Community power can revolutionise our energy system

25^th June 2014

Frances Bodman of ClientEarth sets out the legal, regulatory and policy measures needed to realise the potential of community power across Europe

As the International Panel on Climate Change (IPCC) has made clear, we urgently need to change how we generate, use and think about energy. Pressures brought on by the need to mitigate climate change, increasing energy demands and energy security concerns require that we move towards a decarbonised and more efficient system.

As more people are recognising, we are also in need of a more socially just, democratic energy system. This is confirmed by the recent referral of the ‘Big Six’ to the Competition and Markets Authority due to concerns over the lack of competitiveness in the energy market and its effect on pricing. Consumers are increasingly concerned that liberalisation of energy markets has not benefited them. Energy prices rise, while only a few privileged members of the existing oligopoly benefit.

ClientEarth believes that everyone should be able to participate in the energy system, and not just be treated as passive consumers. That is why we are part of a Europe-wide ‘Community Power Project’, which aims to address obstacles that currently hinder growth of community renewable energy projects, and increase public awareness of the benefits of community power. Community power is where citizens own or participate in the production and/or use of clean sustainable energy. It is an essential element in Europe’s low carbon energy transition and has been instrumental in triggering the low carbon energy revolutions that are taking place in countries like Denmark and Germany. Along with other community initiatives, it has also contributed to creating public awareness of the need to reduce greenhouse gas emissions, the uptake of renewable energy technologies and broader energy efficiency measures across the European Union. Community power has other wide ranging benefits such as building social capital, creating employment opportunities, providing revenue to address community development needs, and combating fuel poverty.

As part of the ‘Community Power Project’ we recently finalised a report identifying examples of best practice in terms of legislation, regulation and policy for community renewable energy projects, and developing recommendations for policy and legislative change. In many EU countries, existing legislation does not provide sufficient support for, and in some cases actively impedes, community ownership. By contrast, some countries have specific regulations enabling citizen ownership of, and involvement in, renewable energy projects. In particular, the report identifies best practices in the areas of: legal ownership models; financial support schemes for renewable energy; land use planning and other local regulatory frameworks; grid access, ownership and management; and energy marketing and supply.

The report makes recommendations for how national laws can promote the development of community power, in particular the effective implementation of existing EU legislation. In particular, the UK has a lot to learn from its neighbours.

The UK’s Community Energy Strategy, released in January of this year, is a start. However, It largely acts as a laundry list of priorities the UK government must now pursue if it wants to make good on its expressed commitment towards promoting community energy. As a first order of business, it should use its authority provided in the 2013 Energy Act to raise the threshold for eligibility to receive feed in tariffs from 5 MW to 10 MW. Secondly, it should take a rational but flexible approach towards defining ‘community energy’, in order to promote a wide range of models for citizen ownership and participation in renewable energy production. In addition to promoting shared ownership between communities and developers, it should also commit to a national community energy target, similar to that of Scotland. To this effect, it should also encourage local authorities to make similar commitments. Furthermore, Ofgem and DECC should work together with communities to provide equitable grid access for community power projects, in particular through at least partial socialisation of costs of connecting to the grid.

The UK government also needs to get serious about restructuring its energy system to allow for what Greg Barker, Minister of State at the Department of Energy and Climate Change, calls the ‘Big 60,000’. This will not be easy, because the current energy market and infrastructure are based on a model of centralised energy production. As a first step, DECC and Ofgem should work together to seriously prioritise holistic planning for transmission and distribution network upgrades, looking towards enhancing local energy management, and creating infrastructure that can handle distributed and intermittent sources of renewable energy, using citizens in the process. Furthermore, the government needs to rethink its vision for the energy market. Allowing community energy projects to become licensed suppliers needs to be prioritised, as does creation of local energy markets through allowing direct marketing and supply of locally generated energy.

The report also recognises that the current EU framework lacks explicit recognition of community power. The EU’s internal energy market still largely treats citizens as passive consumers and beneficiaries of the energy transition, rather than potential active participants. We therefore recommend that in looking towards 2030, the EU framework should itself be recalibrated to provide a more elaborate and explicit legal basis for community power and energy democracy. The UK government could potentially champion such efforts, and we encourage it to do so.

There is economic, social, and environmental potential in community energy. It is not just a niche activity that communities engage in as a hobby. It is a growing movement – a revolution – to seize potential for a more just energy future. The right policies and laws can help pave the way to allowing community energy to play its essential role in the energy transition. But first, we need government vision and leadership – at all levels.