Transformation Moment

3. Local Supply

The importance of decentralised energy in today’s transformations has as much to do with democracy as electricity. The involvement of households and communities is central to its success.

Germany’s Energiewende programme already has over 83GW of installed capacity of renewable electricity generation. The most important aspect of this is found in the new pattern of energy ownership.

Over half of clean energy generation in Germany is owned by households, communities, farmers and localities. By giving this priority access to the Grid, Germany also uses it to drive down peak prices. This has profoundly changed public expectations about their entitlements within a more democratic energy system.

“A typical household in Germany can choose to buy energy from around 72 different suppliers out of 1,100 supply companies nationally. Almost half of these are owned by local government, communities and small businesses. Meanwhile Britain has around 25 active energy suppliers, with the big six squatting on a 93.5% share of the retail supply market last year. Germany’s big four had a mere 43.8% share.”[55]

and where

“…by the end of 2012, 190 German communities had been successful in bidding to run their local electricity distribution grid, with at least nine of these being wholly community-owned ventures.”[56]

German citizens (in towns, cities and communities) can sell (locally) the energy they

produce themselves. It helps to connect the climate/carbon saving agenda to the cost-saving one.

At the moment, Britain has no right of local supply. UK households (and schools) that produce surplus electricity (mainly solar) put that surplus into the Grid. For this, households can get paid an ‘export bonus’ of 4.91p/kWh.

The trouble is that, when households buy the electricity back, it costs 3 times as much. For those on pre-payment meters it is even more expensive.

The obvious answer would be for communities to sell (or share) surplus electricity with their neighbours, at somewhere between the 2 prices. Those without south-facing roofs (or without the money to install PV systems) could then share the benefits of this ability to drive down electricity prices. The same would apply for electricity from a community wind turbine or community-hydro. This is what also drives the pace of change in Denmark.

For a while, Britain did look as though it intended to go down the same path. The 2010 Coalition government wrote a promise to promote ‘community-owned renewable energy generation’ into their Coalition Agreement. The Treasury, however, soon kicked this into touch; limiting DECC consultations to a question of community engagement but not of ownership. There was no mention whatsoever of a right of local supply.

And so it remains.

It has been generally illegal for people in Britain to sell electricity into a local market. In order to avoid being a criminal, you must sell into a national market, at a national price … Oh, and there’s the little matter of a Supply Licence.

Obtaining a full Supply Licence costs in excess of £3 million. Understandably, most households don’t bother. Nor do the schools or community energy co-ops involved in clean energy (solar, wind or hydro-) schemes. Historically, big energy interests have simply blocked out local supply options.

In countries with smarter, localised, energy systems, localities may see electricity bought at better wholesale prices, sold at lower retail prices, and whole towns and communities being better off… but not in Britain.

Instead, ‘solar schools’ have been asked to pay over £1million for grid connection of their school roof. Godalming F.E. College was quoted £2 million for connection of its phase-2 solar roof extension. In Wales, community wind co-ops have been quoted over £6 million for grid connection. In parts of the South-West, they are just told that the grid is ‘full’; no amount of money will buy them connection.

It is hard to know whether to describe this as sabotage, folly or just a persistent pattern of British ‘organised underachievement’.

Yet despite the government’s wholesale assault on renewable energy support mechanisms, Britain still has just over 1 million installed solar roofs. Solar continues to deliver the fastest falling price of all renewable energy technologies. It could so easily be turned from a threat to a success story.

In Germany, the government adjusted its level of tariff support for solar and wind, to deliver roughly 3GW of new installed capacity/year. Efficiency gains drove down prices, but within an expanding market sector. Britain failed to grasp this, adopting a restricted market framework that was only ever designed to fail.

Every time industry managed to produce cheaper/better PV panels, DECC dramatically cut its tariff payment rates; turning a success story into a roller coaster of redundancies.[57] It also prevented solar from becoming one of the new norms in house building/renewal strategies.

DECC made no secret of its fear that ambitious local authority/social housing programmes would make the widespread installation of PV roofs the new norm[58]. Bringing the poor into the ‘clean energy’ game (and cutting their energy bills) was never part of the Treasury plan, so support was slashed.

This had an absurd logic to it, and nothing to do with public costs. The Chancellor’s £1bn Budget subsidies to the oil industry[59], his ‘freedom to pillage’ offered to Fracking, and the open wallet promised to new nuclear[60], made it clear that Britain’s central choices had more to do with politics than energy. Local leadership may be the place to look for fresh thinking .

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