We are not meeting our climate change targets – the UK is way off track to meet the fourth and fifth carbon emissions budgets of the Climate Change Act. Community-scale renewable energy has huge potential to help solve this problem, but it is currently blocked from doing so.
If you want to buy your electricity from local renewable sources, such as the local school and the church that have solar panels on their roofs, you cannot. We all buy our electricity from a utility company that sources it from anything connected to the National Grid, be it a field of solar panels in Wiltshire or a gas fired power station in Yorkshire.
Putting it the other way around – a community with local renewable generation, e.g. housing estates with solar panels or a hydro plant in the local river – cannot sell the energy they generate to local people, but must sell it to a utility who sell it on to customers.
This is happening because becoming a supplier of energy to customers requires grappling with highly complex grid balancing codes and network agreements that are controlled by the largest six utilities and that result in set-up costs of millions of pounds. Running costs are also enormous because regulations require companies supplying energy to customers to contribute to the national and regional energy grid networks.
This would be like you wanting to set up a business baking cupcakes in your kitchen and delivering them to people in your local area, but instead of just paying the road tax for your delivery van you had to pay hundreds of thousands of pounds to use the roads, no matter how few cupcakes you delivered. You could never start your business – this is the reality for community-scale renewable energy in the UK.
The costs and complexity of being able to sell locally generated energy to local people needs to be made proportionate to the size of the local energy co-operative’s or business’s operation. It would then be financially viable for current and potential renewable generators to set up as local co-operatives or companies selling their energy to local people.
Power for People have drafted the Local Electricity Bill which lays out a mechanism that will do this. If enacted by Parliament, it would give generators of electricity the right to become local suppliers, i.e. sell their energy to local people. It gives the task of setting up this right to OFGEM, the energy market regulator. Critically, it requires that OFGEM ensures that this right means that local suppliers face set-up and running costs and complexity proportionate to the scale of their operation. The Bill also requires that OFGEM engage appropriate experts and stakeholders in the formulation of the new process.
Some have suggested the Bill could be improved by adding certain new clauses, for example a detailed requirement on OFGEM to involve certain groups, or a requirement that only not-for-profit companies along with co-operatives could become local energy suppliers. There will be opportunities for redrafting and Power for People are actively seeking input from community groups, experts and academics on how that could be done.
If the Bill became law it would give a huge boost to the deployment of renewable energy generation.
Communities would benefit from selling local renewable energy
Revenues could be invested in local services or to improve energy efficiency in local buildings.
Many more communities could raise funds to build more renewable energy
With a viable economic incentive to build renewable energy projects, communities could become drivers of the rapid move to renewables that the UK desperately needs.
The direct benefits for communities would create wider reaching benefits
There would be greater acceptance and welcoming of the transition to 100% renewable energy, a greater choice of energy suppliers, local economies would be more resilient and local skilled jobs would be created.
The Local Electricity Bill currently has the support of a cross-party group of 115 MPs. If the Bill is to become UK law, it will need many more. The complexities of Parliament mean that there is no exact number of MPs that guarantees success. Often a large number of supportive MPs – e.g. around 330, which is more than half the House of Commons – will lead to the government supporting the Bill which then makes the chance it will become law extremely likely.
What is certain is that every additional supportive MP increases the chance that the Bill will become law. That is why Power for People are mobilising people at constituency level to call on their MP to back it. We need your help with this so please sign up.