going to be on lower-cost, renewable energy sources, rather than energy conservation. This helps to explain a range of initiatives under way at present, involving community share fundraising for community benefit societies and co-operatives.

One of the most impressive of these is the Green Fox Community Energy Co-operative in Leicestershire. Green Fox is involved in raising awareness and promoting the use of renewable energy systems. One of its founders is Ben Dodd, who has just been announced as a winner in the Working in Social Enterprise awards in Leicestershire.

“I won the award for the most innovative funding; in recognition of raising the share capital for the John Cleveland College Community Woodheat Co-operative,” says Ben.

This was the UK’s first community share offer for a biomass project in a school. The objective was to raise £1m, but actually generated £572,000 from 195 investor members, which was sufficient to install one wood-burning boiler at the school, to replace old, inefficient, expensive and high carbon-emitting oil-burning boilers. It had been hoped that the share offer would be accepted under the Enterprise Investment Scheme – which provides important tax incentives. While this was not approved in time, it is hoped that similar projects will be accepted in the future following the success of the Herefordshire-based Woolhope Woodheat biomass community share issue in gaining EIS approval. Instead, a projected 9% return on capital attracted investors to the John Cleveland scheme. The project was back by three organisations committed to sustainable energy use – the others being Transition Leicester and Sharenergy.

Ben explains: “All three organisations are driven by the desire to reduce the impact we have on the environment and are committed to finding solutions that involve the local community. We’re taking a responsible attitude to tackling climate change and helping the government meet its targets for renewable heat generation.

“The college is currently heated by oil and spends £150,000 per year on heating bills. The woodchip boiler will save over £30,000 per year, which is funding that can be ploughed back into teaching, as well as over 250 tonnes of carbon dioxide a year. The project will support the local wood-fuel economy, with fuel sourced from the new National Forest just 12 miles away. This will help support jobs in the area for 20 years – the lifetime of the project. It will also be used by the Educational Funding Agency as a template for other schools in the UK – so we’re revolutionising the way schools get their energy and reducing their dependency on fossil fuels.”

Despite falling short on the fundraising, progress is good, says Ben. “We are currently installing the 800kW biomass boiler at the college, which will be providing sustainable heat to the college in October. Green Fox Co-operative is presently working on eight other potential community share offers – working with local authorities, businesses, charities, churches and schools – over a range of technologies, which are all in different stages of development. I am providing business advice to these organisations on a regular basis.

“The co-operative is committed to, and is actively looking at, ways in which to scale up its operation within Leicester and Leicestershire and has some ambitious plans for community ownership of energy within the city and county.”

Jon Halle, director of Sharenergy, praises the work of Green Fox and John Cleveland College. He says: “They have been pioneers in a model for rural heat which started with Woolhope Woodheat and is now being taken up by a number of other initiatives. We are working with a rural college and community centre, some volunteer-run swimming pools and an ambitious village district heating scheme and hope to see community heat one day have the same impact as in continental Europe.”

These are examples of an excitingly large movement of community benefit societies and co-operatives that are making community shares issues for renewable energy projects. According to the Community Shares Marketplace, www.shares.coop, there are 52 community share issues currently on offer. (The list is not comprehensive and other community shares issues are currently on offer.) Of those 52, almost a third – 15 – are energy projects. These range from wind turbines, to hydro, to solar panel installations.

Sadly, it looks as if the business model to improve energy conservation needs to be redesigned. On the other hand, the system for generating renewable energy through community co-operatives is showing enormous promise.

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