Did you know that community energy projects can help local organisations save money on energy bills, create opportunities for people to invest in local power generation and help reduce carbon emissions? You may never even have heard of community energy, so this blog provides a bit of an explainer, and sets out the exciting plans that are being developed by Surrey Community Energy, a brand new local initiative.
Community energy comes in a variety of types. So let’s start with some simple ideas. Last year I started working for Surrey Community Energy, a new start-up. This very new company is supported by a government initiative that is designed to increase the amount of community-owned energy assets in the country. As we move to use less fossil fuels, the UK needs to build a lot more clean electricity generation. On a large scale, this means offshore wind farms and large solar farms, funded by big investors like pension funds. But the government also wants to encourage a lot of smaller generation projects, across the whole country, with more local investment and ownership, and more benefits reaching the local communities around them. There are now many community energy companies across the country, supported by a mixture of advice and some start-up grants from the national and regional community energy organisations.
Companies like ours have a very straightforward business model. We identify buildings or other sites in our area that use a lot of electricity, but don’t have the capital to invest in solar panels. We focus on organisations with a ‘social purpose’ that the community need and use, for example, leisure centres, schools, nursing homes, but we are not restricted to these. If we can reach an agreement, we set up a project. The site agrees to lease the space and to buy most of the electricity generated. The community energy company raises the money to build the project by creating a share offer and selling the shares to individuals who are interested in the project. The shares have a guaranteed return for a term, usually 15 years, and are then bought back, returning the capital to the investors. The income to pay the dividends and pay off the capital for the project comes from the ‘Power Purchase Agreement’ with the site. It all works because renewable energy is cheap to generate, so the site pays a cheaper rate for the solar power produced than they pay to buy electricity from the grid.
There are a lot of other versions of community energy companies. Some companies provide a lot of energy advice as well as building projects, we don’t currently do that because the Surrey County Council HEAT project run by ZERO does a good job here in Surrey. We are initially focussing on rooftop solar, though we are not limited to this, but elsewhere in the country there are a wide variety of projects. They could be anything from wind turbines to heat networks, they can include retrofitting insulation and heat pumps, as well as supplying electricity, and sometimes companies will take partial ownership of bigger commercial projects to return some value to the community.
There are other new developments beyond this going on around renewable energy, and different ways to invest. Elsewhere in the industry there are even options to buy a share of the energy generated by a local turbine and see a direct return through lower bills. These schemes have been limited while onshore wind was not being built, but there may be more in future.
If you are interested to know more about Community Energy in Surrey, please come to the event at ZERO on Saturday 15 March 1-4pm to hear some very well-informed speakers and meet some of the local organisations working in this exciting new sector in Surrey.
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