Struggling British Community Energy Cooperatives: A Solution to Sustainable Society?

Daichi Yoshioka
by Daichi Yosioka, GLOBUS Correspondent 

Last year’s UN Intergovernmental Panel on Climate Change Special Report warned that a global temperature rise of 1.5℃ from pre-industrial levels by around 2030 is a probable, worst-case scenario. In order to stop temperature rise at 1.5℃, the IPCC reported that global CO2 emissions needs to be reduced by 45% by 2030 and that a net zero CO2 emission has to be realized by 2050. Can we meet this? The UK set a CO2 reduction target in 2008, which commits “the UK government by law to reducing greenhouse gas emissions by at least 80% of 1990 levels by 2050”. This pathway, however, would fail to achieve the 1.5℃ goal.  More ambitious target need therefore be set. Energy supply is a key factor in carrying out our transformation to a sustainable society as it is the sector that emits the largest amount of CO2 into the atmosphere. In other words, de-carbonizing energy system is an indispensable step towards carbon neutral world by 2050.

Community energy is one solution to increase our share of renewable energy and to enhance the sustainability of local communities. While conventional energy systems with large power plants are usually run by giant utility companies, community energy systems provide a localized, bottom-up, de-centralized approach to supply sustainable energy. Community energy is defined as “Projects where communities exhibit a high degree of ownership and control of the energy project as well as benefiting collectively from the outcomes.” (Seyfang,et al., 2012). Typically, a community energy project is organized by a community energy cooperative who collectively invests, owns and operates power plants powered by locally available resources. Profits gained via energy generation will be shared among members and/or invested to solve other local problems.

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Economic benefit is measurable and the strongest incentive to establish a cooperative. A community energy project can reduce cost of energy. If it produces more energy than local demand, the community can gain additional revenue. Most importantly, local economy can retain significant amount of money which otherwise flows to a utility company based in a city. Cutting this flow and circulating capital within local economy could be an effective measure to revitalize local economy.

Community energy projects exploit locally available resource which is renewable energy in most cases. Use of renewables simply results in reduction of CO2 emissions and preventing pollution. In addition, it would contribute to landscape preservation which protects biodiversity and culturally valuable landscape. For instance in Germany, production of energy became an additional or even main source of income for farmers who could have abandoned their farmland due to financial struggle.

Moreover, the benefits of community energy schemes are not only limited to their financial profitability, for the promote social and environmental values that enhance local sustainability. These cooperatives can serve a platform where members affirm their sense of community and shared identity. This enhances resilience and community’s capacity to deal with other local problems. Moreover, community energy project are likely to improve environmental awareness, which accelerates energy transformation in the community.

In spite of the economic, environmental and social benefits of community energy, this sector is still non-mainstream in the developed world. Nevertheless, 228 community energy groups have been identified by Community Energy England’s annual report. They have reduced 17,000 ton of CO2 emissions and have provided clean electricity to 67,000 households in England, Wales, and Northern Ireland,.

Read More: Words – the Vital Earth Energy 

Britain’s community energy sector has three characteristics:

1) Market share is still extremely small: in 2013, the big 6 generated 99.7% of electricity in the UK. Share of renewable energy owned by local communities is truly marginal.

2) Non-business oriented organizations: 88% of British community energy cooperatives produce no surplus or they invest surplus to solve other social issues.

3) Heavy dependence on grant funding: 69% of their income source was grant funding in 2017.

The British community energy sector has to find a way to survive in the conventional, centralized energy system dominated by the ‘Big 6’. In 2017, only one community was newly established in England, Wales and Northern Ireland. This is because of decreased financial support and an increasingly uncertain future outlook caused by the closure of Feed in Tariff (FiT). Grant funding for community energy projects has been greatly reduced due to removal of the Urban Community Energy Fund (UCEF) and closure of the Urban Community Energy Fund (UCEF). Since grants account for 69% of overall income in the British community energy sector, lack of financial assistance directly impact their performance. Additionally, the government of the UK announced last year that the FiT will end in April 2019. This would reduce the stability and viability of renewable energy projects. The community energy organization is therefore likely to struggle to win funding and investment. Britain’s community energy sector needs to prepare to survive in the considerably hard environment.

Community energy sounds ideal solution to enhance sustainability in the local context. However, the situation in the community energy sector in the UK is increasingly difficult. The sector has not been matured, and hence requires financial and political assistance. Nevertheless, policy and mainstream business interests seem to point towards conventional energy system such as nuclear power. The urgent need to deal with climate change encourages a search for quick and effective solutions. However, though these may seem more realistic, they are risky in the long term. We should not be too quick to dismiss community energy as a potential solution.

Bibliography

Community Energy England. (2018). State of sector report 2018. Retrieved from

https://communityenergyengland.org/pages/state-of-the-sector-report-2018

Committee on Climate Change. (No Date). UK regulations: the Climate Change Act.

Retrieved from https://www.theccc.org.uk/tackling-climate-change/the-legal-landscape/the-climate-change-act/

European Environment Agency. (2016). Sectoral greenhouse gas emissions by IPCC sector

Retrieved from https://www.eea.europa.eu/data-and-maps/daviz/change-of-co2-eq-emissions-2#tab-dashboard-01

Li, L. W., Birmele, J., Schaich, H., & Konold, W. (2013). Transitioning to community owned

renewable energy: Lessons from Germany. Procedia Environmental Sciences, 17, 719-728. doi: https://doi.org/10.1016/j.proenv.2013.02.089

Nolden, C. (2013). Governing community energy—Feed-in tariffs and the development of

community wind energy schemes in the United Kingdom and Germany. Energy Policy, 63, 543-552. doi: https://doi.org/10.1016/j.enpol.2013.08.050

Seyfang, G., Park, J. J., & Smith, A. (2012). Community Energy in the UK. University of East

Anglia, Norwich, 3S Working Paper, 11. Available at http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.393.7283&rep=rep1&type=pdf

Watts. J. (2018, October 8). We have 12 years to limit climate change catastrophe, warns

  1. The Guardian. Retrieved from https://www.theguardian.com/environment/2018/oct/08/global-warming-must-not-exceed-15c-warns-landmark-un-report

 

Header Image: Photo by Annie Spratt on Unsplash

One comment

  1. I very interesting article. This story appears to underlie the failure of UK Government to show meaningful leadership on the climate emergency. The FIT was clearly promoting the expansion of low carbon energy. However, its mismanaged termination, without a clear follow-on and despite the Government knowing about this since they placed an end date on the scheme, is a significant yet entirely avoidable stock to an otherwise expanding sector.

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