On 17th July alongside representatives from Community Energy Pathways, Ovesco, and Energise Sussex Coast, BHESCo were invited to meet with Mark McAllister, the Chair and Director of Major Projects at Ofgem, to discuss opportunities and challenges faced by the community energy sector.
The event took place at Marina Workshops in Newhaven, and featured a live broadcast to 2,500 employees at Ofgem.
In addition to key players from the community energy sector, the roundtable discussion was attended by leading voices from the government’s Department for Energy Security and Net Zero (DESNZ), UK Power Networks, and the Greater South East Net Zero Hub.
The purpose of the discussion was to understand how the community energy sector can be a vital partner in helping Ofgem and the UK Government achieve their net zero goals, in particular by promoting the uptake of insulation measures, renewable energy generation, and smart meters.
One early question focused on defining what exactly we mean by ‘community energy’. Apparently, even within the Government’s delivery team for energy and net zero ‘you would get a different answer depending on who you asked’.
Community energy promoting more renewable energy generation
The UK government has a target of installing at least 8GW of renewable energy by 2030 as part of its “Clean Power 2030” Plan. Whilst there is no doubt that major commercial developers and energy companies will be the cornerstone of the rollout, the community energy sector can play an important supplementary role through the delivery of community owned solar farms and wind power projects. In particular, the sector will be key in bringing public support on side for projects that people may otherwise have reservations about.
With wind power in mind, the roundtable discussed the possibility of making it mandatory for all new onshore wind projects to include a percentage of shared ownership with the local communities where the turbines are sited. This will provide local stakeholders with an opportunity to directly benefit from the sale of electricity produced by the site.
In addition to solar and wind there was a general acknowledgement that community energy can have a major role to play in the development of community heat projects. Copenhagen was cited as an example of this, where 90% of heat networks are community owned.
Creating a wide-reaching vision for community energy – making it easier to sell local energy to local people
Ollie Pendered from Community Energy Pathways explained his mission to share the knowledge and expertise of established community energy organisations with communities throughout the UK, and to get local representatives upskilled to develop their own clean energy projects.
One of the highlights of the discussion came when Mark McAllister asked Chris Rowland of Ovesco what would be his wish for community energy if he had a magic wand.
Providing a very simple and clear answer, Chris said that all he wants to do is to be able to establish a ‘Local Supply’, where residents can buy clean electricity at a reduced cost from a local generator. Under the current regulations, the community energy sector has to work with licenced energy suppliers in order to sell their electricity, which is an onerous relationship that does not deliver the goal of cheap energy to local residents.
The multi-million pound cost of becoming a licenced energy supplier is far too expensive for community energy organisations, and this can be a barrier in enabling the sale of electricity from community energy generators.
One suggestion was that Ofgem could mandate that the large energy suppliers have to buy the energy produced from community energy generators, which would provide a reliable ‘route to market’ for the sector. Alternatively, could GB Energy become a ‘white label’ supplier, through which community energy generators could sell their electricity to regional consumers (e.g. “GB Energy Sussex”)?
The high cost (and slow pace) of connecting energy generating assets to the grid was another obstacle that came up. Presently, where there is insufficient substation capacity, a high one-off network upgrade cost must be borne by the project developer. But what if the upgrade cost was spread over a 25 year timeline, which is the typical generating lifecycle of solar panels? This would make grid-reinforcements much more affordable, and could accelerate the development and connection of new renewables projects.
Community energy and public procurement
The ability to win government and local authority contracts came up as a big barrier for community energy.
Ollie Pendered from CEP suggested that Ofgem should place more emphasis on measuring the social value that community energy projects deliver to local areas. He explained that by taking into consideration the uplift to health and wellbeing, local job creation, education, and the environmental benefits, community energy organisations could become more competitive in the local authority procurement process vs bigger corporations.
Community energy and public engagement
Everyone at the roundtable agreed that the community energy sector is well placed to enhance trust and engagement with the public when it comes to the transition to clean energy. Whether the focus is on the adoption of smart meters, the uptake of renewable energy, or promoting participation in energy flexibility initiatives, community energy groups can connect with the public in ways that big corporations can’t. And it was widely acknowledged that trust and consumer engagement will be vital to successfully achieving the UK’s net zero tasks. This is because the information provided by local social enterprises is impartial, trustworthy, and not sales based.
People are far more likely to accept the temporary inconveniences that may come from a new renewable energy project in their area (e.g. road closures, noise) if the project is being presented to them by locally based intermediaries, and if they are able to participate in the long-term benefits of the project.
The same can be said for energy flexibility, where people may have to shift their energy use to different times of day or night depending on the peaks and troughs of energy generation. The public will be far more accepting of levels of automation in their lives (e.g. from batteries charging and discharging) if the benefits are explained to them by someone who is not looking to make a profit out of them.
It is clear that the community energy sector is well placed to deliver significant value towards the UK’s goal of establishing a zero-carbon electricity network by 2030. But to fully realise its potential and bring local people along with the journey there is much that Ofgem can do to make energy markets more affordable and more accessible for local power producers.
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