Co-operatives - helping to power the community energy sector

R-ECO Renewable Energy Co-operative

Energy plays a pivotal role in our lives. From our early morning cup of coffee, to heating our homes on a cold winter’s evening, our reliance is great. This commodity, despite its importance, is often taken for granted.

But the winds of change are not only powering turbines. Our dependence on oil, gas and other non-renewables, concerns over greenhouse gas emissions, and a desire to take greater control over our energy are all fuelling a growing trend.

Renewable energy co-ops are sprouting up across the country. There are more than 5,000 community energy groups active in generating, managing, purchasing and reducing energy consumption. In 2014 community share offers raised almost £26 million to fund new green projects - a three-fold increase from the previous 12 months.

Incorporated in 2010, Bath and West Community Energy (BWCE) had raised almost £10 million through share offers by 2015. The community benefit society had also installed 1.7MW of solar panels - sufficient to supply the equivalent annual electricity demand from 500 homes – with many more projects in the pipeline.

But the production of green energy remains only one element of the mix. In 2015, BWCE distributed grants totalling almost £20,000 to support local carbon reduction and fuel poverty projects. With solar power installations on schools and community buildings, education is also a key component, while there are numerous less tangible benefits.

“There’s an underlying motivation that’s about increasing our energy literacy and bringing energy use to the front of people’s minds, “ said Peter Capener, Chairman of BWCE. “If you had to walk five miles for a bucket of clean water it would make you think very carefully about how you use that water the following day. Energy is not like that. There’s been a massive increase in the use of energy without thought as to the impact of that energy use."

"Ownership is the foundation stone upon which community energy is built."  Peter Capener, BWCE

But community energy is making a difference. Peter Capener said: “We asked people whether being a member (of BWCE) had either helped or encouraged people to think or talk to others about climate change, or actively reduce their carbon footprint.

“I was gobsmacked that about 50 per cent responded to say they had taken action, or engaged with others over the issue of climate change. Being a member of BWCE had encouraged them to do that. Community energy creates a deeper relationship between local people and where they get their energy from.”

The community aspect of renewable energy projects is crucial according to Peter Capener. But continuing to take the sector into the mainstream – and away from the increasingly false perception of quaint small-scale initiatives is also of paramount important.

He said: “It seems appropriate that local people benefit from local projects. What we also wanted to do was to create something financially sustainable as opposed to a reliance on grants, and also deliver on scale, rather than having a small peripheral impact. And all this is underpinned by a strong community model.”

The people of Bath have, quite literally, bought into the intrinsically linked benefits of clean energy and community benefit. There is also a wider knock-on effect in terms of increased public confidence in other social enterprises – such as music venue the Bell Inn in Bath which enjoyed a hugely successful community shares offer. The BWCE chairman added: “Ownership is the foundation stone upon which community energy is built.”

There remain challenges to overcome. Community energy organisations cannot currently sell clean energy back to their members – back to the very same community which financed and houses the renewable energy installation(s).

"We are looking for government to address barriers to market entrants and to explore the potential for a proper liberalisation of the energy market.” Peter Capener, BWCE

The sector also suffers through instability as a result of changing tax and subsidy legislation. Alongside its partners Co-operatives UK, the trade body for co-ops, continues to lobby government over both issues, in addition to raising concerns over limitations on rates of return for member investors.

Peter Capener said: “Just think how much more powerful that offer could be if people could not only invest in a project, but directly source their electricity from that project. We are looking for government to address barriers to market entrants and to explore the potential for a proper liberalisation of the energy market.”

The challenges are certainly not insurmountable – as the sector’s rapid expansion proves. A united front, demonstrated by the success of the Community Energy Peer Mentoring programme, is also apparent.  As part of the Co-operatives UK-led programme, existing organisations (including BWCE) supported 30 new community energy groups. In effect, this support involved passing on their knowledge and expertise to potential future competitors.

Peter Capener said: “People feel that the more successful community energy becomes, the more embedded and stronger the overall proposition becomes – and the more people will see community energy as a serious proposition. There’s a recognition of the mutual benefit success brings.”

“If the sector is to scale rapidly we have to support those groups starting out than we have in the past. We can’t expect people to immediately become experts in a complex market.”

Learn more about Co-operatives UK’s role in championing the community energy sector here.