If community energy is treated fairly, it will play a role in the just transition

Author: Friends Provident Foundation

Date: 15/03/2019

The energy market is being disrupted like never before with economics, technology, and business model innovation driving a transition towards decarbonised, decentralised and more democratised energy – the 3D energy transition. But, whilst this should support the proliferation of community energy, it has been accompanied by policy changes that are cumulatively risking its future.


That’s why 20 community energy and affiliated groups, including ourselves and several of our grantholders, have endorsed a new ‘Manifesto for Community Energy’, produced by Green Alliance. We believe these policy recommendations would enable a level playing field and fair access to market, allowing it to survive and thrive.


In support we organised a letter signed by 10 large impact investors and grant makers to Claire Perry MP, Minister of State for Energy and Clean Growth, asking for community energy to be heard and its added value considered in new energy policy.


At Friends Provident Foundation, we’ve been giving grants to community energy groups to innovate and develop new business models for a 3D energy system, such as Repowering London for a tower block community energy supply model, and Bath & West Community Energy for a neighbourhood storage and demand model. Plus, sector support such as Community Energy England and Forum for the Future’s community energy asset bank.


We’ve also made impact investments, including a community share offer by Awel Community Wind Farm in South Wales to enable refinance and additional community benefit; and a bond offer by Thrive Renewables that enabled asset transfers from commercial to community ownership, including a wind farm in Cumbria and a solar array in the Midlands. But in recent years there have been few investment opportunities in new community generation.


It’s a shame as the capital is there, in the rapidly growing impact investment sector, now moving beyond charitable and philanthropic investors and into the mainstream. Community energy is just the type of high impact investment this growing market is looking for.


Just Transition


We believe if the policy barriers can be overcome, community energy will play a significant role in a just transition to decarbonised and more decentralised energy.


The graphic below, produced by another grantholder, LSE Grantham Institute, for its ‘Investing in a Just Transition’ programmeme, captures perfectly the dimensions of the just transition. Community energy has clear roles to play in relation to  ‘communities’ and ‘consumers’.


Among its benefits is the added community value it brings; creating a significant income stream, improving local economic resilience, and empowering communities to meet their own needs.


Many projects operate for the purpose of addressing local fuel poverty, to date focusing on issues such as energy efficiency. As the 3D energy transition progresses, more consumers will generate and save their own energy, becoming less reliant upon the grid. There is a risk that grid costs will mount upon those ‘left behind’ and exacerbate fuel poverty.


Recommendations contained in the Manifesto, such as allowing direct local supply, will  allow community energy to play a greater role in ensuring a just transition where no one is left behind.


Let’s ensure that community energy is treated fairly so it can play its part in the just transition.