Energy and Climate ChangeWritten evidence submitted by the Totnes Renewable Energy Society
Introduction
The Totnes Renewable Energy Society (TRESOC) is a community owned Industrial and Provident Society, established in November 2007, for the profitable development of renewable energy resources for the benefit of the local community resident in Totnes and surrounding parishes.
TRESOC Registered Office
107 High Street
Totnes
Devon
TQ9 5SN
www.tresoc.co.uk
Summary
This response to the call for evidence in the Inquiry into Local Energy is based on the experience of TRESOC in developing a portfolio of small to medium community owned renewable energy projects and draws the following main conclusions.
Medium sized energy projects can make a significant contribution to the UK’s climate change, energy security and energy affordability objectives.
There are a number of different models of ownership for medium scale renewable energy projects involving local communities, landowners, businesses and individuals.
Community owned projects use local sources of funding, thereby ensuring that a higher proportion of the return on investment is retained within the local economy.
There is considerable appetite for community owned medium scale energy projects in the UK, requiring special provision in the Energy Bill.
Government should engage directly with the community energy sector in the development of legislation to promote small to medium community owned renewable energy projects.
Evidence
3.1 What contribution could medium-sized energy projects (5–50MW) make to the UK’s climate change, energy security and energy affordability objectives?
The experience of TRESOC in researching potential commercial renewable energy opportunities in the South Hams area of Devon is that there is limited scope for medium scale projects. Constraints imposed by terrain, proximity to housing, designated areas, etc., determine a pattern of renewable energy development where 5 MW is likely to be the single largest individual project possible. TRESOC’s current project portfolio includes a 4.6 MW wind farm development, a 4 MW woodfuel pyrolysis plant, a 350 kW Anaerobic Digestion plant, a 400 kW Tidal Hydro project and a number of solar pv projects below 50 kW. In aggregate these projects total considerably more than 5 MW of renewable energy in community ownership
3.2 What different models of ownership exist for medium-sized energy projects and how prevalent are they in the UK?
TRESOC is working in partnership with specialist renewable energy companies using a variety of ownership models appropriate to each project. The 4.6 MW Totnes Community Wind Farm is a partnership project with Infinergy Ltd whereby TRESOC will take a 49% equity stake in a special purpose company that will own and manage the installation. The 4 MW woodfuel pyrolysis plant will be solely owned by TRESOC, as are the small scale solar pv projects. The 350 kW Anaerobic Digestion plant will be a partnership project with a local farm in which TRESOC has a controlling interest.
3.3 What types of financing model are most suitable for small- and medium- scale projects? Do these differ from the financing models used for larger-scale projects?
In common with other community owned energy companies, TRESOC aims to maximise benefit to the local community, including the significant benefit to the local economy. This is realised by raising funding from local investors by issuing shares and bonds for projects as they come on stream. These sources of funding are generally cheaper to access, with less security demanded than from commercial sources.
3.4 Why are community-owned energy projects more prevalent in countries like Germany and Denmark than they are in the UK?
Germany and Denmark have much greater experience of renewable energy projects and have had time to appreciate the benefits of community ownership. A legislatative framework is in place that enables community owned enterprises to access energy markets on competitive terms with large companies.
3.5 Is there any evidence that medium-scale energy projects are more likely to be accepted by local communities?
There is evidence that community owned energy projects are more likely to be accepted by local communities.
3.6 What appetite is there for community-owned medium-scale energy projects in the UK?
Community ownership currently accounts for a very small percentage of renewable energy in the UK compared with renewable energy in community ownership in Germany. Nevertheless the community energy sector is growing rapidly in the UK and, with appropriate legislation, could account for a significant proportion of medium scale renewable energy output.
3.7 What appetite is there among private sector organisations in the UK to invest in their own medium-scale energy projects?
The appetite is there but hindered by a knowledge gap and by uncertainty and risk in planning.
3.8 What appetite is there among UK local authorities to invest in their own medium-scale energy projects?
Those local authorities who have invested in renewable energy, notably Bristol City Council in the SW, are reaping the multiple rewards from doing so. It is not unreasonable to suppose that the appetite for investment in medium scale renewable energy projects is increasing among local authorities as the concept becomes more familiar.
3.9 What are the barriers to medium-scale energy projects in the UK?
Lack of certainty about future support prices and mechanisms and risk in planning, particularly for wind farm projects.
3.10 How effective are current Government policies in encouraging local and medium-sized energy projects? Could they be improved in any way?
Government policies should to be tailored to include the special needs of local and medium sized energy projects. DECC should engage directly with community energy sector representatives in the development of legislation in the Energy Bill to ensure that the multiple benefits of community ownership are realised.
April 2013