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Policies to support local energy
systems: do they go far enough?
Jim Watson, Research Director
UK Energy Research Centre
EG&S KTN Annual Conference, London, 27th March 2014
3.
Innovation
systemsback
& development
Local
energy:
to the
future?
3. Innovation
systems &role
development
Current
/ future
of local energy
 More attention to local energy in
recent years, but still plays a minor
role in energy policy
 Community Energy Strategy:
’Putting communities at the heart of
energy policy’
 Modest ambitions, e.g. community
renewables could supply 1.4% of
electricity by 2020
 Also important for public
engagement and legitimacy?
3. Innovation
systemsless
& development
Local
investors
important than in
some other EU countries
% of electricity generation
15%
• 11.3% of electricity in 2012 (41TWh)
• EU target implies ~ 30% by 2020
14-15%
in 2013?
10%
5%
0%
1990
Source: DECC
1995
2000
2005
2010
3. Innovation
& development
Policiessystems
to support
local energy:
some considerations
Governance not government
 Key role for government, but many
other actors are also involved
 The UK is a centralised state: how
can government enable diverse,
bottom up action?
 Community benefits debate:
benefits for which members of
communities?
Not just an energy policy agenda
 Community development (CLG)
 Financing and incentives (Treasury)
3. Innovation
& development
Policiessystems
to support
local energy:
some considerations
Government at several levels
 National government (UK), including devolved
administrations with significant differences
 EU legislation is part of national policy framework
 Local authorities: capacity varies; some already leading
developers and/or supporters of community schemes
Scaling up and replication
 Can community energy become more ‘professionalised’?
Is this appropriate for this type of local energy?
 Importance of local context for many initiatives: some
limits to learning and knowledge transfer
3. Innovation systems & development
Electricity market reform
Electricity Market Reform
 Mainly focused on large scale, low carbon electricity
generation and the provision of large-scale capacity
 But it highlights the risk of a ‘missing middle’ in energy
policy; local energy could fall between the cracks
 Larger community / local projects are eligible for long
term contracts, but the mechanism is complex
 Fairer power purchase agreements for smaller players
has been discussed extensively, but not fully resolved
 Links to broader issues of competition in energy markets:
see today’s Ofgem announcement!
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add title
Electricity
market
reform
‘To complement EMR, we should unleash a completely
new model of competition and commercial opportunity
… we will need companies, communities, public sector
and third sector organisations to grab the opportunity
to generate their own energy at real scale and start to
export their excess energy on a competitive,
commercial basis. Not just a few exemplars, but tens of
thousands of them.’
Minister of State Greg Barker MP, Sep 2013
3. Innovation
& development
Othersystems
economic
incentives
Demand-side incentives
 Opportunities for more ‘collective’ local action through
ECO and the Green Deal
 Dedicated incentives for communities & Green Deal
 Both policies struggling due to politics and slow uptake
Energy supply incentives
 Grant schemes and FITs have both been essential for
community energy; frequent policy changes problematic
 Proposal to raise FIT threshold to 10MW welcome
 More support for local heat network development from
central government
3.AInnovation
systems
development
key role
for &Local
Authorities?
 Many Local Authorities are already
developing and implementing projects
and/or have energy strategies
 But many less active, and do not have
significant capacity to act
 Key barriers include attitude to risk,
lack of competencies
 Multiple targets and restrictions from
central government
 Prudential borrowing is possible, but
risk aversion reinforced by pressure
for them to reduce debt levels
3. Innovation
systems & development
Innovation
and learning
 Many local energy schemes are not innovative from a
technical perspective: they use familiar technologies
 But institutional / financial arrangements and business
models are often less well known (at least in the UK)
 Important to support demonstrations see ‘what works’
 Some notable examples:
• Ofgem Low Carbon Network Fund
• ETI Smart Systems and Heat programme
 Not enough emphasis on learning from experience, both
for future implementation and future policy development
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Thanks
http://www.ukerc.ac.uk
https://twitter.com/watsonjim2