Recognition of the role for perhaps the smallest end of the decentralized energy sector – ‘community energy’ schemes run by and for local communities – comes in the form of the regulator taking notice. UK energy regulator Ofgem has published a discussion document on what it calls ‘local energy’ schemes that are a both: ‘a growing feature of the Great Britain energy system…’ and: ‘a welcome development likely to increase consumer engagement and choice.’
Concentrating on just electricity systems for the moment, Ofgem lists local generation and supply initiatives, plus microgrids. And also the still-rather-experimental virtual private networks that seek to operate on the public distribution network and balance generation and demand using commercial arrangements. In all cases, schemes need to have a financially viable business case but may also be driven by local drivers, including consumer involvement, says the regulator. Ofgem concludes that the regulatory framework will need to evolve to take account of local initiatives, to ensure that consumers’ interests continue to be protected.
Ofgem’s work follows the publication a couple of years ago, by the UK government, of a Community Energy Strategy. This is full of warm words about the importance of the sector and suggests that 5,000 community groups are active. It also notes the considerably larger community-operated energy – particularly renewables-based – schemes in Germany and Denmark. A third of Germany’s renewable power generating capacity is said to be owned by single owners, including individual agricultural enterprises, individuals and smaller corporations.
In the UK, many community energy generation schemes typically operate by raising money from local people to pay for the installation of rooftop solar PV schemes at schools, community buildings etc. Investors often become members of the organisation, in some instances a cooperative, and are repaid, typically over 20 years from the proceeds of electricity sales to the grid and the feed-in tariff. Host buildings benefit from lower-cost solar power.
One such organisation, Brighton Energy Co-op installed seven solar arrays in 2016 and expects to double its generation capacity during this year.
Local, community energy schemes are typically small and concentrate their benefits the local community. But, as experience in other European countries suggests, they could form a respectable proportion of the overall decentralized energy sector – even in the UK.