market diversification has been a heated topic of political debate. Attempts to
address an unbalanced and unsustainable market have largely been approached in
terms of widening consumer choice, ushering in new competition and breaking up
supply. But such focus is missing the real opportunity, which is to change the
market completely by encouraging consumers to become producers and owners of
the term ‘community energy’, we are in this paper referring to the means of
generating and distributing energy that is owned and led by communities, rather
than by individuals or private businesses. Community energy vehicles are
democratically accountable to community members and participants and may deliver
a financial return to investors, or reinvest surplus profits back into the
project and wider locality.
users to become owners and ‘market-makers’, community energy in both its
practical manifestations and the ideas which it represents is an ideal of the
Government’s ‘big society’ and localism agendas.
create inclusive local and national benefits, which broker in local groups from
both disadvantaged and more affluent areas, we need to enable and incentivise
associative and group practice to play a competitive role in market provision.
There are already a number of examples from within the UK and abroad, where
countries such as Denmark and Germany have shown the potential for communities
to lead their local renewable energy economies.
paper reviews the benefits created by existing community energy schemes,
and how these create a framework of responsibility for users, landowners and
developers. Though the environmental and social effects are benefits in
themselves, the micro-economies created via community energy projects are
transformative on a much broader level, achieving incremental economic change
to the entire supply and demand process.
schemes can only begin to transform the wider energy economy when
self-supporting trust networks are enabled both within and between communities
and other partners. Through ‘market-making’ practices, local residents achieve
powers of ownership, commissioning and distribution, bringing real choice and
true ‘bottom up’ competition back into the entire system and creating
opportunities for all types of communities, beyond the choice few.
paper turns to a variety of inspirational cases, from Fintry Renewable Energy
Enterprise, which negotiated a community stake in a nearby wind farm being developed
by a commercial company; West Oxfordshire's Low Carbon Hub, which aims to
generate and connect enough energy to replace the local Didcot power station
closing in 2015; and the German town of Schönau, which set up its own
energy co-op to buy the local electricity grid.
order to incentivise the formation of many more like these, and develop
stronger and more self-sustaining ‘local trust economies’ that have the
potential to change the macro-energy landscape, we recommend that community
energy must be aggregated across policy agendas.
Localism Act offers a number of opportunities for community projects to attract
further finance and assets that will enable them to thrive. The Department of
Energy and Climate Change, the Department for Communities and Local Government,
and the Cabinet Office should orchestrate a co-ordinated support programme for
community energy which recognises the building of local community-led
partnerships as central to opening up production and supply. The Treasury should
also help to facilitate new community energy schemes and partnership models by
addressing the way tax reliefs incentivise, or inhibit, community finance.
developers and suppliers, local authorities, businesses and housing
associations are well placed as guarantors and capacity builders within the
UK’s emerging community energy market, and should be recognised and positioned
as such in the national and local policy framework. With the resources, assets
and position of such partners, new models of social and economic organisation
can come together and grow in capacity and legitimacy over time.
should also be granted the right or entitlement to own their local distribution
grids, through clear legal structures and partnerships. Such partnerships
should be encouraged through the exploration and creation of new ‘hybrid’
company models that would allow for both community and private sector returns.
are, in short, unprecedented opportunities for the community energy sector, in
addition to those for Government, local
authorities, communities, businesses, energy suppliers and industry players. By
drawing such opportunities to the forefront of market reform, the sector can
usher in, not only a responsible capitalism, but a truly transformative capitalism which places
the market back into the hands of the people.