Community Energy Schemes

Patrick Grady Excerpts

Tuesday 30th November 2021 Westminster Hall

[Wera Hobhouse]

I thank the right hon. and learned Gentleman for that analysis. Do we all want Ferraris? Who knows? But we probably all want community energy. The problem is indeed the cost of entry for small local suppliers, and that is what the Government need to look at. As we have already heard from the right hon. Member for Leeds Central (Hilary Benn), it does not work on the ground. When the right exists, fine, but what is the practice? We need to look at what we can do to change the practice and at what is affordable for the small companies that want to enter the market.

[Patrick Grady (Glasgow North) (SNP)]

The hon. Lady is being very generous with her time. As I have said in previous debates, I have local constituent groups who are dead keen on community energy and really want to be able to rise to the opportunity. In addition to rising to climate change targets and reducing emissions, there is an issue about resilience to climate change. We now have people in different parts of the country who have been without power for four or five days because of climate change-related weather storms. If we had local generation, there would be additional resilience in the system that would perhaps protect or shelter people a little bit from some of the damaging consequences of changing weather.

[Wera Hobhouse]

The hon. Gentleman makes a very good point. Lots of small and diverse players are probably the answer to our future energy demands. The Government in the past have always considered bigger is better, economies of scale and all the rest of it, but we need to look much more favourably at smaller, diverse suppliers.

I need to make some progress, so I will remind everybody where we were. The Bill would lead to energy market reform that would empower community-owned and run schemes to sell local renewable energy directly to households, rather than small companies buying energy from bigger companies, then selling it on. It would make new community energy businesses viable and by bypassing large utilities, they would keep significant additional value within local economies. More of the money that we use to pay our electricity bills would circulate back to our local communities to create more skilled local jobs, more viable local businesses, stronger local economies and greater resilience.

Let us take my constituency of Bath as an example. Bath and West Community Energy has delivered 12.35 MW of community-owned solar photovoltaics, in addition to one hydro scheme. Many of these projects have been installed in schools and community buildings across Bath, including Ralph Allen School, Oldfield School, Walcot rugby club, Newbridge Primary School and Lewis House. Bath and West Community Energy systems generate enough electricity to match the annual equivalent of 4,000 homes. They have distributed nearly £300,000 back into local community grants, which go into supporting community action on carbon reduction and fuel poverty, which has been mentioned.

The group supports a wide range of schemes, ranging from community orchards and reuse and repair schemes to fuel poverty advice and even a cycle-to-work scheme using e-bikes. I am delighted that our local electricity distribution network operator, Western Power Distribution, is a registered supporter of the local electricity campaign. However, there are a number of problems facing local suppliers, including those in my constituency. Bath and West Community Energy has identified and is developing nearly 40 MW in a pipeline of projects that will work with communities, commercial developers and site owners, but its ability to commission the pipeline will depend on a number of different factors.

One key factor is grid capacity. This area is currently heavily constrained. Investment is needed in grid improvement, but Bath and West Community Energy must compete with commercial companies with much more resources to secure a grid connection. Smaller operators do not have the financial resources that big commercial operators have. Another factor is partnership with local authorities. There is huge potential, and I am delighted that Bath and North East Somerset Council supports the Local Electricity Bill. Councillors keep telling me how popular community energy projects in their wards are in the consultation stages, but many projects do not make it to reality. There must be stronger support for local authorities to establish joint ventures and utilise local authority finance to invest in local community projects that generate local social and economic benefits on both public estates and in the wider community.

What is the biggest barrier to community energy? It is the right to local supply. Current energy market and licensing rules mean that community energy schemes to build new renewable generation infrastructure and then sell power to local customers face costs that are too high to make the schemes financially viable. A report by the Institute for Public Policy Research states that the financial, technical and operational challenges mean that initial costs exceed £1 million. As the Environmental Audit Committee has said, community energy contributes 278 MW of renewable energy as of 2020. That is less than 0.5% of total UK electricity generation.

Community energy has seen almost no growth in the past six years—a great waste of potential. However, there is a solution. I urge the Minister to add his support to the Local Electricity Bill, which was introduced by the hon. Member for Wantage and is supported by 281 MPs from all parties. The Bill sets out the mechanism that can fix the UK’s local supply problem. Clause 1 states the purpose of the Bill—to enable the local supply of electricity. Clause 2 sets out the aim of smaller-scale renewable generators to supply electricity directly to a local area. Clause 3 gives Ofgem the task of setting up the local supplier licence process. Crucially, it requires that the process ensures that local suppliers face set-up costs and complexity proportionate to the scale of their operations.