Getting the UK’s community energy sector back on track

Organisations in the UK have come together to challenge proposed rule changes that could negatively impact community energy co-operatives.  Co-operatives UK, Community Energy England, The Co-operative Energy, Social Enterprise...

Organisations in the UK have come together to challenge proposed rule changes that could negatively impact community energy co-operatives. 

Co-operatives UK, Community Energy England, The Co-operative Energy, Social Enterprise UK, 10:10 and Regen SW have united in a call for the fair treatment of energy co-ops, a sensible approach to share capital and an optional asset lock for co-ops.

Community energy organisations in the UK have been on the rise, giving communities more control over production and provision, as well as providing opportunities to alleviate fuel poverty and for local employment.

On 27 January, the government released the full report into its Community Energy Strategy, which praised the way “communities are coming together to take more control of the energy they use”.

In his introduction to the report, Ed Davey, Lib Dem energy secretary, says its aim is to “help existing [community energy] groups grow and to inspire more to set up and expand”.

“We want to tap into the enthusiasm and commitment that’s so evident in community groups across the country – whether it’s for helping people struggling with energy bills or for playing a part in the global race to decarbonise our society.”

However, there is concern that the government’s proposed rule changes would bring the community energy revolution to a halt. These changes include: an alteration to what type of organisations are eligible for tax relief; the refusal of the Financial Conduct Authority (FCA) to register any new community energy ventures that are established as bona fide co-operatives; and the FCA’s challenges to the co-operative endeavour, whereby capital raising and profit distribution go hand-in-hand with the realisation of social mission.

In response to the proposals, Co-operatives UK, Community Energy England, The Co-operative Energy, Social Enterprise UK, 10:10 and Regen SW have led in producing a briefing paper outlining the main actions required to get the UK’s community energy sector back on track.

“This is a moment when the priorities of one sector are of common interest to all co-ops. We are working closely with energy co-ops to make sure our collective voice is heard, and aim to call on the support of the wider co-operative sector in the coming weeks,” reads the briefing.

“The UK needs to move from an economy based on fossil fuels, towards one based on renewable energy; from a market dominated by a handful of suppliers, to one where thousands of communities meet their energy needs locally.

“We need an approach to ownership and innovation that is more co-operative, citizen-centred and decentralised. One that enables people to work together to generate, distribute and supply their own sustainable energy. One that taps the emergence of new crowdfunding mechanisms that have the ability to leverage large sums of money into clean energy investment, and at the same time bolster energy-democracy and the social economy.”

Models for doing this already exist across Europe, where co-operatives and social enterprises deliver clean, low-carbon energy and also offer local employment opportunities, community development funds and fuel poverty alleviation. In Germany, for example, ‘community’ energy made up 40% of Germany’s total renewable energy capacity by the end of 2010, largely through private citizens investing in energy co-operatives.

“We have legitimate concerns over the current degree of support for bona fide co-ops  and the Financial Conduct Authority’s current stance over the registering of community energy organisations,” said Co-operatives UK policy officer, James Wright.

“The focus is very much on community energy, but there are serious implications for the wider co-op sector. It is important that we harness the collective voice of our allies and members to press for reform of damaging regulation. This isn’t simply a co-op or energy issue.

“We are talking about job creation, environmental concerns and social cohesion, as well as helping communities service their own energy needs in a sustainable way.”

 

What needs to be done to get the UK’s community energy sector back on track?

Reforming the Financial Conduct Authority’s regulatory approach

  • Consistent treatment for previously registered societies
  • Clear criteria for the registration of community energy co-operatives
  • Registration guidelines to incorporate realistic financing criteria

Reforming tax reliefs

  • Clarified transition arrangements from EIS (enterprise investment scheme tax relief) to SITR (social investment tax relief)
  • A longer and more measured transition process
  • SITR available to certain qualifying Co-operative Societies

Reforming the Energy Market

  • A community right to the self-supply of electricity
  • Community renewable ‘heat’

Click here to read the briefing in full

 

 

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