New impetus for community energy

The Financial Times reports that the falling cost of renewables, advances in battery storage and the prospect of selling electricity locally are giving new impetus to community energy projects.

Community energy projects, set up to generate renewable energy, are reinvesting the proceeds from the sale of electricity into the locality. Sylvia Pfeifer describes them as part of a wider trend towards “distributed energy” as the industry moves away from the traditional model of large power stations that send electricity through central transmission networks, to one that is dominated by smaller-scale, often renewable, plants.

Residents form a co-operative society, which owns the local scheme and raises money through share and bond offers to develop a project; any profits are fed back into local causes

It is, increasingly, an investment proposition for socially conscious investors

“Everyone realises our energy is changing,” said Emma Bridge, chief executive at Community Energy England, the organisation that represents the sector. “The public want more local involvement and to take practical action on climate change.”

Several policy changes and cuts to government subsidies and tax incentives which helped to promote investment in small-scale renewable projects from 2010 led to a steep drop in new schemes. However, the falling cost of renewables, advances in battery storage and the prospect of selling electricity locally are giving new impetus to community energy projects.

Last year research by Community Energy England identified 222 organisations in England, Wales and Northern Ireland with active local schemes operating wind, solar or hydro. They had raised £190m of investment. Together with the Scottish sector, community energy projects have 188MW of generation capacity installed — enough to power about 130,000 homes.

Accessing funding requires a degree of knowledge. Mongoose Energy helps to develop and finance schemes. Its projects are funded through a combination of bank loans, funding from social capital providers and community fundraisers. Mark Kenber, Mongoose chief executive, said he believed investor appetite was growing. “More and more people are now investing as they see renewables such as wind and solar as tried and tested technologies and the returns on offer are predictable,” he added. “People are looking at it as a reasonably low-risk return.” Consumers take charge

The sector may be small but supporters said it was part of a future in which consumers increasingly take charge of their energy usage. The Department for Business, Energy and Industrial Strategy said it had made £100m of funding available for small scale renewables between 2016 and 2019. It is currently “considering options” for its approach beyond next year.

Believed to be the first major funding by a local authority in community-owned energy infra

Westmill Solar Cooperative raised more than £20 million for 5 wind turbines and a ground-mounted solar array. Members receive an average of 8% return on their investment. The balance of funding required was raised by a debt bond arranged with the Lancashire County Council Pension Fund, in what was believed to be the first major funding by a local authority in community-owned energy infrastructure.

As yet, any electricity produced locally by a community energy project is not bought directly by local residents for their own usage. Richard Benwell, a director of Westmill, the UK’s first community-owned solar farm, says,

“The really exciting thing will be when schemes can sell locally produced energy to members of the co-operative society that owns a community energy project. With lower distribution costs real savings can be made”.

 

 

 

 

 

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