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August 27, 2014

Rewiring local energy

The last edition included a paper from think tank ResPublica floating the idea that local energy generation and local energy use could be brought more closely together so as to retain more value within communities and increase levels of energy resilience. Scottish Government seems keen to go down this road. A new policy consultation has been launched along with a significant new pot of cash (£20m) to help communities develop their thinking and test out what a local energy economy might look like on the ground.



Nicholas Gubbins, Community Energy Scotland

Community Energy Scotland Briefing Note

Headline Points

1. The Scottish Government has launched an important new policy consultation and funding programme that has the potential to create significant new benefits at the community level. The consultation can be found here

2. The central idea is that Scotland’s communities should be able to take ownership and control of their local energy system. With this in mind, support is now available to develop ways of linking local generation with local use that capture and retain more value at the local level – helping to build ‘local energy economies’.

3. The ambition is to see community energy flourish within an assets-based approach to community empowerment, and at the heart of new local low carbon energy economies, based on local energy systems.

4. The new Local Energy Challenge Fund will offer up to £20m in 2015-2016 to support collaborative demonstrator projects that provide transformative innovative local energy solutions. Details of the Fund can be found here

5. Up to £30k funding is available for partnerships this year for phase 1 development work designed to lead to a capital project next year. However, time is tight – phase 1 applications must be submitted by 10 October 2014. Full phase 2 applications must be submitted by 6 February 2015. 

6. Community Energy Scotland has led the development of the LEE concept in partnership with Highlands and Islands Enterprise and The Scottish Government. It is currently developing new project partnerships to bid to the Challenge Fund. Contact Felix Wight at 07917 883 698 or Nicholas Gubbins at 07796 275 988 for further information.

Background: The Local Energy Economy Idea

7. The vision of Local Energy Economies is to develop and deploy new business models, regulatory arrangements and technologies that can facilitate the creation of sustainable local energy ecosystems, i.e. systems that are resilient because they are based on a range of energy sources, efficient because they are based on short supply chains and economically vibrant because value is being added and retained at a local level.

8. For many communities, housing associations, local authorities and others their aspiration to directly participate in the retail of energy to local customers, supported by a suitably trained local workforce, have not been realised to date. The UK electricity market is not designed to facilitate new, small scale suppliers, and the opportunities for creating synergies between energy services across the heat, electricity and transport sectors generally remain unrealised because of a lack of regulatory and policy integration. This means that the ongoing supply chain opportunities arising from renewable energy are more limited than they would be if there were more direct links between local generation and local retail energy markets.

9. Many communities are also faced with the perverse situation where they have renewable energy resources on their doorstep but currently pay high rates for imported, fossil fuel based energy, giving rise to high levels of fuel poverty.  Furthermore, community generators currently have to sell energy to the national at wholesale rates, with local consumers having to buy it back at much higher retail rates – with no benefit to the community generator.

10. The Local Energy Economies concept seeks to address these issues by developing the policy, technical, financial and regulatory measures necessary to enable energy to be generated and used locally.

11. The Scottish Government now wishes to establish a pipeline of pilot community energy innovation projects across Scotland, which simultaneously address immediate, practical challenges for communities, while creating a body of experience and knowledge that can be transferred to other sectors and regions, and scaled up.

A Practical Example

12. Orkney is a perfect example of the opportunities currently being missed as a result of the misalignment of the above factors. On the one hand, the ambition of the Orkney community and the deployment by SSE of a ‘world first’ smart grid has led to renewable electricity generation exceeding 100% of local electricity demand on an annual basis. On the other, the full potential of Orkney’s renewable resources remains limited by a lack of available grid capacity, and fuel poverty levels remain among the highest in the UK.

13. Part of the solution must be to use wind energy that would otherwise be switched off, to provide affordable heating to households currently heated by oil or night storage heaters. However this can only be delivered by effective collaboration between a wide range of stakeholders, combined with the application of cutting edge new technologies.

14. In effect, the situation in Orkney is a time capsule from the future that can give us insight to what the national energy system may look like in ten to twenty years time, which creates an opportunity to pilot appropriate solutions before deploying them at scale, in order to ensure a well managed low carbon transition.