Policy overhaul is needed to realise a transition to a more local energy system, that’s flexible, democratised and participatory, Nigel Cornwall of New Anglia Energy has said.
Responding on 19 March to the Environment Audit Committee’s inquiry into what role community energy can play in decarbonising energy and heat, Cornwall set out how while there are many benefits and co-benefits that community energy can offer, government policy has not proven supportive. This has resulted in the sector struggling to reach critical mass, despite community energy and local energy systems being key to achieving net zero.
Reasons they will prove so important include supplying grass-roots active engagement in the net zero transition and helping to achieve smart markets that can harvest local flexibility, subsequently reducing the cost of meeting the target. They also have a crucial part to play in the strategic localisation of the energy system, harnessing and developing resources that would otherwise be unlikely to contribute to achieving net zero.
However, despite these benefits, a series of policy interventions have been particularly detrimental to the sector, including the closure of the Levy Exemption Certificates regime and the Urban Community Energy Fund, the withdrawal of tax relief and removal of embedded benefits, along with the removal of ROCs, the Feed-in Generation and Export Tariffs. The introduction of punitive business rates on roof-top solar, tightening of planning constraints for onshore wind and VAT increases on solar panels, batteries and energy saving measures – from 5% to 20% – have also has an impact.
Furthermore, there are regulatory barriers to the development of community-based models that must be addressed, while there is no meaningful support for delivery institutions and community bodies. The limited support that does happen to be in place is “not joined up, poorly targeted and badly coordinated”.
Considering the substantial benefits community energy can deliver, Cornwall set out a series of policy recommendations to boost its support, including supporting community energy activities in the Net Zero Strategy and progressing them through the Treasury’s Net Zero Review, as well as the need for a new Community Energy Strategy, addressing how to tackle barriers to the development of community energy and smart local energy systems.
Other proposals included reducing VAT on energy saving measures to zero to support a green recovery; the implementation of a Community Smart Export Guarantee with a floor-price for exported community energy and guaranteed 10-year tenure or, alternatively, the consideration of a Community Energy CfD open to sub 5MW projects; and that BEIS, together with Ofgem, consider how to facilitate local supply through a bespoke light-touch licensing scheme or class exemptions.
Read Nigel Cornwall’s full response here.