Leading adviser calls for clearer support for community energy projects

by Search Gate staff. Published Fri 30 Aug 2013 13:40
Helping communities tap into energy schemes
Helping communities tap into energy schemes

Leading environmental lawyer Simon Steeden of law firm Bates, Wells and Braithwaite here calls on the Government to remove the barriers against growth for community energy projects.

Community energy projects need to be released from stringent restrictions on their access to funding if they are to realise their potential as significant players in the UK’s transition to low carbon electricity generation.

The government has recently finished a period of consultation before its publication of a Community Energy Strategy. The strategy is, apparently, intended to encourage the growth of the community energy sector, with the government recognising that community-led action can tackle the most challenging issues more effectively than government alone.

In its call for evidence the government has said it wants to see community groups “taking control of their own energy projects” and has acknowledged potential barriers in how they are able to secure public funding.

But the Community Energy Strategy will only begin to realise the full potential of the community energy sector if the government removes some of the impediments to its growth. This means recognising that community energy is different to business as usual. Widespread community ownership of energy resources could create enormous benefits in terms of generating public support for renewable energy technologies, reducing our dependence on polluting fossil fuels, reducing energy poverty and improving community cohesion and resilience.

But community ownership comes at a price – it can be slow and, in the early stages, expensive to establish a viable community energy project. Getting there will often be a learning process, dependent on volunteer support and grant funding.

The government needs to recognise these distinctive features of community energy and take them into account in all areas of energy policy design, instead of allowing a ‘one size fits all’ approach to impede the sector’s growth.

This certainly has not been the case in the recent past, with a prime example being the way that changes to the feed in tariff regime have prevented many community energy projects from getting off the ground, and threatened the survival of some early flag bearers.

From July 2011, the government decided that any energy project that had received any public grant funding would not be eligible to receive feed in tariffs (FITs), payments from electricity suppliers for the electricity they generate, and for any surplus power used by the National Grid.

Many community energy projects fall into this category, having relied on at least some grant funding to get started. Some projects, such as MOZES in Nottingham, have been left high and dry, unable to access FITs and complete their plans to install solar panels or build wind turbines. Just as damaging, innumerable community energy projects remain on the drawing board because the revised rules mean it is no longer financially viable for them to proceed.

Restrictions on the ability of projects to claim FITs if they have previously received public funding were first introduced in May 2010 on the basis of a misguided interpretation of European Union rules on state aid. From May 2010, any project was prevented from claiming FITs if it had received public funding for a renewable installation which, together with the anticipated FIT payments, would exceed a threshold of (generally) €200,000.

There is a good chance it would be possible to override this restriction, at least in relation to community groups. However, to do so, the UK government would need to obtain a new state aid clearance from the European Commission.

Unfortunately, government policy seems to be set in the opposite direction. The government apparently believes that the FIT regime has already been over generous, and that projects which have received public funding should not receive an additional benefit from FITs. But this ignores the non-commercial nature of community projects, their typically small scale and their inherent dependence on volunteer support and grant funding. Most importantly, it ignores the vital role that community ownership could play in generating wider support for clean and renewable energy generation. If the government is serious about producing a viable Community Energy Strategy, one of its aims should be to carve community projects out of the general restriction, enabling them to receive FITs irrespective of whether they have benefited from past grant funding.

The same approach should also be taken to the renewable heat incentive, which provides an incentive to renewable heat generation in the same way that the FIT encourages renewable electricity generation. Such changes would encourage reduced energy use, which is one of the UK government’s stated aims.

Other European countries, such as Germany, Denmark and Belgium, have adopted more liberal approaches to their Feed-in Tariff regimes, and, as a result, seen community energy projects flourish and grow. There is a clear lesson here for the UK government if it is serious about seeing, in the words of energy and climate change minister, Greg Barker, "even more communities taking local power production into their own hands".

As a director of Friends of the Earth, Simon Steeden also has a particular interest in advising environmental organisations, particularly in relation to environmental financing and campaigning.

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