The Plymouth skyline is changing, and so is the city’s energy future, thanks to a partnership between its council and two community benefit societies.
Plymouth City Council joined forces with local residents to form Plymouth Energy Community (PEC) in 2013. Immediately PEC set up a second bencom, PEC Renewables, to fund and manage renewable energy installations. As these bencoms advance, so does the spread of solar panels on the city’s rooftops.
PEC Renewables launched its first share offer in February 2014. It closed after seven weeks, oversubscribed at £602,000, with 144 investor members, around half of them local. This enabled it to install free solar photovoltaics on 18 schools and three community buildings between May and November 2014.
The installations, which collectively represent 0.78 megawatts, are now generating half-price electricity for their community building hosts. Surplus electricity is sold to the grid. The bencom also receives income in the form of a government subsidy, via the Feed-in Tariff.
“We were blown away by the support,” says Alistair Macpherson, chief executive of PEC. “We took that project from conception to generation in only nine months.” He says this speed is in part thanks to the council’s support through loan finance, staffing services and agreeing to host the installations on its buildings.
Building on this partnership, PEC Renewables launched its second community share offer this February, this time with a £950,000 target. It will fund more free solar photovoltaics, and bring the bencom’s community fund to more than £1.2m.
Plymouth’s largest solar roof will be installed on Plymouth Life Centre, a diving centre and one of the busiest leisure centres in the country, and there will be solar panels on four more schools, bringing the total to 1.3MW.
PEC Renewables is forecasting a return of up to 6% for members, which rises to 10.5% including tax relief. The offer, which closes on 5 May, has already raised £510,000.
PEC Renewables’ community fund is being used to tackle the challenges of rising energy costs, fuel poverty and climate change. Projects include PEC’s fuel debt advice service, which has helped local residents clear £55,000 of energy bill arrears in the last 10 months, and its energy team, which trains volunteers to provide free home energy advice to at-risk households.
Plymouth has 11,500 households in fuel poverty, 10% of its population, and like many UK cities has energy-inefficient housing stock. Plymouth City Council, a co-operative council, has set out in its corporate plan to reduce emissions from the council estate by 20% by 2015 and to reduce citywide emissions by 30% by 2020.
In 2012 it established a Low Carbon City Team, which helped identify Plymouth’s potential for community energy solutions and forge the partnerships behind PEC. The council funded all pre-development, initial community engagement and business plan development for PEC and in 2013 supported a group of like-minded citizens to set it up.
It provided £69,000 in grant funding and a £60,000 loan, and passed organisational control to the PEC board.
Both bencoms have volunteer boards of directors; PEC currently has nine directors and PEC Renewables has five. The council has since made two £500,000 loans available, one for each share offer.
A shared services arrangement allows PEC to buy expertise from the council rather than employing staff directly. The equivalent of five and half full-time council staff manage the day-to-day running of the bencoms, with support from council services including the Low Carbon City team, estates, business, apprenticeships and legal.
PEC aims to bring together like-minded people, who want help to transform energy for the benefit of the community. Its mission is to give the people of Plymouth the power to transform how they buy, use and generate power.
It has 850 members, 95% of whom are local residents, and the number is rising, with more joining as the current share offer progresses.
One of its primary aims is to help local people understand their energy options, so it is promoting grant schemes for free cavity and loft insulation and subsidised external wall insulation, offering savings of around £260 per household per year. It has also provided energy tariff advice for over 600 households, offering average savings of £180 per year.
Energy champions are supporting residents and have trained 100 frontline staff, who in turn reach hundreds of vulnerable consumers. PEC has also employed two energy marketing apprentices, and is training 30 community volunteers to provide free home advice visits.
PEC’s next step will be to develop bespoke energy tariffs for Plymouth residents. It is collaborating with Bristol-based energy supplier OVO Energy to create competitive local tariffs for local householders, which in turn will create further community benefit funds.
OVO Energy says it plans to democratise the energy market. OVO Communities is its solution for communities which want to cut out the middle man and become an energy company themselves, including supply, generation, smart technology and energy efficiency. The company believes it could form as many as 500 partnerships across the country by 2020, serving up to one million customers.
OVO Energy founder and CEO Stephen Fitzpatrick says: “We want to bulldoze the barriers to entry and drive competition. What we’re offering is a way for trusted groups like local authorities or community organisations to take back the power from companies which they no longer trust to serve customers’ best interests. We think the industry will look very different in a few years’ time as community-led partnerships like this spring up to challenge the incumbents.”
Alistair Macpherson is confident that their work could potentially save Plymouth residents well in excess of £1m per year.
“Bespoke tariffs, specifically designed to meet our community’s needs, are logically the next step,” he says.
“We’re looking at local consumption profiles and involving the community benefit society in designing tariffs for local people. It’s the only way to do something about the difficulties people on pre-payment meters face. For us that’s really powerful.”
PEC and OVO hope to officially launch the partnership this autumn.
Raising community finance: Top tips from Alistair Macpherson
Explore a partnership with your local authority. We’ve been very fortunate to work closely with a forward-thinking local authority who have recognised the win-wins of collaboration.
- Develop a very clear message around the community purpose of the enterprise/investment opportunity.
- Be clear about who your target investors are and devise a marketing strategy that fits. We develop distinct approaches and messages for our local and national audiences.
- To encourage local ownership, we reduced the minimum share purchase to £50 and gave priority allocation to investors with Plymouth postcodes.
- Social investment platforms like Ethex and Trillion were crucial as part of our national marketing strategy, allowing us to reach a niche database of positive investors.
- Be aware of the seasonality of investor preferences and timetable your offer accordingly. Many people want to invest before the end of the tax year, and things go quiet in summer and around Christmas.
- Develop as much certainty about the investment proposition as possible before launching your prospectus.
- Get good advice and scrutiny of your business plan. There’s plenty of excellent help available, for example from Co-operatives UK, the Community Share Unit and the Energy Mentoring Scheme.
- Engage advisors who really understand your vision and share your enthusiasm. We worked with Communities for Renewables, Foot Anstey LLP and Francis Clark LLP.