Jeff Kenna and the BWCE directors look ahead to 2016
The community energy sector was hit by many negative changes in government policy last year – imposition of the climate change levy on renewable energy, slashing of feed in tariffs, loss of EIS status, planning restrictions for onshore wind. On top of this, oil prices have fallen considerably, leading to an uncertain view of future electricity prices which seriously impacts on the viability of future projects. The government’s energy policy appears to be driven more by the Treasury than by the Department for Energy and Climate Change and nuclear energy and gas are seen as our future energy sources. Ironically new nuclear needs greater subsidies than renewable energy to make it viable and will lead to higher energy bills – the very reason that DECC has said that it needs to cut the feed in tariffs. To rely on gas for our future energy security is giving a hostage to uncertainty and short termism. Prices may be low now but who is going to invest in gas generation without government guarantees on future prices? In addition reliance on gas and nuclear undermine the UK’s resilience and fuel security, based as it is on foreign investment and imports. Unless that is we believe that UK based fracking will eventually produce significant quantities of cheap, useable gas.
The year ended with the Paris Climate Change Agreement and that has signified a global commitment to a low carbon society. There are still major hurdles to overcome. Not least is the agreement of all countries to specific carbon reduction plans that when added together will come anywhere close to minimising global temperature increase to the 1.5 – 2 degrees agreed in Paris. However the headline intention to limit temperature rise to this level makes a substantial statement and those countries that embrace it will be stronger for it. China is the major producer of solar photovoltaic modules and is the largest investor in renewable energy. Germany is on track to become the world’s first renewable energy economy and over one third of renewable energy capacity is community owned. Contrast this long term view from two of our major competitors with the short termism of the UK government. What makes their position even less comprehensible is the that the UK has the best overall renewable energy resources in Europe. Sadly, our political leaders appear to have learnt little from the 2008 financial crisis where short term thinking and wrong measures have led to years of austerity.
So where does that leave community energy in the UK in 2016? Quite simply – we just have to get on with it. We cannot expect any support from Government. Fortunately energy is a fundamental need and providing energy is a profitable business activity. Importantly for us and our members, community energy offers a fundamentally different way of doing business:
- Through ownership. By encouraging investment in local projects we offer members a tangible stake, with fair returns, in a collective move towards a low carbon society.
- Social impact. By sharing surplus returns with the local community we can achieve a social impact that goes beyond any conventional business.
- Resilience. By increasing the take up of community controlled renewable energy, we can take a longer term view. This gives a resilience to our energy supplies that will be unaffected by the vagaries of fossil fuel prices or geopolitical fractures. We believe prices will fluctuate widely in the short term but can only increase in real terms in the long run.
- Engagement. By creating a stronger link between ordinary energy consumers and local projects we can raise awareness of energy issues, support greater action on carbon reduction and encourage local communities to add their voices to the pressure for change. By changing behaviour and creating a bottom up movement we will be able to influence policy makers – an essential action in the move to a vibrant low carbon society.
BWCE currently has 7 MW of operating projects at a total cost of £9.5m. There are further projects under construction. We plan to continue to build our generating portfolio and will continue to seek out opportunities that meet our investment criteria. As our track record develops we hope to provide liquidity to our members – that is the ability to easily ‘cash in’ or transfer their investment – which in turn will improve our ability to raise funds. We will consider other low carbon technologies such as combined heat and power (important for our supply ambitions) and look at the acquisition of existing operating assets. New viable renewable energy projects will be more difficult to find in the short term, but technology prices continue to drop and we are confident we can add new projects to our portfolio in future years.
Our main focus in 2016 will be to work with partners to launch a local energy supply offer for our local communities. We are talking to potential partners including Mongoose Energy and will be running a member meeting in February to discuss our plans. Developing a local supply offer can increase our value chain and by selling electricity directly to local customers we can hedge the price that we receive for generating electricity. It will also create new opportunities on energy efficiency and engagement.
We believe 2016 will be another exciting year for BWCE. Community energy has a valuable, and increasingly important, place in the UK’s energy landscape. We should look to the long term and not be disheartened by short term government policy.