Cities and local authorities can provide an alternative to the UK’s ‘big six’ energy companies with a range of options open to them to invest in and support local generation, which some are already utilising.
This conclusion comes from a new analysis by the Institute for Public Policy Research (IPPR) think tank and its report, which urges Britain’s cities to get even more active in energy markets and for the pioneers to go further.
Three courses of action for cities to invest in on-site energy generation are recommended. For instance, cities should create a collective agency for the issuance of local authority bonds, including green municipal bonds and should work with the Green Investment Bank on discrete low-carbon infrastructure projects where there is a clear rate of return on investment. Local authority pension funds should also take into account environmental, social and corporate governance factors and proactively seek low carbon investments, the IPPR says.
The report argues that smaller scale electricity generation is increasingly cost effective, supports growth by smaller energy companies and delivers local jobs and growth. Cities that take forward this approach would help to ensure that subsidies for low carbon power benefit their communities rather than multi-national companies. This will in the long run help preserve greater public support for low carbon subsidies as has taken place in Germany.
IPPR’s analysis also reveals how by becoming active in the energy supply market cities could support independent generators and ensure that low income consumers are paying a fair price for their energy.
Commenting, Nick Pearce, IPPR director, said: ‘Around the world cities are spearheading the transformation that must occur in the energy sector. In Germany, for example, the city of Munich has already invested €900 million in renewable energy projects and it has plans to invest a total of €9 billion which will enable it to supply the entire municipality of 1 million people with renewable electricity by 2025. In the UK, Lancashire County Pension Fund is investing at least à‚£193 million in low carbon projects. Local generation technologies like solar and medium-scale wind are radically transforming how energy systems operate, bringing to an end the dominance of centralised generation and distribution. This will create a system which is much more diverse and competitive. Cities should grasp the opportunity this presents to support local job creation and growth and enhance the resilience of local electricity supply. This will ensure that more low carbon subsidies directly benefit British communities.’