With the launch of the UK’s first Community Energy Strategy, a ray of light has opened in a doorway to what could have a radical impact in the way we generate and use energy.
Not only does it hold out the prospect of a far greater level of local, community engagement in sustainable energy generation – the ‘democratisation of energy’ – there is also a glimmer of hope on local electricity supply. Why is this important?
Rarely a day goes by without the cost of energy and the security of our current supply being in the news. One of the biggest fears is that we are all on a treadmill of ever spiralling energy costs as our generation and supply infrastructure wears out and the market can’t or won’t invest to replace it.
This theme is cropping up regularly. Our centralised electricity generation and supply system has been an extraordinary achievement which has helped stabilise energy costs for a long time. But the economics of large centralised generation stations – which the National Grid currently operates – are now in doubt and with it the economics of centralised supply.
With the rise of smaller scale, renewable energy technologies, with much lower running costs and free fuel supply, there is a prospect of local generation developing to meet local demand – progressively reducing our dependence on a centralised system that is locked into global fossil fuel prices. And with a much more local approach to energy supply comes the added advantage of much greater awareness – reinforced through our friends and neighbours – of how we can reduce our energy demands.
Also, if local generators could also become retail suppliers, there’s the tantalising prospect of selling power locally at a higher price than present – whilst charging local consumers less than they currently pay. Too good to be true? Just look at the gap between the wholesale and retail price in the Ofgem chart below (for more information on the chart, see https://www.ofgem.gov.uk/gas/retail-market/monitoring-data-and-statistics/electricity-and-gas-supply-market-indicators).
It’s just a glimmer of light at the moment. As the strategy alludes to, there are significant regulatory issues to overcome – ‘license lite’ (referred to in section 6.4 of the Strategy) is just an initial step down this road and we hope that the Greater London Authority sets a positive example with its application. There are plenty of technical and commercial challenges too. On the whole, the Strategy represents a step in the right direction, and is one that Community Energy Scotland is actively pursuing through its Local Energy Economies Programme.