Residential Co-operative Power Production

Jamie Wallis Excerpts

Wednesday 13th September 2023 Commons Chamber

[Dr Jamie Wallis (Bridgend) (Con)]

I am grateful to have secured this debate to champion reform that is not only innovative but pragmatic: an idea that encapsulates the essence of empowerment, economic prudence and the responsible stewardship of our environment. At the heart of this vision is the unequivocal call to reconsider our approach to funding residential co-operative power production, in particular by not imposing green levies on individuals who choose to invest in their own renewables, no matter where in the country they may be. It is not just about fiscal prudence, but about putting the power to shape our green energy future back into the hands of the people.

We live in a time where large-scale wind and solar energy have emerged as the United Kingdom’s most viable sources of renewable electricity. Yet what truly sets this era apart is the exciting realisation that ordinary people, like you, Mr Deputy Speaker, and me, can now own a share of a wind farm or a solar park. This is not merely a financial transaction; it is an opportunity for each of us to become an active participant in shaping the trajectory of the UK’s energy landscape—a vision reminiscent of the transformative privatisations of the 1980s by the revolutionary Thatcher Government.

Consumer ownership of green energy assets goes beyond mere financial gains; it empowers individuals to play a pivotal role in the transition to net zero emissions. It makes tangible and accessible our personal contributions to, and the benefits from, that shift. So, how does it work? The process is simple: as individuals, we can purchase shares in a renewable power production initiative, alongside thousands of others. We receive our share of the electricity generated, delivered directly to our homes via the national grid. We experience tangible savings on our electricity bills each month for the entire lifespan of the asset.

A growing number of consumers, both households and businesses, have taken the bold step to invest in their own off-site green energy generation. They are not just securing energy independence for themselves; they are contributing significantly to the UK’s environmental targets. These consumers invest by purchasing shares in residential co-operative power production initiatives, bearing their portion of upfront construction costs. Owners of these shares receive their share of the electricity generated, delivered to them via the grid. Importantly, their energy suppliers purchase this electricity at the low operating cost of the co-operative, rather than at the fluctuating wholesale market prices. The resulting savings are then applied directly to the owners’ bills each month, stabilising costs over the long term.

However, a glaring issue demands our immediate attention. Consumers who invest in their own renewable power production have energy levies integrated directly into their electricity bills by virtue of the fact that they are purchasing from the grid. Contracts for difference, feed-in tariffs, green levies and so on all come off their bills. Paradoxically, the levies mean that consumers who own their own green energy assets effectively subsidise the green power consumption of others. The energy levies serve as a significant deterrent to investment in consumer-owned residential co-operative power. They hinder people from directly reaping the rewards of the UK’s transition to net zero—a counterintuitive outcome, to say the least.

My proposal is simple yet powerful: consumers who own shares in off-site renewable power production should be granted an exemption from the levies. Such a step could potentially reduce their bills by a remarkable 44%. That would create a compelling incentive for consumers to invest in their own source of green power, unlocking a new wave of personal private ownership of UK infrastructure. Moreover, there is another aspect that warrants attention. A portion of the savings that consumers accumulate on their electricity bills is currently liable to taxation. The savings are treated as interest, and if they surpass their owner’s annual interest allowance they become subject to taxation. The taxation of these savings serves as a significant deterrent to investing in energy ownership, as it adds complexity and uncertainty to the financial picture. In developing a sustainable future, taxing consumers’ bill savings from off-site renewable energy ownership is also counterproductive. I propose that we rectify it by exempting all bill savings from off-site green energy production from taxation. That would bring this into line with the treatment of home solar, creating a level playing field for all renewable energy investments.

Members may be wondering about the potential cost impact, so let me be clear: if these energy levy and tax exemptions did not induce people to invest in their own energy assets, there would be no cost at all to the Treasury or to other consumers. The scale of the cost impact hinges directly on the scale of the adoption of green energy ownership within the residential co-operatives. If people do not invest, there will be no costs. To put that into perspective, if just 10% of consumers decided to invest in such a manner, the levies imposed on other consumers would increase by approximately 11%—approximately £15 a year. These costs would be deferred and the Treasury’s revenue would be neutral for, probably, the next five or six quarters.

To underscore the real-world impact of this proposal, let me share with the House a compelling case study. It concerns a wind farm launched by Ripple Energy, not far from Cardiff and near my constituency of Bridgend, in Porthcawl. It was one of the first consumer-owned wind farms, owned collectively by 900 individuals from across the country who invested an average of £2,200 each. It has been generating clean electricity since March 2022, and has saved its owners an average of £320 on their electricity bills, with projected savings of about £970 in its second year. These substantial savings are attributable to the recent surge in electricity prices. Importantly, ownership of the wind farm has shielded those individuals from the price spikes that have burdened other consumers in recent times.

If we look beyond the immediate financial and logistical benefits, we see that this proposal carries even more profound significance in the context of our nation’s future. It positions us on a path to energy independence and resilience against global energy price shocks—vulnerabilities exposed by international conflicts and wars such as what we are currently witnessing in Ukraine. In post-Brexit Britain, this initiative is emblematic of the British public taking back control—taking control of their energy future; taking control of their financial wellbeing; and taking control of our contribution to a greener, more sustainable world. It encapsulates the very essence of British self-reliance and national pride, aligning perfectly with the spirit of autonomy that Brexit has come to symbolise.

Beyond the immediate fiscal and environmental benefits, this proposal has the power to shape our society. It can foster a sense of collective purpose and unity as people from all walks of life come together to invest in our common future. Imagine communities rallying around the prospect of owning a share of a local wind farm or solar park. Imagine schools and universities engaging students in the process of renewable energy ownership, educating them about the importance of sustainability and self-reliance. Picture a future when our energy landscape is dominated not solely by faceless corporations, but by the collective will of the people—a tapestry of interconnected, community-owned energy assets that serve as symbols of resilience and sustainability.

Furthermore, in line with the Government’s commitment to grow the economy, this initiative can act as a catalyst for innovation and job creation. As more and more consumers invest in green energy ownership, the demand for renewable energy technologies will soar. This will spur research and development in the UK renewables sector, creating new opportunities for scientists, engineers and entrepreneurs. Simultaneously, the growth of the consumer-owned green energy sector will lead to the establishment of local energy co-operatives and businesses, generating employment and economic growth in regions across the UK.

In a world where the challenges of climate change loom large, where global energy prices are subject to geopolitical disruption and where the public’s desire for self-determination has never been more pronounced, this proposal is a testament to our ability to take control of our lives. It is a resounding declaration that we, the people of the United Kingdom, are not mere spectators in the unfolding drama of our energy future; we are its authors and its protagonists.

In conclusion, what we have before us is not merely a fiscal proposal, but a transformative vision; one that empowers individuals, safeguards our energy future, and solidifies our commitment to a sustainable tomorrow. By not taxing green levies on those individuals who choose to invest in their own renewables, we would be giving power back to the people, and ensuring that everyone could partake in our collective journey toward a more sustainable, fairer and more resilient tomorrow.