The Case for a New Community Energy Revolution

Neil  Barnes is lead for Linlith-Go-Solar & Voluntary Trustee of Linlithgow Community Development Trust. In this post he makes the case for a new Scottish Community Energy Partnership. The post raises lots of issues. How do you win hearts and minds? How do you make the links with the immediate issues of fuel poverty and the cost of living crisis? How can community energy deliver renewable energy at the scale that is demanded by the climate crisis? And how does community generation intersect with the need for public ownership and public investment though a national energy company which we at ScotE3 advocate? We welcome responses to all these questions and to Neil’s article.

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Have we reached a pivotal moment in our modern history to radically change the course in how energy is developed, delivered and managed in Scotland, the UK and other parts of the world? 

Is the case for community-owned renewable energy and storage systems now overwhelming?

Millions more homes across the land have just been plunged into fuel poverty through no fault of their own. Our energy market is broken. 

Despite the vast resources of renewable energy at our disposal – particularly solar which globally can provide more than 80 times what we need with existing technologies – we continue to rely on fossil fuels for so much of our energy supply to every rational scientist’s incredulity. In 2021, we used more fossil fuel than at any point in our history. We even set market prices for grid electricity on the price of gas-fired generation for the additional electricity required when renewables are in short supply. A key reason why the terrible invasion of Ukraine has been so damaging – especially the poorest families – as we continue to rely on gas for heating and a significant proportion of our electricity generation in power stations. Even though we know the incontrovertible fact that renewable energy (particularly land wind and solar) is cheaper to deliver. It has been for years.

As if that wasn’t bad enough, we march inexorably to climate catastrophe and the end of a viable biosphere than can maintain life as we know it. 

Nevertheless, there is hope.

Did you know that when communities own their renewable energy generating systems, they could be earning as much as 30 times the revenue compared with commercial developers? 

Point and Sandwick Trust (Outer Hebrides islands in Scotland)  is a case in point, where they earn £170k per MW of wind turbine power installed, compared to £5k, or 34 times the community benefit generated from their wind farm compared to what they would get if led by a commercial developer.

Wind turbine just outside Lerwick image by Pete Cannell CC0

There are now over 1900 ‘official’ or constituted community energy cooperatives across Europe according to REScoop.eu. The majority are not only earning more for their communities than commercially developed systems, but they are also providing ethical investment opportunities for local people and wider populations enjoying decent but ‘ethical’ rates of interest.

What’s more, where they are in power purchase agreements (or PPAs) with building owners or tenants using the renewable electricity (or heat in some instances) they can keep energy prices lower than the National Grid because they have fewer overheads to pay. 

Such local energy schemes can also pin any price increases lower than energy inflation whilst undertaking fair and friendly negotiations directly with customers. Beating the general rates of inflation is particularly easy now given the recent and humungous hikes in energy prices. Such eye-watering increases are forcing people to switch off. We’ve heard of householders reopening open coal fires and chimneys, foraging for local wood supplies and even burning furniture and clothes. The authorities and fire services are worried about an increase in domestic fires and fatalities too. This is also making it harder and harder for small businesses to survive. One in seven could go bust. 

The winter of 2022 might be like no other in living memory.

Here in our wee town of Linlithgow, West Lothian, in 2019, our local community development trust started a small energy enterprise with big ambitions. Through ‘Linlith-Go-Solar’ we have installed 5 Solar PV systems in 3 local community sports clubs that have cut carbon emissions, reduced electricity costs by at least 15%, and provided an affordable ethical investment opportunity for local people. We now generate a modest amount of surplus that we reinvest into further community benefits, including educational initiatives.

Image by Ulrike Leone from Pixabay CC0

The core of our model is a ‘Power Purchase Agreement’ (PPA). Indeed we all have one of these as bill payers to our utility suppliers. The ‘PPA’ price we charge the clubs for using our solar electricity is below 14p/kWh. It was only raised by 1.8% this year. A fraction of current energy inflation. And we are highly unlikely to see increases beyond that sort of level throughout the 25-year lifespan of the solar panels.

Whereas your domestic and business electricity tariffs are now moving upwards of 25 p/kWh. We have recently heard of a commercial price as high as 61 p/kWh! 

Of course, there are many other factors to take into consideration and energy prices are made up of different components that a micro-supplier doesn’t face, such as network charges. But we at Linlith-Go-Solar also had significant upfront development and capital costs that means paying back bond holders with interest, as well as ongoing maintenance, metering subscription, insurance and contingencies, e.g. inverter replacement, before making surplus.

So a like-for-like comparison is still probably unfair to a great degree. Nevertheless, if we consider the vast sums that we as taxpayers and customers have already paid into the National Grid infrastructure and the enormous fossil fuel subsidies that persist, perhaps our comparison might not be wildly outside the realms of logic. Caroline Lucas MP of the UK Green Party has regularly posted on social media that fossil fuel subsidies and tax break in the UK are 9 times the rate for renewable energy. Utter folly.  

On the moral front, many in the environmental campaigning sector believe it’s down to sheer avarice, if not corruption, from the large fossil fuel generators. Gas prices were rising before the Russians invaded Ukraine. Watch the recent BBC documentary: “Big oil Versus the World”. The level of disinformation and deception is startling. Rational scientists have been left feeling powerless. 

Nevertheless, with the political will and right support at grassroots level, we could begin to turn the oil tanker. 

In local community-owned energy projects, the community itself can decide how any surplus can be reinvested back into local community benefits. So not only are we saving carbon, we are making communities more economically resilient. The ‘multiplier’ effect means that each pound reinvested attracts at least another, and spent in the locality, and this will further benefit local people building new projects, services & assets. A social return on investment assessment would no doubt reveal even more added value for communities.

We appreciate the significant strides in greening the UK and particularly the electricity supplying the Scottish National Grid through wind, hydro and solar. It reached 98% last year. So some might question whether the carbon saving is really worth the bother. Given the embedded energy in the National Grid, the fact that in Scotland we still import fossil-fuel fired power when the wind isn’t blowing, and the knowledge that Solar PV panels, for example, will provide at least 4 times, in some cases up to 30 times, the electricity over their useful lifetime of 25 years or more, compared to the energy consumed in their manufacture (and we are not blind to other environmental impacts they might cause in other parts of the world) suggests more carbon will be saved for the foreseeable future. It should also be noted that Solar PV panels are continually improving in efficiency and alternatives, including Perovskite (a potentially more efficient replacement for silicon-based panels), solar film, solar glass and solar car ports now popping up in local neighbourhoods like the one at Falkirk FC Stadium 10 miles from Linlithgow. 

Electricity demand is still rising too, around 3% per year on average, especially with the advent of Electric Vehicles, and the exponential rise in sales globally. So for some ‘District Network Operators’, the cost of reinforcing the grid and for generators to build more power stations (and many countries are still blindly bringing new fossil fuel plants online) will be prohibitive. In some places where there are constraints on the grid capacity, renewables and other power generators are forced to inhibit supply when we should be storing the surplus green energy in hydro, heat and electric batteries. This must be part of the new community energy revolution and rapid shift to come. 

Scottish Power Energy Networks, who operate and manage the grid transmission and distribution in southern Scotland and elsewhere, even have their own Community Energy Strategy and have invested millions in local embedded community energy projects, including Solar PV, battery storage and green transport because they understand the strong local sustainable economic and environmental case. Linlith-Go-Solar benefited from this through Local Energy Scotland’s astute initiative in the 2nd phase of our enterprise. SPEN have just launched their Transmission Net Zero Fund for local communities, a successor to their successful Green Economy Fund, which community groups, charities and the like can apply for in their transmission area.

However, there is a rather sizeable ‘but’.

Even though the facts about the local and global benefits of community energy are clear, the sad fact is that it makes up less than 1% of the total energy demand of the UK. Read the  “State of Sector  Energy Report 2022” at: https://www.communityenergyengland.org/pages/state-of-the-sector.

Yes, successive governments have provided – now much-lamented – incentives such as the Feed-in-Tariff and the Renewable Heat Incentive, but communities really struggle to find the development revenue to prospect, plan, develop and then ultimately build, own and operate their own renewable energy and storage systems. It’s been the ‘Holy Grail’ of community development of any form for decades and part of the wider local democratic deficit in Scotland in particular. Some believe independence will unleash a new surge in local empowerment. Others are sceptical. When compared to other par” and Lesley Riddock’s seminal book – ‘Blossom’. 

Raising capital does not seem to be such a major challenge as experienced in many community renewable energy shares or bond schemes, often oversubscribed, and earning anywhere between 0.5% and 4% interest. The average invested is somewhere in the region of £1500 per investor with some schemes starting at £5 for low income households to be part of this local investment. Some projects like ours – part funded by over £40k worth of community bonds delivered in partnership with Scottish Communities Finance Limited (SCFL) – have deliberately kept interest rates under 1.75%. Firstly, because the nature of our community bonds is that they should not be about making profit as the prime motivation, but helping communities become more carbon-free and resilient through developing locally-owned renewable energy. And we’re pretty disciplined about our small budget ensuring it’s kept well into the black for all eventualities. Furthermore, we are bound by certain rules and regulations by the Finance Conduct Authority to exercise financial discipline so as not to favour the large high-return distant investor. Also, because we want local people to invest in it, sharing the returns far and wide across our community, and at investment purchase levels as low as £50 for a bond, it reinforces that sense of ownership. And in an SCFL survey over 80% say they will invest again. Bonds can also be bought as an ‘eco gift’ for children and grandchildren, creating a legacy for future generations.

The Scottish Government have provided £50 mill over 10 years from the Community and Renewable Energy Scheme (CARES) via Local Energy Scotland – a very supportive scheme – and you can also cite the Climate Challenge Fund, and both south and north of the border there are various funds for communities to tap into to help fund a range of regeneration initiatives and now COVID resilience from the public purse. But it is woefully inadequate, especially when one considers the billions – nay trillions – invested in fossil fuel subsidies globally; or vast amounts given to private companies during the pandemic without due public procurement process or scrutiny. Of course, we sympathised with the terrible predicament the UK Government and public servants were in, attempting to keep us all safe. But when we look back at the money squandered in Test and Trace, PPE contracts and so on, we may just become very irked indeed by the fact that this could have been invested far more sustainably in something as far-reaching and cross cutting as cheaper community energy.

Investing in community energy is apolitical; it cuts across all mainstream party policies. It’s enterprising in the way profits are generated and used as ‘community surplus’ that can be locked into a community. It is cooperative in that it works with the community, often supporting different sites, some more conducive to development than others that could be overlooked to help cut costs, or giving them the option to invest first. It connects strategically with local authorities for use of land and assets, potentially providing rent, planning permission and building warrant and other fees, as well as helping their Climate & Renewables Strategies, or working with different officer experts. It partners with industry and local SMEs for advice, supply of goods, installation, maintenance, monitoring and other innovations. Such activity can boost jobs, education & training opportunities for so many. It can work with fellow communities with lower volunteer and know-how capacity to deliver, or give more benefits to those localities with greater need.    

What’s not to like about that?

All things considered, even if you are a local community volunteer, with the passion, hunger and energy, you may become exhausted or disillusioned quickly at the lack of accessible development revenue to employ staff to deal with the mountain of red tape of setting a scheme up. It often takes less than a week to install a small scale rooftop Solar PV system but a whole year to do all the rest! This is a form of modern day madness. It might actually explain a great deal as to why many of us – particularly those in fuel poverty and more worried than ever about their energy bills – have not enjoyed the benefits of ubiquitous renewable forms of energy owned and delivered by their local community. Indeed, the FiT was set up partly to help people in poverty to afford micro-renewable energy systems but failed to deliver. Yet rich landowners and large companies benefited enormously.

The sun provides many more times the – technically capturable – energy we need as an entire planet. This is in the form of existing solar power technologies alone in their various electricity and heat generating forms. So not some fanciful sci-fi movie. Actual, deliverable technologies that right now can power the entire planet in a much cleaner, greener way. Read “10 Short Lessons in Renewable Energy” by Stephen Peake. 

The saddest news of all is that scientists, engineers, industrialists, banks, governments and many of us, knew that we should have done this decades ago. The great physicist and mathematician – Arrhenius – knew and lectured about the risk of burning fossil fuels 120 years ago in 1902! His warnings – after studying the effect of thick greenhouse gases on Venus causing surface temperatures over 500oC, above which no carbon-based life like ours or any on our planet can survive – were cast asunder. Now where have we heard that before? There are not too many climate sceptics around now. But unfortunately for my two children and yours, too many are still flying the fossil fuel, or ‘transition fuel’ flag. And the simple matter is, we just don’t need to. We don’t have time to delay either.

The other great opportunity – albeit poorer brother of the ‘renewables bling’ – is energy efficiency. In my 20 or so years in or around the energy sector, I haven’t visited a building yet – new or old – that couldn’t save considerable amounts of energy through simple energy-saving and efficiency measures. And much of it is sheer common sense in simple behavioural or low cost/no cost measures such as draught proofing or basic insulation.

But even those energy efficiency measures can take considerable time, effort and money to pay – preferably local – people to get them done. Or to rely on caring volunteers to help mobilise.

It’s no wonder local volunteers get exhausted trying to support their local folk – never mind those trying to run food banks. Food sustainability is another huge subject and carbon conundrum to explore for our communities, never mind building local resilience through local energy generation. We could marry the two as in other parts of the world developing solar-agriculture. 

We should be employing an army of new ‘Green Miners’. Young and old alike to work in local communities with local groups, volunteers, retrofit clubs, charities and SMEs to deal in this new carbon-saving currency in the new community energy revolution. 

In our wee toon, we are very keen to have young people at the heart of this revolution. Having reached out to the local academy and young graduates and undergraduates, we are doing our bit to try and engage them and our Young Energy Enterprise Group in real STEM activities to develop their careers. We are still trawling the funding landscape for pennies to invest in our ambitions to employ local folk to do this green stuff, and are also talking closely with fellow community development trusts in our region and elsewhere to lever in this elusive resource. Despite several knock-backs and near misses, we are still trying. 

Now it really is up to big government to properly invest and incentivise the community energy sector. 

There is also a decentralising of the energy system coming through as distribution network operators look to become more ‘service-based’, as we innovate and introduce more smart grid systems. But in the UK there are only a few companies managing the grid. Germany has some 800 more locally-based district network operators. We have 2 in Scotland and only half a dozen or so down south. (Reference: https://www.capgemini.com/wp-content/uploads/2017/07/tl_Overview_of_Electricity_Distribution_in_Europe.pdf)

This provides more hope that a more open, accessible grid and talk of potential nationalisation too, could support communities to develop and store energy they own at scale without those often insurmountable connection barriers and costs. Some communities might go off grid altogether.

Want some more inspiration? Watch the documentary film “We the Power – the Future of Energy is Community-Owned”. Two community energy activists in Germany even managed to wrestle the local grid from the regional nuclear power company via a referendum. People power can work.

Yet in Scotland those communities and homes living closer to cheaper, greener renewable energy generating systems, including wind, hydro and solar, are being unfairly penalised. In the Highlands & Islands, fuel poverty is the highest in the UK, perhaps above 80% in some cases, exacerbated by a ‘Highland premium’, a disproportionate number of higher-cost prepayment meters, solid fuel and electric storage heaters and lower temperatures of course. The whole system is topsy turvy and stacked against those communities in greatest need.

The campaign group ‘Power for People’ in the UK have now managed to sign up over 300 MPs for the implementation of their Local Electricity Bill, now progressing through the UK Parliament. If this goes through, it will provide local communities with the freedom, and remove the red tape and regulatory fees and barriers to effectively sell on their renewable energy and energy surplus to each other and their residents via the National Grid. Indeed, our regulator, OfGEM, have been under huge criticism recently for its lack of teeth and nous in failing to prevent some of the energy market failures we have experienced recently and the unprecedented rise in energy prices, whilst it had been warned about the risks faced by smaller utility suppliers entering the market. The energy price cap is a very blunt instrument and lack of innovation in such policy tools and other incentives are key barriers to resolving our energy crisis.

Earlier this year, our very own MP Martyn Day SNP, deposited our wee petition for a new ‘Community Energy Booster’ form the UK Government. Martyn presented the petition and ‘complaint’ to the Houses of Parliament. We did receive a reasonably positive response from the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lord Callanan). There are some funds being put into the mix to support the community energy cause. And they graciously cited the Scottish Government’s CARES scheme too, which we’ve already enjoyed. But it is still way insufficient for the type of support that would kick start a new community energy revolution. 

On a more positive note, we had visit from MSP and Minister Mairi MacAllan in July and she was very interested in all our local climate action activity, including Linlith-Go-Solar. We shall continue to impress upon our politicians the need for more support. And we continue to learn from others, including the examples above, the Big Solar Coop with its first live investment opportunity to build community solar systems in England, REScoop, Edinburgh Solar Coop, Local Energy Scotland, Community Energy Scotland & England, Scot.e3, Scotland’s Towns Partnership (over 60% of Scotland’s people live in towns and villages and many could be accelerated towards Net Zero and modes of best practice) and many like-minded communities, some of whom have come directly to us to learn about our modest wee enterprise. This collective sharing can only be a good thing for all. We’re keen to marry our ambitions with mass retrofit schemes including those under the new Scottish Government’s Heat In Buildings Strategy, as well as like-minded communities with community sheds, tool libraries, emerging retrofit clubs, business improvement district schemes to support SMEs, local schools, colleges and universities. The potential for such wholesome collaborations is massive.

Perhaps we need to form – urgently – a new Scottish Community Energy Partnership, made up of energy and non-energy bodies, led by grassroots community representatives, starting with a summit on the future of community energy in 2023, building on our assets and good people with the right values and passion to drive us towards a far more sustainable energy system? 

Now, will you join us in the new community energy revolution?

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