In the space of just a few weeks, an idea that lay on the fringes of the co-operative movement has firmly entered into the mainstream – a community right to buy.
In October, the Labour Party announced proposals that would see an increase in fan participation in the running of football clubs, with a right to buy shares in the event of a club changing ownership.
Then, in November, the renewables industry responded to cajoling from the UK government and launched an initiative to give local communities the opportunity to invest in local renewable energy projects such as onshore wind farms, as well as solar and hydro power. This could be an enormous development for the social economy given that energy projects account for around 60% of the UK’s total infrastructure project pipeline, totalling over £200bn.
Every major political party in the UK is committed to an expansion of community-owned energy – and why shouldn’t they be, given that across Europe there are now hundreds of co-operatives and social enterprises that are delivering clean, low-carbon energy alongside local employment opportunities, community development funds and fuel poverty alleviation?
When politicians laud community energy they usually point to Germany, where nearly half of renewable energy capacity is owned by individuals, community groups and private developers (and this is a country where renewables accounted for a sizeable 31% of electricity generation in the first half of 2014).
But there is another country with an even more impressive track record. Wind power provided 41% of Denmark’s electricity consumption in the first half of 2014, and 62% in January.
This incredible progress is in large part down to the fact that 70-80% of wind turbines in the country are under some form of community ownership. This, in turn, results from Denmark’s Right to Invest legislation that requires developers to offer 20% ownership of wind projects larger than 25 metres to local communities. In Denmark (and Germany for that matter), citizens and communities have been the driving force for not only the development of renewable energy revolutions, but their acceptance as well.
Unfortunately, in the UK, few similar opportunities have existed for ordinary people to get directly involved.
The business I lead, Co-operative Energy, is a customer-owned energy supplier. We have some 220,000 customers and seek to not only source the greater part of our electricity from renewable sources (68% last year), but from community generation projects. We’ve made lots of progress (we have 15 power purchase agreements with community groups), but there simply isn’t enough community generation in the UK to meet our needs.
That would change if a meaningful right to invest was introduced in the UK.
In a positive step, the government is progressing backstop legislation to encourage a right to invest in renewables – but even so, this offers too little (5% stake maximum) at too high a threshold (5MW) – and its enactment is merely an option at this point. It is similarly welcome that an industry taskforce has been established to progress matters on a voluntary basis, but we need the mandate to move matters forward speedily.
If a right to invest was extended to all 1MW+ wind and solar projects in the UK at a meaningful level (minimum 25% stake offered), and the options taken up in large part, the resulting £20bn of financial investment by UK citizens could generate in excess of £700m per annum over the next 20 years.
While £20bn may sound like a lot, it is equivalent to just 1.7% of the UK’s £1.2tn of cash holdings.
The involvement of citizens would bring many additional benefits, not least a broadening of the political support base that will be crucial for the UK staying the course on renewable energy progress. It would also usher in a new era of social economy in the UK – which is why the Social Economy Alliance wants to see right to invest pursued here for renewable energy and other asset classes. The Alliance’s manifesto proposes that new and existing infrastructure and utilities should be opened up to community ownership.
Almost 30 years ago, Margaret Thatcher called for a ‘crusade of popular capitalism’ that would ‘enfranchise the many in the economic life of the nation’. This never came to pass – our stock exchange has never been more in the hands of foreign investors. What we now need is a crusade for a social economy: a crusade that offers the many the opportunity to invest in the assets and infrastructure that we support with our taxes and custom. A crusade which begins with unlocking finance for renewable energy and helping deliver the low carbon economy so vital to our future health and prosperity.
To date, investment banks and private equity groups have been the major beneficiaries of the UK’s renewable energy expansion – while expansion has been paid for by levies on the bills of energy users in the UK. It is only fair that those same people should have the opportunity to quickly and easily invest in the UK’s low carbon, renewable future. They should have a right to invest.