Will Walker
Portfolio Manager
Power to Change’s long-term commitment to supporting community energy business was recognised last month with the highly commended award for Sector Support at the Community Energy Awards 2023. The judges cited our investment and support for the groundbreaking Community Energy Together and Next Generation programme, amongst others, saying “these initiatives collectively empowered communities, promoted expertise, encouraged collaboration, and paved the way for a sustainable future in the community energy sector.”
However, to fully unlock their potential, Community Energy Businesses (CEBs) requires a step-change in support and the removal of barriers as set out in our new briefing, The Role of Community Energy in a Just Transition to Net Zero. It highlights the importance of providing CEBs with the necessary power, resources, and backing to contribute to a just transition to net zero and makes specific recommendations for support from government and key stakeholders. It is a joint publication with our partners Community Energy England and the Centre for Sustainable Energy, drawing on the learning from our community energy initiatives over several years.
The UK Climate Change Committee stresses that it will not be possible to deliver net zero by 2050 if the people of the UK are not engaged in this challenge, and that fairness and local action are essential constituents of a successful transition. Moreover, Chris Skidmore’s Net Zero Review highlighted that ‘local action is key to delivering net zero in the cheapest and most effective way possible’. CEBs have an important role to play within this context. As Labour’s Local Power Plan seems to recognise with their promise of up to a billion a year in investment, local and community energy can be the cornerstone of the UK’s clean energy future. It can deliver multiple benefits to local people, the places they live and the energy system itself. We urge all political parties to match this ambition.
By harnessing local expertise, knowledge, and capital CEBs are making a growing contribution to renewable generation, energy efficiency, and fuel poverty initiatives across the country. They do this through local approaches that centre the needs of communities in a just transition to net zero. This engenders a sense of ‘we are all in this together’ and helps to share the costs and benefits of the transition equitably across society. CEBS are well placed to prioritise support to these most affected, including lower income and marginalised communities. This is particularly important as the price of energy bills remains a desperate concern for millions again this winter as the cost of living crisis continues to have an impact, driven by our reliance on expensive and unsustainable fossil fuels.
These businesses provide trusted advice to community members, acting as intermediaries between projects and local people. They play a vital role in engaging communities, building trust and consent, and normalising new behaviours related to energy and climate change. Moreover, CEBs are instrumental in identifying and responding to local community needs and delivering services in marginal markets. In 2021 alone, CEBs engaged over 217,400 people across the UK, reaching 57,600 people with energy efficiency interventions and generating significant social benefits.
CEBs have access to unconventional sources of capital and provide social value through their activities. For example, Community Energy Together has successfully raised over £1.65 million in community shares in around 4 months and is expected to deliver over £20m of community benefit funding over its lifetime. Research commissioned by the government found that community energy generates 12-13 times the local economic value of commercial energy installations. A Bristol University Study in 2020 showed that community energy fuel poverty initiatives can deliver at least a 9:1 social return on investment.
Two CEBs supported by Power to Change’s Next Generation programme, CREW Energy and Nadder Community Energy, showcase the achievements and positive impact these types of organisations can have in a just transition to net zero. CREW Energy successfully installed air source heat pumps for a community hub serving local children and young people, contributing to increased confidence in the technology and ultimately lower operating costs. Nadder Community Energy, on the other hand, has established an electric car club, providing discounted rates for lower income individuals and addressing wider transportation issues in a rural area.
To fully realise the potential of CEBs, various forms of support are required from governments, local authorities, electricity system operators, and funders. Governments need to recognise the crucial role of CEBs and provide leadership and an ambitious framework that includes financial incentives, policy support, and opportunities for engagement. Local authorities can offer cooperation, access to land and assets, and support for emerging community energy organisations. Electricity system operators and funders should engage in better dialogue, provide incentives, and access to data, and offer funding for capacity building, innovation, and emerging projects.
CEBs have immense potential to contribute to a just transition to net zero emissions. However, support from governments, key stakeholders, and funders is essential to realise future ambitions for the sector. By providing the power, resources, and backing required, CEBs can make a significant impact on achieving a sustainable and equitable energy future.