How would you define a community energy project?

In the recent FiT Review consultation document (published on 31st October 2011) regarding changes to Solar PV tariff levels, DECC invited feedback on community energy projects.  They are considering the idea of a new (and higher) tariff specifically to support "genuine" community energy schemes.

Here's what it said in their report...

7. We are also considering whether more could be done to enable genuine community projects to be able to fully benefit from FITs. We will provide more detail on this in the second consultation on the comprehensive review [due out before the end of 2011] but we would, in the meantime, welcome any views on this and whether, for example, a definition of community scheme is required and, if so, how this should be defined?

So how would you define a 'community energy scheme'?  Given this is more about FiT tariffs, let's assume this would be a 'community energy generation project' rather than one focused on making efficiency savings...although, as with many generation projects, the revenue from the scheme could support energy efficiency work in the community.

One of our articles - Developing a community energy project – which option is right for you? - tries to define some of the key concepts - would you agree?

Comments

Useful guide to community energy

There's a new guide I came across all about Community Energy Projects:

see http://www.roughguide.to/communityenergy/RG_Community_Energy.pdf

John

Defining community energy projects..

My personal view is that this sounds like it's a simple question...until you dig into it when things become more complicated.

It's bad enough trying to define what a 'community' is let alone defining a 'community energy project'!  

Assuming DECC are looking for a fairly simple definition I would agree with others above that 'community' will be defined as some form of limited geographic area (even though you can have virtual communities, multi-geography communities etc.).  How small this geographic area has to be is the obvious next question - could it be the size of a city, a local authority...or Wales for example?  I'm guessing that DECC might see the maximum size being a local authority scale (although inevitably projects will span boundaries which will lead to interesting questions!)

Does there have to be a formal organisation established that represents the interests of the community?  I would suggest there should be one.  Does it have to be 'non-profit' like a CIC as Ted suggests above?  Or a charitable company?  Or could it just be an unincorporated association like the transition group I'm involved with?  I would hope it covers all of these structures.

Are they covering community energy efficiency projects as well as community energy generation projects?  I would hope both are covered.  Energy efficiency projects are unlikely to generate significant revenue so don't have that additional complication.  You would assume that to qualify, the group behind the project would need to be a 'non-profit' social enterprise, charity or voluntary group of some kind.

As for community energy generation projects, things start getting more complex due to the number of models out there from community wide promotion of mass discounting of PV panels to serious 5 year wind turbine development projects.  The number of project structures that can support these projects is growing rapidly - does this structure REALLY matter?  Or is it really the fact that underpinning everything should be a not-for-profit organisation or group of some kind.

I would argue that a community energy group does not need to 'own' generation equipment nor does it necessarily need a direct stake in a project.  It could just receive a 'community benefit' payment from a nearby windfarm which it then uses very effectively to deliver energy related projects.  There is nothing inherently wrong with the concept of community benefit payment models (provided they are sufficiently generous) and they are likely to suit some types of community.  Other communities will prefer to have some form of stake in an energy generation project while others want to organise, set up and run the whole thing themselves.  There are lots of different types of community out there and one size does not fit all.  

In Scotland I would personally strongly disagree with the comment above about leaving it all to Community Energy Scotland - they have their own models and approach focusing on the way they think things should be done.  But there are lots of other alternative approaches that are just as appropriate (Joint Ventures with Developers, Co-Ops etc) - unfortunately they don't generally get the CES stamp of approval and are then considered sub-optimal.

What are the limitations, if any, on its use of revenue from energy generation?  Can it use funds to support transport services for OAPs or help set up a local market (where money changes hands)?  Can it use funds to improve facilities and assets owned by the local authority?

On a related subject, are there limitations on the overall activities (not just funding) of the group?  Does the community group need to be primarily focused on "energy related projects" (generation or conservation) or can it do other activities like support the local football club or a local youth group?  Are 'Transition Groups' inherently 'energy groups'?  Those of us involved in them might argue they are but there are plenty of people involved in our transition group that are completely turned-off by energy related activities.  

I would suggest that the funding and activities of the group need to be primarily focused on helping those in its community to save energy and generate their own renewable energy.  If the group is doing lots of other stuff as well then there's a case for separating off the energy related activities into a distinct separate group or organisation.

So, in summary, what would a group need to be to qualify to receive a higher FiT tariff payment?

(1) It should be a formal not-for-profit group with an agreed structure (voluntary group, CIC or charity)

(2) Activities should be focused primarily on energy related activities (conservation or generation)

(3) Any FiT revenue should be focused on projects related to energy conservation or generation - this could be at the scale of multiple households (eg. energy saving advice) or community assets like a renewable heating solution and additional insulation to a village hall.

 

Community Schemes

A study sponsored by the then Department of Trade and Industry, through the Energy Technology Support Unit (ETSU), in 1999 entitled “Overcoming Barriers to Enable Greater Active Community and Local Involvement in RE in the UK” defined "Community project" as follows:

• A renewable energy development carried out by a local individual or body whose prime business is not energy generation

and:

• Community of interest is an association of people, who may be geographically separated, who share a common interest
• Community of locality, where those involved live within a defined geographic border

In the absence of an alternative, this would still seems to be the basis of a reasonable definition

The definition

The definition should be trivial and easy to comply with. A definition that requires the FiTs generator to be a Community Interest Company (CIC) would meet the bill.

I don't think that HAs should be included as such. If they wanted to benefit from the enhanced rates then they could set up their own CIC.

This approach means that the eligibility test is off-loaded to the CIC Regulator, who is already well placed to carry out the necessary work.

For more on CICs see - http://bit.ly/rL1P53

Community Energy

The following link to an academic paper provides an excellent background to the last two decades of community energy policy. The paper "Harnessing Community Energies: Explaining and Evaluating Community Based Localism in Renewable Energy Policy in the UK" was published in 2007 and it shows some of the other factors that complicate the issue.

http://northumbria.openrepository.com/northumbria/bitstream/10145/39557/...

Communities can be transient as well as static They can also be national but concentrating their efforts to a particular "end user", for example the Scottish Veterans Housing Association who provide accommodation in Edinburgh and Dundee.

Also, Local Authorities in Orkney and East Lothian are considering installing PVs on council homes. These would be a "rent a roof scheme" but with FiT payments being returned to the local community through council services including energy efficiency measures.

Community Energy Scotland should also be able to claim Community FiTs as their work supports community energy projects. They provide support and guidance to community energy projects across Scotland and as such are in an excellent position to monitor and evaluate whether an energy project is actually Community Energy or not. Rather then being duplicitous why not allow membership of Community Energy Scotland to be the qualifying criteria for Community FiTs. I don't have an answer for this question on a UK level. If initiated in Scotland with Community Energy Scotland as soon as feasible we may well see jobs creation from the inception of sister charities in the other regions of the UK.

I agree with Stuart. Community Energy must be able to reach those within our society at most risk of fuel poverty. If communities were provided with a simpler path towards a good income, with professional support, they would be in a much better position to move forward with a community energy project.

Community schemes

Worth noting that EST are doing a phone around to map out Community Energy Projects.

My guess is the issue of ownership and initiation (e.g. the scheme is iniated by a community body serving a fixed geography and is wholly owned or in part owned by the community). Benefits are distributed locally within a fixed geography. I could also include any scheme on a community building receiving a good chunk of the FIT – i.e. not a pure rent a roof scheme because most of the benefits fall without the community.

In the case of the Edinburgh Community Energy Co-op its in its articles what it is designed to do. I would say that this should be fairly broad. But we would want DECC and Ofgem to be fairly clear on what they expect and be able to give people early advice on this.

I would also say that Housing Association schemes should fall under this definition again if the HA is benefiting from the bulk of the FIT. This is crticial in relation to pushing the technology and the benefits of FITs into less affluent areas. At the moment the scheme is pretty much for middle class people with spare capital. Changeworks is doing some research in this area.