What assistance is available for community energy projects?
Posted by Sam Tonge on 19 September 2018 at 10:21 am
Earlier this summer, environmental law firm ClientEarth and YouGov surveyed more than 2000 UK adults on attitudes on climate change and sustainability. The survey should give policymakers some food for thought, with almost three quarters of those surveyed wanting to see greater investment in renewable energy.
The survey revealed 71% of respondents would be interested in community energy schemes. Yet, it appears the public backing of local energy projects doesn’t quite match up with the reality.
Community Energy England’s ‘State of the Sector’ report described 2017 as “a challenging year for community energy”, with only one new community organisation that year and 31% less generation capacity installed or acquired in comparison to 2016. It appears that the cuts to financial incentives are continuing to be felt by all of those involved in community energy projects.
What is community energy?
Community energy covers collective action to reduce, purchase, manage and generate energy. There is a clear emphasis on local engagement, leadership and control, with the community benefitting collectively from outcomes. The umbrella term covers community-owned renewable installations, support towards energy-saving measures, working with Distribution Network Operators to pilot smart tech, collective oil purchasing for off-gas and collective switching of suppliers.
Benefits include reduced transmission losses which lower costs over the long term and improved community sustainability and self-reliance. Community energy schemes are open to a wide range of groups including registered charities, Community Interest Companies (CICs), Cooperatives and Community Benefit Schemes, social enterprises, faith and equalities groups.
Getting it off the ground
A report from BEIS (formerly DECC) from 2014 highlighted how lack of access to up-front investment remains a key barrier to getting community energy schemes off the ground.
The research highlighted how a lack of understanding of the benefits of community energy along with a perceived lack of clarity in the then government’s climate change goals continues to hinder the ability to unlock the potential for community energy.
However there is hope, and despite uncertainty surrounding green energy subsidies, it seems that public awareness and appetite for community energy is improving.
Community Energy England are a representative body for community energy organisations developing renewable energy and energy efficiency projects and those that support and work with them. They’ve conveniently produced an online resource hub for all stakeholders in a budding community energy group. This includes advice on establishing a group, project planning, working with local authorities and distribution network operators.
The Rural Community Energy Fund (RCEF) is a £15 million programme, jointly funded by Defra and BEIS. It supports rural communities in England to develop renewable energy projects which provide economic and social benefits to the community. The scheme aims to provide up to £150,000 of funding for feasibility and pre-planning development work to help projects become ‘investment-ready’.
Provision of support varies between local authorities, but some act as pioneers including Islington (London), who operate their own grant funding schemes for community projects. The Islington Community Energy Fund helps local groups to develop and deliver energy projects which will benefit Islington residents. Any constitutional group with charitable aims across the borough can apply.
Businesses helping the community
Support from businesses is rather wide-ranging, from banks that can provide loans to energy companies offering their services.
An Energy Services Company (ESCo) can provide a managerial role for a group, which can help determine viability during the initial stages of a project. Some energy suppliers can provide funding, for example the Marks and Spencer Community Energy Fund, which provides a combined total of £350,000 to community organisations ranging from sports clubs to neighbourhood associations. The voluntary Energy Redress Scheme (administered by Energy Saving Trust) is a voluntary scheme which distributes payments from energy companies who may have breached rules. Applications are open to charities delivering energy projects in England, Scotland and Wales until at least 2021.
What about charities?
Power to Change’s Community Business Fund offers grants between £50,000 and £300,000 to community businesses trading for the benefit of and accountable to their local communities. If your project isn’t eligible for this, look into their Sandbox Ideas Programme. Ideas proposed must have a charitable purpose and must be able to demonstrate relevance to Power to Change’s mission to create better places through community businesses in England.
Pure Leapfrog is a charity that has been supporting community energy across the UK for over ten years. They provide finance, expertise and support to community energy projects, empowering groups to lead the clean energy transition.
Once it’s off the ground
Ongoing financial support is currently available in the form of Government subsidies, although only time will tell whether this continues to be the case from 2019.
Payments for renewable electricity generated and exported are available on installations up to 5MW (or 20GW on micro-CHP) through the Feed-in-Tariff scheme.
Community Interest Companies (CICs), Cooperatives and Community Benefit Schemes can gain additional benefits from the Feed-in-Tariff, such as the ability to fix tariff rates for period of time and to remain exempt from certain efficiency requirements of Solar PV.
Note: If you’re setting up a community energy project and are not already one of these, you can set one up.
The Feed-in-Tariff is only available for new registrations until April 2019, but once you’re registered, payments are guaranteed for 20 years.
Renewable Heat Incentive
Payments aim to cover the cost of producing renewable heat and can generate income if you can sell surplus heat to other people or organisations nearby. If you’re eligible for the scheme, you will be paid quarterly for seven years. Find out more about the scheme on our information page.
Note: Reforms have come into force for the Renewable Heat Incentive during 2018 – find out more.
We hope that this blog entry has provided a broad introduction to the varied range of support mechanisms available for community energy projects throughout the UK. Of course, this is by no means a complete list – you may know of other sources of assistance available. Please let us know by sharing your thoughts in the comments section below.
About the author:
Sam has contributed to our blog since 2016 and previously worked for the National Energy Foundation.
He became interested in green energy after completing a degree in Geography (BSc) at Royal Holloway, University of London.
Sam is passionate about renewable energy and is committed to spreading the word about the role it plays in delivering environmental sustainability.
If you have a question about anything in the above blog, please ask it in the comments section below.
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