ECC Environment Team Guide to Community Energy

Guide to Community Energy
This guide provides information about community energy and the support available to local groups.
It was produced by Essex County Council Environment team based on information provided by
DECC, the Centre for Sustainable Energy and other sources.
Throughout this document you will find information on various topics. If you are interest in a specific
issue you can click on one of the links below to be directed to it:
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Feed-in Tariff
Renewable Heat Incentive
Grants and finance
Energy efficiency at your community
Legal structures for community groups
Guides and toolkits on community energy
Choosing the right technology
Planning issues
What is community energy?
Community energy schemes are collective initiatives to reduce, purchase, manage or generate
energy. The main characteristic of these initiatives is that the local community benefits directly from
the scheme, but the approach is very diverse, including multiple scales of implementation, different
models of ownership and operation. Examples of community energy projects include:
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Community-owned renewable energy installations (solar PV, wind farms, biomass boilers,
CHP, etc.)
A community group providing energy advice or supporting energy saving measures such as
the installation of cavity wall or solid wall insulation
Community initiatives to reduce the local carbon footprint (Transition Towns, EcoTeams,
Carbon Conversations, etc.)
Photos: Lewis-Clarke /Geograph, Warren Gretz /NREL; Dirk Ingo Franke
ECC Environment Team
ECC Environment Team
Community Electricity and Heat Generation
Community-owned renewable energy projects present a powerful
opportunity to create significant income that can be invested in
locally-agreed priorities, and to connect individuals with their own
energy use. Aside from helping to reduce carbon emissions,
these projects can also act as a catalyst for other community-led
initiatives.
Green Energy Nayland
Green Energy Nayland "How we did it" guide is quite useful to other
groups looking to set up a similar community energy enterprise. Wey Valley Energy cooperative is
another example of a successful community energy scheme – the project has been providing free
electricity to 6 schools in Surrey, as well as financial returns of 5% to its community investors. The
Wey Valley cooperative is also working on a second community enterprise that will supply
renewable heat using wood fuel. More case studies are available at the PlanLoCal website.
If your community wants to know more about generating electricity or heat, you may be interested in
the following government schemes:
Feed-in Tariffs (FITs)
FITs support individuals and organisations, including communities, to generate low-carbon
electricity using small-scale systems. The scheme covers solar PV panels, wind turbines, water
turbines, anaerobic digestion (biogas energy) and micro combined heat and power (micro-CHP).
The last tariffs can be consulted here.
Currently you can receive FITs on installations of up to 5 megawatts (MW). DECC will be consulting
in 2014 on the introduction of a higher threshold of 10 MW for community groups. Feed-in Tariffs
provide a payment for all electricity that is generated, and also a smaller export tariff (for any
electricity not used on site and fed in to the national grid), plus potential savings on energy bills from
the ‘free’ energy being generated and used on site. The up-front costs need to be funded eg via a
local share offer or loan finance.
Community Interest Companies (CICs), cooperatives and Community Benefit Societies (Industrial
and Provident Societies which are not cooperatives) and schools are able to fix tariff rates for a
period, for more on FITs arrangements for eligible community groups, see the Ofgem website.
Renewable Heat Incentive (RHI)
The RHI helps organisations including communities to meet the cost of installing renewable heat
technologies. The scheme covers biomass, ground and water source heat pumps, geothermal, solar
thermal, biomethane and biogas heating.
Currently the RHI is only available for non-domestic installations, but the domestic RHI will
launch in Spring 2014. The RHI provides payments for the heat produced renewably for 20 years,
and as for FITs, the up-front costs need to be funded by the community organisation. As well as
receiving RHI payments, community groups generating heat can sell the heat produced to provide a
supplementary income stream.
ECC Environment Team
Further information about FiTs and RHI is also available in Climate Energy’s presentation to the
Community Energy Seminar 2014, including a very useful table showing the current tariffs available
for different installations at different scales.
Funding
Funding for community energy projects can come from grants, crowdfunding, loans, private
investors, or community share offers.
In order to help local groups to identify funding opportunities, Essex County Council set up a
dedicated Grantnet service. Grantnet is linked to a large database containing details of over 4,000
UK and EU funding sources. In order to use the service, please follow the link near the bottom of
this page, and you will be required to sign up using an email address. You can search as many
times and as often as you like.
These are some of the funding streams and finance currently available to community energy
projects:
1. Community Initiatives Fund (CIF)
This is a small grants scheme funded by Essex County Council (excluding Southend and Thurrock)
which is designed to fund community projects that:
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create, procure or develop new community assets
enhance existing community assets
enhance or develop initiatives that strengthen a community
Follow this link for further information about CIF or see the slides from Angela’s Balcombe
presentation at the ECC Community Energy Seminar.
2. Power of Giving - UK Power Networks
UK Power Networks grant scheme looks to address climate and/or social concerns in the local area
in a recognisably sustainable and cost efficient way. Charities, not-for-profit community
organisations, educational establishments and social enterprises can apply for between £1,000 and
£10,000 for innovative projects designed to help local communities in a number of areas such as
reducing fuel poverty, enhancing energy efficiency and promoting low carbon economy.
Submissions need to be made by 22 April 2014. Further information can be found here.
3. Pure Leapfrog
Pure Leapfrog is a business led charity working in partnership with Government and investors to
provide social investment and professional support to community energy projects in the UK. Finance
is secured through a credit facility from Big Society Capital and expertise through their professional
partner network. Further information can be found at the slides from Pure Leapfrog’s presentation to
the ECC Community Energy Seminar 2014.
ECC Environment Team
4. £15m Rural Community Energy Fund (RCEF) - open to applications
The £15m RCEF is aimed at helping rural communities in England access funding to carry out
feasibility studies for large-scale renewable energy projects, fund pre-planning studies and
preparation of planning applications. RCEF funds will support eligible rural projects including wind,
solar, biomass, heat pumps, anaerobic digestion, gas Combined Heat and Power (CHP) and hydro
through initial grants at stage 1 (less than £20,000) and loans at stage 2. For further information and
details of how to apply, see the WRAP website and the CSE for support with your application.
5. £10m fund for non-rural community energy projects – opening 2014
DECC will be launching an Urban Communities Energy Fund (UCEF) as a counterpart to RCEF for
non-rural communities in England in 2014. More details on eligibility criteria and how to apply will be
available shortly at the DECC website.
6. Awards for All England
Small Lottery grants of between £300 and £10,000. The scheme pays for activities that will benefit
the community, including putting on an event, activity or performance and buying new equipment or
materials. Applications can be made at any time, further information here.
Some banks specifically support community groups. These include: Charity
Bank, Triodos and Cooperative Bank. Communityshares.org.uk offers advice on
community share offers. PlanLoCal also have a number of useful videos on
finding funding and sourcing finance for community projects.
If you are looking into installing solar panels on a school, check the Solar
Schools initiative, an innovative program that provides free training and support
on fundraising for solar panels and engaging your community.
ECC Environment Team
Energy efficiency and reducing energy use in your community
Reducing energy use can reduce carbon emissions, and also save people money on their energy
bills. Some of the best community energy projects involve not generating, but saving energy and
communities working together can do that in a number of ways.
For example, communities may get together to improve the energy efficiency of a local building;
share tips on how households can use less energy on a day-to-day basis; or advise people about
what support is available to help them insulate their homes.
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Provide local energy advice - Communities groups can be
a trustable source of good and impartial energy advice, and
particularly effective at engaging vulnerable consumers and
reaching those in fuel poverty. This video gives you some
ideas on how to start offering this service in your area.
Run a Green Open Homes event in your community or take
Green Open Homes
part at Colchester Green Open Homes events. Open homes days
are events run by volunteers who have made low carbon
improvements to their homes and share their experiences with neighbours and others. They
are an excellent way to demonstrate the benefits of low-carbon renovations such as solar
panels, solid wall insulation and draught-proofing. Watch this video to learn how or visit the
Green Open Homes website.
Retrofit for community buildings – improving the energy efficiency of community buildings
can increase the comfort, reduce fuel bills and lead to an increased use of the building.
Improvements to these spaces can also raise awareness of the need to use energy
efficiently in local communities. Village Halls can get help from the Rural Community Council
for Essex, which provides an energy audit report that will guide you through all the options
available and help you to develop an action plan to achieve your objectives. Additionally, the
Centre for Sustainable Energy has prepared many resources to help groups to identify the
most worthwhile energy saving improvements for your building, such as an exercise that
shows how to estimate the heat demand of a community building.
Energy at schools – Your group could run energy activities to children and their families at
your local school; for project ideas, follow this link.
You can find more ideas at CSE’s presentation to the Community Energy Seminar or here.
Community Collective Purchasing and Switching
Community energy purchasing and switching can help communities secure better deals on
electricity, insulation or renewable technologies through discounts or referral fees.
Essex County Council first Energy Switch had over 4,200 residents signing up for a chance to save
money on their gas and electricity bills in February 2014. A new energy auction will be launched in
Summer 2014. Further information about the Essex scheme can be found here or follow this link for
tips on switching tariffs.
Photo: Bristol Green Doors
Here are some ideas of community energy projects in this area:
ECC Environment Team
Governance and legal structures for community groups
A legal structure is needed to apply for the majority of grants and to qualify for loans. The following
are examples of community group legal structures:
There are two types of Industrial and Provident Society:
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Community Benefit Society (BenCom). This is set up to benefit a particular stakeholder
group. They cannot operate like a private company and IPSs can offer community shares
(less than £20,000 limit).
Co-operative Society. This is run by and for the interest of its members. Co-operatives pay
out dividends to members, often on the basis of participation not investment. Each member
gets one vote, regardless of the number of shares they own. For further free advice, contact
the Co-operative Hub.
Community Interest Companies (CICs) cannot be formed or used solely for the personal gain of a
particular person, or group of people. They have an asset lock and a limit on dividends. CICs are
supervised by the CIC Regulator. CICs cannot run community share offers.
Charities are run by trustees, supported by donations and have charitable status (tax relief). They
are regulated by the Charity Commission.
Joint Ventures involve a community group and one or more other bodies like a private investor who
may bring business or technical skills, capital, legal expertise, local land etc.
Pure Leapfrog’s presentation to the Essex Community Energy Seminar 2014 included an example
of a business model for a community energy project, and the CSE have produced a very helpful
guide on setting up a legal structure. You can also find out more about setting up a social enterprise
on these GOV.UK pages.
Choosing a technology
The quality of a product and installation affects its performance. This in turn directly affects income
and the financial payback period. On installations that are less than 50kw (electricity) and less than
45kw (heat), advice should be sought from MCS installer companies with written estimates of
outputs and costs. Above these capacities, communities can get advice from consultants. ‘Due
diligence’ on technologies/consultants is part of the process of making community energy projects
successful- it ensures projects are viable and provide reassurance to potential investors.
The following links provide comprehensive information on choosing suitable technologies:
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CSE’s PlanLoCaL – this page provides you an overview of the main technologies.
Energyshare website also has a range of useful guides to technologies and services
Climate Energy’s presentation to the Community Energy Seminar 2014 explains how some
renewable technologies work and includes a very useful table showing the current tariffs
available for different installations at different scales.
ECC Environment Team
Choosing a consultant
A qualified and experienced consultant can assess on behalf of community groups the feasibility,
likely performance and energy outputs, i.e. the long term income which repays the investment. They
can also advise on the most appropriate technology.
Below 50kWs for electricity and 45kWs for heat, MCS installer companies can act as consultants
and will usually be able to provide you with a free quote. Communities are not covered by the MCS
consumer code of practice but there are routes for any complaints should they arise via MCS.
See the MCS site for further advice.
To access good quality advice, you should speak to a range of potential suppliers. Communities
should look for:
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A demonstrable track record of experience and/ or qualifications in the relevant field. This
may be demonstrated by their professional accreditation, CV, case studies, testimonials etc.
Value for money: getting as many quotes as possible – we recommend at least three - will
help you to establish a reasonable cost for the work in the current market.
For advice on Solar PV installations, download this checklist produced by the CSE to help you ask
installers the right questions and understand the answers, ensuring you get the best system.
Planning permission
All renewable energy installations that involve development require planning permission. This may
be granted either by a permitted development right (PDR) or by a planning application to the local
planning authority. Development is defined in section 55 of the Town and Country Planning Act.
Please see the Planning Portal for further guidance and contact your local planning officer. The
following links offer further information:
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Planning Portal - Neighbourhood Development Plans
Dept of Communities and Local Govt - Neighbourhood Forum
Local Govt Association’s energy infrastructure planning tool.
PlanLoCaL videos
Communities should also bear in mind that issues such as landscape, ecology, environmental and
archaeology, may affect different renewable technologies.
Useful guides and toolkits
The following organisations have produced useful toolkits and guides for people interested in
establishing or involved with running a community energy project:
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Centre for Sustainable Energy PlanLoCaL videos – these well-produced short films provide
advice on setting up a community-scale energy project, while the toolkit has various guides,
scoping exercises and info sheets
Centre for Sustainable Energy “The Source” - CSE's favourite guides and tools for
community energy
ECC Environment Team
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Low Carbon Communities Handbook - A comprehensive handbook designed to assist
community groups in running projects and engaging the community, with ideas and
examples from groups in Oxfordshire.
Community Renewable Energy Toolkit – an online guide produced by the Scottish
Government to help community groups to develop renewable energy projects.
Carbon Trust – have a look at their guides on buildings and technologies
Energy Saving Trust have also produced case studies
Further sources of information and advice
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Centre for Sustainable Energy “The Source” and the PlanLoCaL videos
Pure Leapfrog - social investment provider within the community energy sector. They
provide low cost finance to UK projects, drawing on a credit facility from Big Society Capital.
http://www.pureleapfrog.org
Rural Community Council of Essex (RCCE) - provides Energy Audits for Community
Buildings
Green Energy Nayland "How we did it" guide
Wey Valley Solar Energy and wood fuel cooperatives websites.
Cooperative Enterprise Hub - free advice and support for communities on setting up
cooperatives.
Sharenergy - A not-for-profit organisation which helps communities find, build and own
renewable energy generation schemes.
Energy4all - offers resources to support community-owned renewables.
Cooperative Community Share Fund – free advice on raising community shares.
Community Energy Coalition – organizers of the Community Energy Fortnight and advocates
of community energy with the Government.
Microgenius - A national platform for community share offers.
Community Shares Unit - Support service for those interested in and involved with community
share offers. Delivered by Co-operatives UK and Locality and backed by the Department for
Communities and Local Government.
Transition Streets – Transition Network information on community “street” programme and
training
Low Carbon Hub website
DECC’s Heat map for England
Biomass Energy Centre - online information on biomass
Department for Communities and Local Government: Planning practice guidance for
renewable and low carbon energy