Your Royal Highness, Smeatonians and guests.
Thank you for inviting me along tonight. I’ve been asked to give you a quick flavor of what community energy is all about.
I’d like to start by giving you up front my assumptions, you may like to agree or disagree, but for me they lay the foundations for why community energy must be a central part of the energy agenda going forward
First, I believe climate change and energy security represent two of the greatest threats to the human race… ever.
Second, the rate of reduction in carbon emissions in the UK may be sufficient to meet coming international commitments in 2020, but it is nowhere near enough to deliver a fair and equitable contribution to our global response.
Third, unless we drastically reduce our reliance on fossil fuels we are also offering our children a world in endless and rapidly escalating conflict.
Fourth, in order to build the acceptance for the scale and speed of change that these things require, we will have to totally rethink our relationship with energy.
At the moment we are consumers, and passive consumers at that. We give our energy suppliers money, they give us energy – a fair exchange you may say. But it also instills a sense that we have the right to use as much energy as we want, or at least can afford.
Community energy challenges this assumption, shifting us from merely passive consumers to being active participants in a process of change.
The community energy vision has three elements, communities owning and benefiting from their own renewable energy projects, that supply energy back to local people, underpinned by a community led approach to demand reduction and energy efficiency.
And by community, I mean both geographically defined communities as well as communities of interest.
The first part of that vision, community owned renewable energy, is the most developed. It involves community enterprises owning renewable energy projects, offering the opportunity for local people to invest and earn a good return and then recycle profits back into meeting community needs. As a result economic value is retained locally, where it’s generated. But it also gives local people a stake in local projects, fostering positive debate and increasing acceptance as a result.
As one example only, Bath & West Community Energy has helped raise £10 million through community share offers that together with debt finance has helped commission or finance 15MW of community renewables, with a pipeline worth over £60 million. We have paid members 7% on their investment for the last three years and will recycle profits from these projects alone that will build to £250,000 per year.
This sector is still small and faces challenges around community capacity and investment readiness but the model is proven and the sector is rapidly growing, with hundreds of community enterprises around the country at various stages of development. Government has established the first ever UK community energy strategy with a 3GW aspiration, creating a fifty-fold increase in community renewables by 2020.
The second part of the vision, creating community controlled local supply coops, goes one step further by enabling local generation to be supplied directly to local consumers, increasing community benefits significantly.
Local supply coops face regulatory and scaling constraints, but there are business models that are emerging within the market that offer some solutions. These models look to aggregate community interests to generate the scale necessary to meet commercial challenges and establish a supply licence.
Together community owned generation and supply offers a radically different way of doing business. One that is based on strong commercial and financially sustainable business principles, but one that also offers a different take on who benefits and who controls.
The third and final leg, a community led approach to energy efficiency and demand reduction involves building a sense of collective purpose, a sense that I am not alone and so my actions can make a difference.
For example a community dimension within the roll out of smart meters and the development of smart grids could increase the visibility of what is happening on energy across a whole community rather than just in our own homes and create new discussions between friends, family, neighbours and colleagues.
Or the delivery of area-based insulation schemes or bulk discount schemes illustrate how the trust and credibility of local community networks can increase the take up of energy efficiency measures.
This is perhaps the hardest area to make progress around. For many reasons, but in particular it’s hard to develop viable business models that value and reward the added value of the community contribution and so community action remains primarily volunteer led and grant dependent and so becomes difficult to replicate and scale.
So to summarise –
The community energy vision is built on three three foundation stones, community owned renewable energy, community controlled energy supply and community led demand reduction and energy efficiency.
These three strands are progressing at different speeds, they face different challenges and there is much to do to make them a reality. But together they offer a different way of doing business on energy, a way of fundamentally challenging our assumptions about energy and forging a response to climate change and energy security that is truly fit for purpose.