Utility Week

10 | 12TH - 18TH APRIL 2019 | UTILITY WEEK Policy & Regulation Time to stand up for community energy Opinion Alan Whitehead MP A s you read this, all forms of support for small- scale renewable energy installations will have gone. And when I say "gone", I mean just that. Small-scale renewables are now on their own and many are struggling to make a business case. On 31 March, the government ended its feed-in tari• (FIT) policy, which has been strikingly successful in deploying smaller renewables, including more than 12GW from solar PV. In the case of solar, the export tari• – a partial repayment to owners for the electricity their systems exported to the grid – has also gone. Not only must small-scale solar and wind energy launch their generation without any support, they must also e• ec- tively provide their surplus energy to the grid for free. This news is overshadowed by continued crowing about the success of large-scale (mainly) o• shore wind. At that end of the scale, there is a pot of about £557'million available over a number of years to support large o• shore and other substantial technologies. This support will be managed through regular auctions into which the large developers will be invited to bid for con- tracts for di• erence. It is impossible for small systems to bid into these auctions: it is strictly for the big players, as are Power Purchase Agreements (PPAs), alternative support mechanisms to underwrite investment. Under a PPA, the developer of a project obtains a long-term guarantee for the sale of the energy they pro- duce – and this can be, in the absence of an underwrit- ing from elsewhere, a useful way of underpinning an investment; it guarantees you the developer a market for what you are producing. However, PPAs will not be available for smaller generators for the foreseeable future – unless aggregation systems that can create a "virtual" large supply from many smaller sites become established, and they are some way o• at the moment – leaving small-scale generation with few options. The government justi– cation for ending all support is that costs have come down substantially, and some pro- jects can get o• the ground on commercial grounds alone. If there is some truth to this argument, smaller installations remain a long way from being able to independently purchase the kit, install and start running successfully. This is particularly true for community energy, which o— en involves a small community wind farm with one or two turbines, or a solar PV array on a community centre or a small – eld installation, o— en under 5MW. In 2014, the government set a target of one million homes to be powered by community energy by 2020. Today, only 7 per cent of that target is met (in England and Wales). Onshore wind has e• ectively been banned across England and Wales through planning restrictions, and now solar must operate without any income from the sale of surplus electricity. These restrictions add yet more hurdles for com- munity energy schemes to jump to – nance and launch sustainable generation successfully. Many groups do not have deep pockets and the o— en arduous planning and permission processes eat up what small pre-production resources they might have had. The government was right to see the importance of community energy. The future energy system looks likely to be distributed, decentralised and digitised. Connec- tions will be made locally, trading will happen between neighbours and smart systems will plot energy œ ows in real time and adjust bills accordingly. Within the context of this future energy system, community energy schemes will bring tremendous value to the energy world far beyond the bare mathematics of trading transactions. This value will only be realised if schemes get the support and nurturing they need to reach a secure posi- tion in the system. The existence of a reliable FIT system has been one way to underwrite schemes. Support and advice at a local and regional level for community developers in the early stages of development would be another, as would a known and stable destination for the power that such schemes produce. Altogether, this support o— en helps to get hard-to-– nd investment in schemes across the line. The European Union recognises this importance and has produced new legislation that guarantees communi- ties and individuals the right to generate, store, consume and sell their own energy. This is coming into force just as the UK, with its continuing ra— of barriers to the e• ec- tive operation of community energy, leaves the EU. It's unlikely we'll transpose those new EU rules into UK law. Even worse, new proposals from Ofgem look to treat all sources of generation equally, regardless of whether they travelled the length of the country, or across the road. Despite all the hard work of local energy entre- preneurs and despite the glowing testimonials to its importance in the future energy landscape, community energy is su• ering. This urgently needs to change before we risk stunting the sector completely. Reinstating FITs for small and community schemes ought to be a priority, along with assisted support for collective PPAs or similar arrangements. Even if not required to by EU directives, placing into UK law a presumption of local support and priority would give an enormous boost to the security of future operation that local schemes need. It cannot be right in the long term to bet the farm on large-scale o• shore wind as the carrier of renewables for the country, and ignore or actively hamper the rest of the renewable spectrum, but that is where we are headed at the moment.

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