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Community energy projects

Volume 711: debated on Monday 28 March 2022

The petition of residents of the constituency of Linlithgow and East Falkirk,

Declares that community energy is the essential grass-roots ally to obtain the consent and participation of the people in the urgent energy transition to net-zero and to invent and deliver essential local climate solutions, enabling the Green Recovery; further that, since the removal of the Feed-in Tariff, Export Tariff, Social Investment Tax Relief and the increase in VAT for solar and batteries, community energy struggles to make a business case to become active; further that the Smart Export Guarantee is insufficient in re-mobilising community energy and provides no certainty to investors; notes that the Rural Community Energy Fund is set to end in April 2022; declares that national growth funds are often closed or not applicable to community energy groups; further that the Net Zero Strategy contained neither the promised plan for community energy nor the practical support measures to harness its potential and enable the growth of community energy as recommended by the Environmental Audit Committee; further that a new Community Energy Booster would allow charities, development trusts and social enterprises to plan, develop, install and operate local renewable energy, low-carbon heat, retrofit and energy efficiency systems and solutions, working as equal partners with industry, SMEs and local authorities; further that this would deliver local jobs, reskilling, education and training opportunities, significant carbon savings and huge social and community benefits which would not be provided by commercial projects; and further that communities simply need a fair playing field to compete with commercial developers.

The petitioners therefore request that the House of Commons urge the Government to follow the recommendations of the Environmental Audit Committee and reallocate existing funding to better support community energy projects through extending and expanding the Rural Community Energy Fund, as a minimum, to include urban, heat, retrofit and energy efficiency projects. The House of Commons should also urge the Government to reallocate funding to create a community equivalent to the Contracts for Difference scheme in order to give more certainty to potential investors. Petitioners also request the House to ask the Government to develop a Community Energy Strategy that recognises the importance of community energy and puts in place long-term policy support to enable community to be the local powerhouse of the net zero transition.

And the petitioners remain, etc.—[Presented by Martyn Day, Official Report, 25 January 2022; Vol. 707, c. 974.]


Observations from the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lord Callanan):

The Secretary of State responded to the EAC inquiry outlining that plans for community energy would be outlined in the Net Zero Strategy. The Strategy, published in October 2021, acts in lieu of a community energy strategy, and recognised that community groups have a role to play in the Department’s efforts to decarbonise the economy. Furthermore, it recognised the excellent work communities already do to help us achieve this goal. The Strategy also committed to re-establishing the Community Energy Contact Group to strengthen engagement with the sector.

On UK-wide growth funding schemes, as Members will be aware, Government funding opens in rounds, and we encourage community energy groups to work closely with their local authority to support the development of community energy projects within these schemes. For example, the Towns Fund and the Community Renewal Fund are the types of funding where local energy projects would often be eligible. The Towns Fund has awarded over £23.6 million to Glastonbury Town which includes the Glastonbury Clean Energy project that aims to generate renewable energy for use by other projects within the Plan, as well as local businesses and residents.

The recent Levelling Up White Paper also outlined that the new UK Shared Prosperity Fund would support interventions that reinforced the Government’s commitment to reach Net Zero by 2050. This includes providing £2.6 billion of funding for community investment—including for community infrastructure projects.

Government also encourage community energy organisations to look at available funds outside of BEIS. For example, Ofgem has announced that it plans to welcome applications from community interest groups, co-operative societies, and community benefit societies to the Industry Voluntary Redress Scheme.

As stated in the petition, the Government currently funds the Rural Community Energy Fund, to support community energy projects. The £10 million scheme supports rural communities in England to develop renewable energy projects. The question of the level of funding for community energy, including RCEF, has not yet been decided.

On the petition’s request for a community-based equivalent to the Contracts for Difference scheme, community projects below 5MW may be able to benefit from the Smart Export Guarantee (SEG). The SEG is a market-led mechanism that ensures that small-scale generators continue to have a route to market for the electricity they export to the grid following the closure of the Feed-in Tariffs scheme. While Government recognise that the SEG may be more suitable for some community projects than others, we are pleased to see the market responding positively in its first year with a range of export tariffs available.

The Secretary of State explained in the written evidence to the EAC inquiry that the Smart Export Guarantee (SEG) was a new mechanism that significantly differs from previous policies. It was not designed to replace the Feed-in Tariffs scheme (FIT), but rather to be a cost-reflective and market-led mechanism, helping to level the playing field for small-scale low-carbon generation whilst supporting the transition to a smart and flexible energy system. At the time of its introduction, the main objective was to facilitate a competitive market. In its first year of operation the market has responded positively, with a range of SEG tariffs, demonstrating the fact that market-led approaches to delivering small-scale renewables can be successful. We will review again for signs of price competitiveness and innovation following Ofgem’s annual report on the SEG in the autumn. Government also note that Scotland has its own means of supporting community energy through the Scottish Government’s Community and Renewable Energy Scheme (CARES).

CARES provides advice and support, including funding support—grants and loans—to community groups and organisations, rural SMEs, and other eligible organisations seeking to explore their renewable energy options.