HC 1605 Energy and Climate Change and Environmental Audit CommitteesWritten evidence submitted by Llangattock Green Valleys

1. IntroductionLlangattock Green Valleys

Llangattock Green Valleys CIC is a community interest company based in the rural Welsh village of Llangattock in the heart of the Brecon Beacons National Park. Llangattock is a relatively small community numbers wise—around 420 homes and some 1,300 residents.

With our journey starting back in September 2008 as a loose collection of residents who shared a broad vision of creating a cleaner, greener, more sustainable future for our community. Today that vision is becoming a reality with our principal objective being to establish Llangattock as a Carbon Negative Community by 2015.

By sharing knowledge, forging innovative partnerships and encouraging the whole village to get involved in a range of ambitious projects that are already making a real difference. 2011 has brought about us wining the British Gas Green Streets competition as well as reaching out of the village boundaries to a far wider audience with our Renewables Buying Club that includes solar PV.

Central to our ethos is our belief that while grants and funding are a great way to get things going, we shouldn’t rely on them. To become truly sustainable we need to apply sound business principles and find ways to generate income. Right now, we’re on track to generate significant revenue and be non grant dependent by 2013.

Basically, we believe we have a choice: we can wait for “someone” to come up with a solution to dwindling oil stocks, economic stagnation, climate change, sustainability, restoring back pride and well being into communities. Or we can start doing something ourselves. We think that developing long-term strategies locally makes the most sense, because it means we’ll get the solutions that will work for our community.

We are of the firm belief that our destiny is not being written for us but by us. Together we can make Llangattock and the surrounding area an area that can and is already inspiring many more communities to bring about the much needed change and begin to believe that the impossible is possible.

2. Proposed Tariff Level

(a)Residential (<4kWp)

The proposed tariff level for residential solar PV is pitched correctly in our view presents residential adopters of solar PV installations with an attractive return compared to money on deposits with the downward trend in installations costs continuing. Whilst we are seeing that return on investment is a primary decision driver for adopters of solar PV. Adopters are wanting to reduce their electricity bills, as well as reducing their carbon footprint and contributing towards their community’s carbon reduction goal.

It must be noted that adopters of solar PV whose intentions due to lack of capital availability and are directed towards interest free loans as a method of funding their proposed solar PV will now find that they will need to make a far greater contribution towards the repayments of the interest free loan due to the reduced FiT payments. We are already seeing evidence of reluctance to take up the interest free loans as affordability will not allow the potential adopter of solar PV installations to make up the increased shortfall from their monthly household income to cover the interest free loan repayments.

(b)Commercial (>4kWp to <50kWp)

Aside from the interest free loan comment made in 2(a), our view on the proposed tariff level for commercial solar PV schemes is as the residential view expressed above.

(c)Community Energy Projects (>4kWp to 50kWp)

The proposed solar PV FiT tariff level of 16.8p for 4-10kWp and 15.2p for 10-50kWp installations prevents us from deploying our funded model. As an example, the funded model allows us to mature solar PV schemes on school and community hall roof spaces with those organisations having little if no prospect in maturing solar PV schemes on their roof spaces due to lack of capital. This is now on hold due to the proposed tariff levels.

Given the proposed rates, we strongly recommend the Government look at providing genuine Community Energy schemes with a Community Energy FiT premium of:

4-10kWp providing a 8.2p Community Energy tariff premium to take overall FiT to 25p.

10-50kWp proving a 5.8p Community Energy tariff premium to take overall FiT to 21p.

As it stands, as an example based on the proposed tariff levels by the Government we would need to be installing solar PV schemes (10-50kWp) for £1,300 per installed kWp. Whilst in time the solar PV industry will achieve this installation price of £1,300 per installed kWp. We are currently not there and are in need of an enhanced FiT tariff for Community Energy schemes in order to mature the schemes. Allowing recipient organisations to benefit from lower electricity bills and energy efficiency measures but also the wider community over the medium to long term having financial support for further renewable schemes along with environmental and suitability projects from the profits from the solar PV schemes.

Whilst the list below should not be viewed as definitive, it is very much a starting point in Government understanding what types of organisation should be eligible for a Community Energy FiT tariff premium:

Community Interest Company (CIC).

Registered Charities.

Cooperative Societies.

Wholly owned trading subsidiaries of Community Interest Company (CIC) and Registered Charities.

Companies limited by guarantee.

Housing Associations and Community Trust are not mentioned above because are not legal forms as such but could in practice could use one of the legal structures above.

The Comprehensive Review considers that “the coalition Government is committed to ensuring that as many people as possible are encouraged to consider local low-carbon solutions and are able to benefit from the funding available”. We urge the government to look at this in another way than has previously been the case. Whilst we have seen positive steps made through the fast track FiT review into solar PV schemes of >50kWp in the summer 2011 and reduced the demand for solar PV parks. The intentions to limit the rent-a-roof industry through the multi Installation tariff rates for aggregated solar PV is one we support but needs further consideration as Community Energy including housing associations and social housing schemes will be adversely affected when Governments intentions are to prevent FiTs going to the few when they should be distributed to a far wider adopter base.

3. Eligibility Date for Current Tariff Level

We believe that given the uptake of solar PV over 2011 coupled with the unprecedented growing demand in recent months. The likelihood if the Government hadn’t stepped in when they did would be that of not only would the spending cap being exceed for this current financial year but future years of solar FiT payments would have been severely jeopardised. The industry highlighted to Government only six months ago that intervention was needed with a reduction in the FiT tariff level needed to prevent a bubble from appearing in the solar PV market which we currently have.

What must be brought into question is how the Government has gone about giving the solar PV industry just six weeks (31 October 2011—11 December 2011) for installations to be installed if they are to receive the current FiT tariff level for the next 25 years.

Any extension to the 12 December 2011 deadline we believe will only protract what are at the very least difficult market conditions for installers/community organisation to install solar PV schemes due to severe shortages of panels, inverters and mounting systems which has had a knock on effect to the prices with installers having to pay premiums to secure what little stock is available with a number of installers/community organisation just throwing the towel in as they cannot secure stock to fulfil their planned installations.

4. Multi Installation Tariff Rates for Aggregated Solar PV

This we believe has been brought about to quell the rent-a-roof industry but with the same brush has tarnished the community energy sector with the rent-a-roof schemes. It must be noted that we are not against rent-a-roof schemes in principle where they benefit customers who are in fuel poverty and have come as a welcome boost for example with social housing organisations and local authorities especially in areas of deprivation.

But as no doubt the Government is fully aware there have been organisations that include the big six energy companies that have marketed their rent-a-roof schemes on the basis of the electricity savings but have not be forthcoming and demonstrating what they will get out of it financially throughout the life of the FiT (25 Years).

Sadly this has allowed a number of organisations to profiteer from such schemes lining the pockets of the few when the FiT is and should be there to allow as many adopters of solar PV as possible with the FiT being distributed as wide as possible maximising the benefits. What we have seen is a run on the FiT pot in the first instance with the Solar Parks (which the fast track review into >50kWp market quelled but came too late as the pot had already been milked) and the rent-a -roof organisations.

Having a multi installation tariff rate for aggregated solar PV schemes is just plainly kicking the community energy sector when they are already on the floor following the proposals through the Comprehensive Review (Phase 1) having already had the knife stuck in our backs by Government and twisted by a cut in feed in tariff for 4-10kWp and 10-50kWp schemes that is disproportionate to the actual reduction in the costs of solar PV installations.

Community Energy schemes must be given an exemption to the multi installation tariff rates for aggregated solar PV if we are too get our funded models to deploy to the organisations that are in most need for solar PV and the associated benefits that go hand in hand.

5. EPC Certificates

We would prefer an EPC target but this assumes that the EPC model is able to cope with multiple sources of heat, voltage optimisation etc. Which it currently cannot do. We are also concerned that there needs to be some modification of the model to enable rural buildings and older buildings in conservation area, national Parks and/or with listing to partake in the scheme as these buildings frequently struggle to raise their EPC score and are prevented from installing many of the measures by planning regulations but also have owners in fuel poverty. In particular we note there is a fetish in the scheme for solid wall insulation which in our case is not economic or aesthetically possible on stone buildings in a National park.

We believe there is adequate scope within most buildings to improve their thermal scores which together with PV will make a major contribution but this needs more modelling.

6. Cost Control Mechanisms

We fully support the Governments consideration on contingent degression and more frequent/rolling reviews (which we would add would have prevented the current situation we are faced with with the 12 December 2011 deadline).

We cannot support the Government’s third consideration of rationing/quotas are we believe this is a restriction of trade and organisations that are showing entrepreneurism in maturing multiply Community Energy schemes will be effectively penalised for showing entrepreneurism. This would not only restrict the organisations promoting and delivering Community Energy schemes but the recipient organisations that are having solar PV installations.

7. Conclusion

In conclusion it must be seen that the current debate that is going around the UK regarding the subject for additional support for Community Energy schemes is one that can only boost the profile of this vibrant driven and motivated sector and will allow government to take seriously the proposition that the sector not only offers their own communities, regions and countries but also in being a seriously contributor to the government in meeting its targets going forward with Community Energy projects being the catalyst for greater things to come within communities.

24 November 2011

Prepared 22nd December 2011