What has BHESCo been doing to accelerate the clean energy transition in Sussex communities?
BHESCo have partnered with a number of communities in East Sussex to develop plans for replacing their fossil fuel heating systems with heat pumps, in a way that is affordable and accessible to all residents.
To achieve this goal of a just transition, BHESCo recommend a ‘fabric-first’ approach, improving the energy efficiency of each property before installing the heat pumps. This means that heat pumps use less electricity, lowering the cost of providing a comfortable level of heating for each property.
Where appropriate and feasible, BHESCo will also look to connect households to a shared heat network, reducing overall costs for residents and providing a community-owned, reliable heat source.
Put simply, our approach is summarised in three phases:
Phase 1: Energy efficiency improvements
Phase 2: Heat pump installation
Phase 3: Connection to heart network
Fund raising mechanisms and community ownership
Heat network infrastructure is estimated to have a working life of 100 years, building in the flexibility to accommodate future efficient heating technologies.
Funding for upgrades could be raised via a community share offer (through a special purpose energy services social enterprise) paying investors a target interest rate of 5%.
By raising upfront costs in this way, we present an opportunity for the community to become part-owners of the energy supply company and the heat delivery infrastructure from which they will benefit. They will also be directly financing the clean energy transition while benefiting financially from it.
A recent Government report has also shown that direct public participation in local low-carbon initiatives has the potential to accelerate the delivery of wider net zero policies.
Project management costs compared to private sector
Being ‘not-for-profit’ by their nature, community energy groups can operate at much lower financial margins compared to the private sector. New clean energy projects can be delivered more cost-effectively as there is no obligation to earn profits for private shareholders.
This means that the cost of heating to customers can be significantly reduced. Consider that a commercial company will seek operating margins of 20% for their shareholders, where a social enterprise can deliver projects at margins less than half this rate.
Raising the capital costs for a project through a community ownership model (at a cost of 5% annual interest payments) is considerably more cost-efficient than through commercial borrowing (typically 8-10%).
Furthermore, community energy groups are willing to work in areas (such as energy efficiency) that are not highly profitable. This is due to the fact that, as not for profit businesses, success for community energy groups is measured though a socio-environmental lens, as opposed to strictly fiscal incentives.
Local job creation potential
Community energy projects have the potential for wide scale job creation within the local project area, in addition to stimulating wider supply chains.
By our estimates, BHESCo’s proposed heat network in Firle Village would require 296 weeks of labour, equating to the full-time employment of 6 persons during the construction period. This can be multiplied across the 2,500 villages currently ‘off-the-gas’ grid in England.
Lower heat and power prices for consumers
As a not-for profit sector, community energy can deliver heat and energy prices on behalf of project consumers at a considerably lower cost than would be acceptable for profit-making private corporations.
According to its Interim Financial Results for the 6 months up to 30th September 2023, they made a 35% profit on their operations, allowing for a significant dividend to their shareholders.
This demonstrates that, even when their customers are experiencing the worst pandemic in 100 years, private energy suppliers focus their attention on delivering returns to their shareholders instead of supporting their customers by providing access to clean, affordable energy.
This in turn leads us to the question of how we incentivise business and the general public to change their perspective and priorities when it comes to tackling the climate crisis.
Developing a low-carbon heat system for your community
BHESCo are actively seeking to connect with communities who want to transition form fossil-fuel based heating to modern, low-carbon alternatives.
Our technical expertise and innovative financial solutions make renewable energy available to everyone, from a block of flats in a city to a rural village in the countryside.
If you want to get started on the road to affordable, reliable, low-carbon heating, register your interest below and a member of our Projects Team will contact you shortly.
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