It is generally acknowledged that local involvement in energy generation, particularly renewables, can have a number of economic, social and even environmental benefits. The potential benefits of local and community involvement range widely. For example, Cardiff University’s report with the University of South Wales and Keep Wales Tidy on small and community hydro in Wales suggested that local and community ownership could almost double local economic impact (compared with non-local, commercial developments). Communities could use benefit funds to further reduce emissions and energy use, and increase energy resilience (for example in Talybont-on-Usk where hydro income has enabled the purchase of both Solar PV for the community hall and an electric vehicle). In addition, local and community ownership could engage local people more widely around the subjects of energy security, energy poverty and climate change.
Given these benefits it is perhaps surprising that community energy has not played more of a role in climate change mitigation at a regional or UK level. Local communities face a number of barriers in becoming involved in renewable energy generation and these have proved significant throughout this millennium. There are varied reasons for this, which I will not go into during this short article as I would not do the long list of barriers justice.
We have been clear in previous Re-energising Wales reports that we need policy change to make sure that the investment required for Wales to become 100% self-sufficient in renewable electricity by 2035 – around £25bn of investment in renewable electricity generation – enables significant involvement of local communities, at least in terms of ownership.
Welsh Government has recognised the economic, social and even environmental benefits that locally and community owned renewable energy projects can achieve by setting a target for 1 gigawatt (GW) of renewable electricity capacity in Wales to be locally owned by 2030 and for all new projects to have an element of local ownership by 2020.
Up to the end of 2017, 529 megawatts (MW) of capacity in Wales was locally owned renewable electricity, including 185MW of onshore wind and 179MW of solar PV. Wales is therefore more than halfway towards meeting the 1GW target.
Locally owned projects comprise just 20% of all renewable energy capacity in Wales and the development of locally owned schemes is likely to become more difficult with the reduction in UK Government policy support for renewables. Given this, the latest strand of the IWA’s Re-energising Wales project has explored some of the specific levers and uniquely Welsh factors that could be used to drive more scale in community and local ownership of onshore renewable electricity generation in Wales.
Our report How to protect, promote and achieve scale in community and local ownership of renewable energy in Wales, produced in partnership with Regen, sets out a number of recommendations designed to enable Wales to become a world leader in community and local energy – energy that delivers genuine benefit for people in Wales.
Our research is clear: the change of the scale that we need in our energy generation, use and supply simply cannot happen without public backing. The development of renewables must engage local communities in order to maintain the active backing and local investment needed.
Drawing on existing research, as well as our own semi-structured interviews with key stakeholders, we outline 19 recommendations in 4 key areas for action:
- shared ownership;
- a local energy company for Wales (Energy for Wales);
- planning and land access;
- and grid connection.
Whilst 100% community owned projects will tend to deliver the most value to communities, for Wales to achieve targets for 1 GW of local ownership by 2030 we believe there will need to be more partnership projects with commercial developers. We believe that Welsh Government should require all new renewable energy projects in Wales above 5MW
to have between 5% and 33% community and local ownership by 2020. Welsh Government policy should require local authorities to offer 50% business rate relief on the community percentage of shared ownership projects, and a sliding scale of business rate relief for the developer proportionate to the community share (so that efforts required by commercial developers to make offers of shared ownership are offset).
Energy for Wales
During 2019, the Welsh Government should look at the viability, cost and timescales involved, along with the local benefit that could be realised, if they were to set up a local energy company for Wales: ‘Energy for Wales’.
Planning and land access
A key recommendation in this section is for Natural Resources Wales, who manage 7% of the land area in Wales, to support more community projects at scale on their land. We believe that NRW should allocate at least 5 sites for at least 15MW per year from 2019 onwards for 100% community and local authority owned renewable energy developments at a nominal or peppercorn rent. NRW should also allocate at least 3 sites for at least 60MW per year from 2019 onwards for shared ownership schemes at a nominal or peppercorn rent.
Accessing affordable grid connections is a key part of electricity generation projects. Whilst these barriers apply to commercial projects as well as to community and locally owned schemes, the research for this report noted that while commercial developers are free to look for areas of grid availability, communities cannot move, making them disproportionately affected. As the electricity and gas market regulator for Britain, Ofgem are key to enabling investment in the electricity network. Ofgem’s RIIO-2 framework governs how National Grid and Distribution Network Operators will manage and invest in the network. A key recommendation in our report is for Welsh Government to engage closely with Ofgem in the RIIO 2 process to ensure mechanisms are put in place to enable anticipatory investment in the network to support the development of locally owned projects.
The Welsh Government have already made significant steps towards achieving genuine local benefit from energy generated in Wales. However, without specific actions to drive forward the changes necessary to meet government targets, Wales could fail to grasp the opportunity to create a thriving local energy economy that delivers a more resilient society as envisaged in the Well-being of Future Generations (Wales) Act 2015. If acted upon, the recommendations in our new report will help protect, promote and – crucially – achieve the scale in community and local ownership of renewable energy in Wales to make Wales a leader in local and community energy.
All articles published on Click on Wales are subject to IWA’s disclaimer.
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