The energy sector has changed over the past few years, but a lot more needs to be done to support renewable energy co-ops, according Ramsey Dunning, general manager of Co-operative Energy.
Speaking at the Community Energy Conference at the National Exhibition Centre in Birmingham on 13 September, Mr Dunning highlighted that the supply from the “big six” energy companies has decreased from 99.8% in 2009 to 93.4% today.
Set up by Midcounties Co-operative in 2011, Co-operative Energy has been supportive of community energy and pledged from the outset that the carbon content of its electricity would be less than half the national average. This target was exceeded and the organisation is currently sourcing 68% of electricity from renewable sources.
Communities and co-operatives have a lot in common, thinks Mr Dunning, as they both involve people working together with a common interest. “Co-ops and communities are almost synonyms,” he said. This is in part why
Co-operative Energy has launched a “User Chooser” facility that enables customers to choose where their electricity is sourced from at no extra cost. Mr Dunning, who lives near Oxford, gets his electricity from Westmill Co-operative in Oxfordshire.
Also speaking at the conference was Will Dawson, head of energy at Forum for the Future, who said the organisation was working on engaging with political players. In 2011, Forum for the Future convened the Community Energy Coalition (CEC), which now includes 30 influential civil society organisations and energy practitioners.
Mr Dawson said the CEC had played an important role in the development of the UK’s first Community Energy Strategy, launched by the Department of Energy and Climate Change in January this year.
One of the initiatives that came out of the strategy was the creation of the Shared Ownership Taskforce. It includes representatives from the renewables industry and the community energy sector who are working to increase shared ownership of new commercial onshore renewables developments.
The taskforce’s aim is that by 2015, the norm would be for all commercial developers to offer the opportunity of a shared ownership element to communities.
Challenges and opportunities
Community energy projects continue to face various barriers. Although the Coalition government tabled an amendment to increase the capacity threshold for projects under the fixed feed-in tariff scheme to 10MW, this is now in jeopardy. Proposed amendments to the scheme require approval from the European Commission before they can be implemented and before any aid can be awarded.
Another challenge for community energy initiatives is the fact that the Financial Conduct Authority has blocked the registration of a number of renewable energy co-operative applications on the grounds that members would not participate enough in these co-operatives.
Community energy projects are also faced with the prospect of having certain tax reliefs removed. Enterprise Investment Scheme (EIS) tax breaks could no longer be available for companies receiving subsidies such as the renewables obligation certificate (ROC) or the renewable heat incentive (RHI).
Sustainability adviser, Paul Monaghan, believes the removal of EIS tax relief would have an enormous impact on community energy schemes. An investor questionnaire revealed that without these tax reliefs, 37% of investors would have invested less, while 38% would not have invested at all.
Under the provisions of the Budget 2014, the Social Investment Tax Relief (SITR) is also being made incompatible with the Feed-in Tariff.
In July the government announced two parallel consultations on venture capital and social enterprise tax relief.
The deadline for response to the consultations has now passed, but Paul Monaghan has worked with Co-operatives UK to make views known.
In the consultation response, Co-operatives UK said: “For community energy co-operatives to thrive and multiply, and so bring more people in as partners in the UK energy transition, they need a stable predictable and well calibrated tax relief that supports large scale community investment.”
It added that a survey of community investors suggest that the absence of EIS would have resulted in a 59% loss in community investment.
On the positive side, Will Dawson added that the Green investment Bank was likely to be able to finance onshore wind and hydro schemes, replacing the gap left by the Co-operative Bank.
“There is finance for community energy projects, it just needs to be found,” he said, adding that a rural community energy fund would also be launched.
Working with developers
The community energy sector has more to gain by working closely with developers, thinks Merlin Hyman of Regen SW. He argued that developers should be seen as allies, not as a threat. Mr Hyman, who was part of the Shared Ownership Taskforce, said many developers were unsure how to work with communities and were concerned this would take too much time and affect their ability to meet deadlines.
According to Mr Dawson, developers are not incentivised enough to get communities’ support for the projects. This process has to force kick the developers into community engagement, not just pay a PR team to do it for them, he said.
European context
“For every one of your problems, there is a solution somewhere abroad,” Siward Zomer told conference delegates. Mr Zomer is a board member of REScoop, the European federation of groups of citizens and co-operatives for renewable energy.
The federation was officially set up in 2013 with support from the European Commission’s Intelligent Energy Europe Program, to represent citizens working on renewable energy and research best practices.
REScoop does not just include co-ops, but also groups of people developing community energy projects. All REScoop members sign a charter to say they adhere to the co-operative principles.
There are currently over 2,300 renewable energy co-operatives in Europe. A recent report by REScoop describes 15 best practice examples across Europe and puts forward best practice principles, one of which is the willingness to learn from others. Mr Zomer encouraged delegates to work together and pool their knowledge and resources, giving the example of Som Energia in Spain, which copied the organisational model and business cases of Ecopower in Eeklo, Belgium.
Until recently, Som Energia received no subsidies from the government, which froze all feed-in tariffs to renewable energy projects in 2012. However, with help from volunteers and advice from Ecopower they managed to cut costs and attract more members. Their financing model is based on direct investment from members.
Joshua Roberts, lawyer with Client Earth, researches barriers to and legal solutions for community energy projects. Speaking at the conference, he highlighted that the EU’s Renewable Energy Directive does not explicitly talk about community energy.
The European Commission’s white paper on the 2030 framework for climate and energy policies includes only one fully binding goal to cut emissions by 40% by 2030 as well as weaker EU-wide target on green energy, which would not oblige individual nations to act.
Mr Roberts thinks member states should also take the opportunity to gain wider recognition of the role of community energy in helping to meet EU’s climate change and energy objectives.
Delegates also discussed the difficulties in obtaining a grid connection faced by community energy schemes.
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