It’s been a rough year for community energy. We’ve gone from thinking we were on the brink of a huge expansion of the movement, to wondering how we are going to be able to keep going at all. Government support (primarily through the feed-in tariff) has been vital to the success of community solar, wind and hydro projects, and so the cuts announced last autumn mean an end to the way we have done things up until now.
Right now, most community energy groups are busy racing against the clock to get their final projects funded, built and plugged into the grid before deadlines hit. So 10:10 spent our time working out what we - as a movement - could do once those projects are out of the way.
Since February, we have spoken with over 30 leading community energy groups and support organisations about the future of UK community energy. We focused on what potential new business models community groups might be able to use now that the feed-in tariff can no longer be relied on.
These fascinating and inspiring conversations didn’t produce any silver bullets. But they did point to a whole host of new approaches communities can try out to maintain momentum behind the grassroots energy transition over the coming ‘lean years’.
Commercial solar farms usually change hands a few times after construction, so communities may get the chance to take ownership of local projects - if they can come up with the cash quickly enough. This would help groups to get long term income to support new projects in the future, and also to own a LOT of solar, if that’s something they want.
The main worry here is that communities would be competing against pension funds and making deals with hard-nosed money men, so we’d have to be very careful not to get burned. The other obvious problem with this approach is that it doesn’t directly cut any carbon - which was the main motivation for many volunteers to get involved in community energy. On the plus side, it would go hand in hand with…
2. Becoming an electricity supplier
This is the big one. At the moment, community energy generators have to sell their power to the grid for less than five pence per unit - but customers buy power from their energy suppliers at up to 15p per unit. Everyone we spoke to agreed that keeping more of this value for small generators is going to be key to the survival of community energy in the UK over the coming years.
But they didn’t agree about the best way to do it, with a wide range of concerns about how realistic it is for communities to break into the supply market in practice. It’s high cost, high risk and much, much more complicated than just generating renewable energy. On top of that, it’s suddenly become fiercely competitive, as dozens of new supply companies start up to challenge the dominance of the big six.
Overall, the people we spoke to felt that for community groups to supply electricity today, we will need partnerships with bigger organisations who have financial clout and energy expertise, and (crucially) who are on our side. Luckily there are more and more of these around, and new local councils who are setting up as energy suppliers are particularly keen to work with communities.
But the most exciting option on the table in this area was the idea of the Community Energy Services Company or CESCo. Using some clever techno wizardry, a CESCo can match local demand for energy with local solar, wind and hydro generation. That means more of the benefits of local energy can be kept local through lower bills for households and better prices for the generators. CESCos would also be much more able to help their customers to reduce their overall energy demand than conventional suppliers.
Unfortunately the UK’s fiendishly complex energy market rules don’t allow for this kind of arrangement to go mainstream yet - but there are signs this may be about to change. 10:10 is supporting early trials of this model with our friends at Energy Local - you can read more about it here.
3. Selling power directly to an on-site customer
This is the easiest and most obvious option we looked at. Most groups do this already, we just need to learn to do it better. When communities sell power directly to someone who uses the power, we are competing with the price they would have to pay to buy power from a big supplier. That means community groups can undercut that price and still make more than they can by exporting to the grid.
The main challenge here is that it’s hard to find suitable sites for renewables that also come with reliable customers. Also, this will probably only really work with solar, as wind and hydro really need to be situated where the resources are.
There is a lot of excitement about batteries in the air right now, and almost everyone agreed that batteries will be crucial to the success of any renewably-powered future. But, most also felt that it’s a bit too soon for community groups to be able to run businesses around. Solar plus battery storage for individual households is probably going to be the first thing to go large here - watch this space.
5. Energy efficiency
The great hope here was for LED light switching. LEDs are the most efficient light bulbs, using up to 90% less energy than old incandescent bulbs. Because it’s easy to measure how much energy they save, it’s easy to put a business case and a financial plan together to switch to LEDs. So there was a lot of enthusiasm for community groups to look at LED switching projects in the short term.
More widely, people felt that efficiency is the biggest unsolved problem, not just for community energy, but for the energy transition in general. The design of our energy market means there’s little commercial incentive to drive efficiency improvements, and central government policy in this area has been a huge failure. People did not feel optimistic that this situation would improve any time soon.
6. Renewable heat
Around two thirds of the energy we use in our homes is for heat, so we’ve got to crack this nut if we ever want to reach zero carbon. But again, almost everyone told us that the UK doesn’t have the right policies or market rules to make renewable heat happen in a big way, and particularly not in a way that communities can easily be a part of.
The big issue is that renewable heat (unlike electricity) is best distributed and supplied through totally different systems than we use for heat today. The best way is to use heat networks to pipe heat into buildings, instead of everyone making their own heat in their own boilers. So the best place to make heat projects happen is at new housing developments - but community groups simply don’t get invited to those conversations right now.
7. Partnerships with local authorities and businesses
This theme came up so much during our conversations that we had to add another section to the report to cover it. In a nutshell, what community energy groups told us was that now that central government don’t support community energy, we need to find other big institutions that will - we just can’t keep moving forward on our own. Most felt that councils would be our best bet for partnerships, but there is also scope for community groups to work more closely with British companies that are committed to going 100% renewable.
In conclusion, whilst the outlook for Britain’s community energy champions over the next few years is tough, there are plenty of new things we can try as we keep our shoulders to the wheel of Britain’s energy transition. Some of them are bound to work!
We've also written a report explaining the different options in more detail. Have a read.