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Want a clean energy revolution? Give communities the right to sell power locally
When I first starting helping REPOWERBalcombe to get their solar co-op off the ground, one of the first things they wanted to know was how they could supply renewable energy to local people. They were dismayed and confused to discover the answer: they can’t.
There’s no technical reason for this. The problem is the rules governing the UK’s energy market, which assume highly centralised generation, distribution and supply, forever and always. The system as it stands simply does not recognise local supply.
Matching local demand with local supply cuts balancing and transmission costs, but because the system was built for an age where decentralised energy was inconceivable, it offers no way for local generators or local consumers to benefit from these savings.
But the benefits go beyond savings to the grid. DECC’s Local Supply Working Group has identified four key areas of promise: Better routes to market for local generation; re-localising energy value; fulfilling the potential of the demand side; and real energy efficiency gains. The first two of these can help community energy schemes sustain themselves as subsidies continue to fall. Meanwhile, the second two are equally necessary to the move to decarbonise energy and tackle fuel poverty.
It can be done. In Germany, households can typically choose to buy power from around 72 companies, almost half which are owned by local government, communities and small businesses. These local renewable suppliers are increasingly competing privately-owned utilities out of the market.
Yet the obstacles to change here in the UK are formidable. Domestic electricity supply licences can only be granted to national-scale companies, and just entering the market cost upwards of half a million pounds. Licence holders must be party to over ten thousand pages of codes and agreements only understood by career specialists. Changes to the codes typically take years to process and are decided on by industry representatives who have no interest in anything that would affect their business models.
Nevertheless: change is coming. As I write, 10:10’s petition to DECC on the subject is edging towards its 10,000th signature; Ofgem is consulting on Non-traditional Business Models; the CMA is calling for a slash and burn of the impenetrable red tape that is hampering change; Energy Local is recruiting for its pilot with Westmill; Nottingham and Bristol councils are in the process of setting up not-for-profit energy companies; and Co-op Energy and OVO have created their own commercial offers to capture some of this momentum within the existing regulatory framework.
Ultimately, the much vaunted UK community energy revolution can’t take root without local supply. So long as people can only participate in community energy as investors, our sector will remain trapped in a small do-gooding niche. But we are all energy consumers. The popularity of Good Energy’s local tariff around its Delabole wind farm offers a glimpse of the prospects that local supply could offer for changing the UK public’s relationship with renewable energy, and the value proposition of community renewable schemes to local people.
For now, you can get the wheels in motion by helping to push 10:10’s Our Power petition over the 10k line before we submit it to Amber Rudd at DECC on the 15th July.
This blog was written by Leo Murray, Director of Strategy at 10:10.
9th July 2015