Is there a light on the horizon for community energy?
by Helen Ho
6 Dec 2016
This article contains information about government schemes that may no longer be active, such as the Feed-in Tariff, which closed to new applicants in 2019.
Over the past decade, many community energy projects have sprung up around the UK, providing localities with a stake in the energy system. However, the support available to these schemes has been drastically cut in recent months and communities are now struggling to develop new projects. Despite this, at a recent roundtable hosted by the British Academy and the Institute for Public Policy Research (IPPR) there was still some optimism among the attendees for the future of community energy.
At a basic level, community energy schemes can help to reduce energy bills, boost local revenues and contribute to the decarbonisation of the UK’s energy system. Most schemes achieve this through the development of small-scale renewable electricity projects – such as onshore-wind, solar PV and hydro – or though installing energy-efficiency measures in local buildings.
However, the benefits of community energy are far broader than the direct installation of carbon-saving measures. Indeed, these schemes can have widespread cultural and social benefits within local areas by bringing a community together with a shared purpose, and educating and including them within the energy system and the need to decarbonise it.
The case studies and policy reports published by the British Academy explore the different cultural dimensions and policy environment needed for community energy projects to thrive.
Communities seeking to access these benefits and develop their own schemes are now mostly unable to do so. The support available – such as feed-in tariffs, Green Deal Communities, tax relief and the Energy Company Obligation – has now been sharply reduced or removed altogether. In the short term, this will mean that very few new schemes will be developed.
But two big trends occurring within the energy system could open up new opportunities.
Firstly, small-scale renewable electricity technologies are falling rapidly in cost. For example, the cost of solar panels is predicted to fall by 60% by 2040 and onshore wind is predicted to fall by 41% by 2040. This is a global story and will not be turned around by a lack of policy support at the UK level. Soon, electricity generated from these technologies will be cheaper than from conventional power stations and deployment will start to increase rapidly. Bloomberg New Energy Finance suggest this point has already been reached for solar PV and onshore wind in some parts of the world and will be reached for other countries in the 2020s.
When this happens in the UK, it will provide new opportunities for communities with a desire to develop their own generation projects because they will not be as reliant on government support.
Secondly, across the UK, local authorities are beginning to enter the energy sector. For example, Nottingham and Bristol have recently set up their own energy supply companies and many others are looking to follow suit. These new companies could become coordinators and supporters of community schemes in their area. Bristol Energy state that they are ‘different from other energy companies. With no corporate shareholders to keep happy, we can reinvest our profits back into the local community, to fight fuel poverty and support locally generated renewables.’
If replicated, this type of support of community energy could help to fill the gap left by cuts to government schemes. Further devolution and the next stage of City Deals could encourage more local authorities to enter the energy sector and support local communities to develop their own schemes.
There is no denying that the current environment for community energy is extremely challenging. But hopefully these two major developments in the UK energy sector could open up a more positive future. IPPR will continue to explore what these opportunities mean for communities and how they might go about maximising them, and the British Academy will continue to identify opportunities to socialise the report’s recommendations.
Helen Ho was a research assistant at IPPR and is now at C40. She tweets @shmelen_