Disclaimer: In keeping with the freestyle spirit of blogs, these are personal views and don't necessarily represent official Co-operative Energy policy.
Cold Homes Week starts this week and climaxes on Friday. The campaign has been created by The Energy Bill Revolution, an alliance of charities, environmental groups, consumer groups, trade unions, businesses, politicians and public figures. Co-operative Energy is a supporter of the alliance and has been challenging the practices of the ‘Big Six’ and championing the rights of the consumer since it launched in 2011.
Co-operative Energy, which joined the Energy Bill Revolution in April 2013, was the first energy supplier to actually introduce a price cut in its energy prices for two successive years and most recently rolled back its planned price increase to 2.5 per cent. After the Government announced its intention to removed social obligations on bills, Co-operative Energy had already removed ECO costs last November. Co-operative Energy then challenged all other suppliers to follow its lead and pass on the saving and where they’ve implemented price rises, provide customers with a rebate.
Co-operative Energy was also the first energy provider to offer customers tailored payment arrangements, helping pensioners and the 3.5 million British workers who receive their income on a fortnightly or four weekly basis. This allows customers to choose to pay their bills either every four weeks, making 13 monthly payments across the year, or fortnightly, making 26 payments across the year, as opposed to the standard 12 monthly payments offered by other energy companies. Last year three fixed tariffs were also introduced to help customers looking to bring down their energy bills safeguard their expenditure in some cases for the next four winters if they so wish.
All the supporters of The Energy Bill Revolution have teamed up this year to help raise awareness of the issues surrounding fuel poverty, and to gain the support of politicians to help make UK homes more energy efficient.
The campaign’s key elements are a big tweet and e-alert on Monday 3 Feb, calling for petition signatories. The campaign twitter hashtag to follow all developments is #coldhomesweek. Key members will also join a debate in parliament, host public meetings and call on the nation to get knitting scarves. The scarves will be presented in a parliamentary reception, along with pictures of the public wearing scarves and images of scarf adorned statues. A symbolic art installation is also planned for Westminster, and an online ‘counting the cost’ calculator has been developed. This calculator allows users to type in their postcode to find out if their local MP is supporting the campaign and find out how many inefficient homes there are in their area.
With the counting the cost element in mind we have compiled a list of simple but helpful tips to help make your home more efficient:
- Draught proofing – undoubtedly one of the easiest and most affordable DIY jobs to save money in your home. Head to your nearest retailer for the best solutions.
- Insulate – Insulation will keep your home warmer for longer. Loft insulation is a quick fix that will not only take under a day to complete, but it can save you up to £180 per year on your home heating bills.
- Double glazing – upgrading your windows can dramatically cut your heat loss and could save you around £170 a year on heating bills. To get a better idea of how much you could save by replacing your windows, use this Energy Saving Calculator.
- Upgrade your boiler – boilers account for 55% of your energy bills, so it’s important you have an efficient one. Upgrading to an A-rated high-efficiency condensing boiler could save you £310 a year.
- Bleed your radiators – if your radiator feels cold at the top and warm at the bottom it is likely it has trapped air in it that needs releasing. Bleeding your radiator is very easy, simply open the small valve on your radiator and allow the excess air to escape. Make sure your heating is off, you have a towel at the ready for any leakages and you wear protective gloves.
For more information visit: www.energybillrevolution.org/cold-homes-week/
Ramsay Dunning, general manager of Co-operative Energy discusses why there is a need for an impartial, not-for-profit regulated comparison website and the ongoing campaign to provide this service for customers who are being kept in the dark over commission charges.
As a member owned business – with no shareholders – we felt it only right to champion the push for an independent information and comparison service. A free to use service which customers know will present all the available tariffs and supporting information to let them make an informed decision on which energy supplier to use. Energy comparison sites are currently unregulated and as such, we believe, are not always operating in the best interests of consumers.
Customers have a right to be able to compare energy tariffs and currently some sites operating are not being transparent in their dealings and are deliberately directing customers only to commission generating tariffs. This is yet another example of the lack of transparency which energy consumers are exposed to.
Many of the switching sites present themselves as a service, when in reality they are profit maximising sales organisations, leading customers by default to the tariffs that pay commission.
There are claims by comparison sites that their service is free to use. But we know it is the customer that ultimately ends up paying for this commission as it is added to their energy bill. Removal of this commission based-structure entirely can only be good news for customers as it would lead to a drop in energy bills.
We know that not all comparison sites are the same but what we are saying is that consumers must be adept at navigating the sites effectively in order to see all the tariffs available. Many ask leading questions which act as a channel for sharing the deals which ensure a commission for the site. This is misleading as there may be a deal available that the site does not have a commission arrangement with, but would be better suited to the customers’ energy needs. The customer could easily sign up for this deal directly via the suppliers own website. The prices being quoted are exactly the same as the price a customer would pay if they went to the energy supplier direct.
Some of the methodology the switching sites use for calculating annual savings is questionable. Lots of assumptions are made which do not always put the customer first. For example, sites often assume that when a product ends, the customer will rollover to a variable rate which has a higher unit cost attached. This results in some customers being sold a product which is not always the best and most suitable deal available
Another area of concern is that the cost to acquire via the switching sites is greater than the total profit gained by the supplier who manages the total risk. Under Ofgem rules, it is important that the end bill is cost reflective and the customer is paying a fair price.
The comparison sites claim they only charge a small admin fee when in reality what they charge is a sales commission. Even describing the commission as an admin fee is misleading consumers as it infers only a small charge.
As energy suppliers we are legally bound by confidentiality clauses, which take both parties to agree disclosure. I give permission for disclosure, therefore releasing those switching sites with whom we are contracted from confidentiality. If they refuse to disclose how much we pay that is their choice, there are no legal restrictions.
There is no questioning the convenience factor comparison sites provide. How many of us have the time to research multiple websites looking to get the best deal whether it is for a new energy, insurance or mobile phone contract?
In our ongoing crusade to bring transparency to a sector that has become increasingly confusing, Co-operative Energy will continue to campaign hard to protect the customer by calling for the creation of an impartial not-for-profit information and comparison site, which is properly regulated by OFGEM or the Government. In the interest of helping to bring down energy bills further and operating a fair and transparent energy market, this is what consumers need.
You’ve already crashed and burned on the New Year’s resolutions, the miserable weather and dark days are getting you down, work is a real struggle after the Christmas break and financially, it feels like the end of the month can’t come soon enough.
Today is ‘Blue Monday’ officially the most miserable day and Co-operative Energy has outlined a series of simple steps which can not only see you through to the end of the month but help you to make significant changes which will benefit you from this point onwards.
First of all don’t let everything get on top you, January can be a long, hard and depressing month for many but it’s also a great time to reconsider your finances and start afresh for the year ahead. You’ll feel in great shape after tackling any money matters and updating your budget to free up some much needed cash after Christmas.
At Co-operative Energy we believe that carrying out a simple ‘life laundry’ can help you to get to grips with many of the financial hardships that have such an impact in January.
Hopefully the following steps will help put a smile back on your face before the month is out….
Step 1 – Get to grips with your household budget
Take a look at your budget and write down all incoming cash and essential outgoing payments. Then decide which unnecessary costs you can cut out (like magazines, unused cable or satellite entertainment packages or meals out) and see how much you could save. There are ‘cutback calculators’ available online which can help you to do this and put a framework in place https://www.moneyadviceservice.org.uk/en/tools/cut-back-calculator
If you can put any savings you make aside, these will soon mount up and could be put towards a holiday fund or in preparation for any emergency or unexpected expenses later down the line.
Look at your bank statements too. Are there any mystery direct debits such as the gym membership you signed up for last January, used for a month and then forgot about completely? If so – cancel it for immediate savings.
Step 2 – Shop around and compare
Now it’s time to consider where more significant savings can be made such as on household bills – gas and electricity or phone and broadband. It is likely that there are better deals available so it can really pay off to spend some time shopping around – there are plenty of comparison sites to get you started.
Why not put aside half a day at the weekend to tackle the finances or even some time in the evening on Blue Monday itself! The savings can amount to hundreds of pounds and it really isn’t as daunting as it would appear once you put your mind to it. It’s also worth considering helping older relatives or friends to do the same – they might not have the equipment such as laptops, tablets and smartphones that can help to make the whole process so much easier.
Begin with the biggest bills, for example, energy – look at some of the short and long term fixed deals out there. Co-operative Energy offers a very competitive one, two and three year tariff which means you can safeguard your energy prices for up to four winters and maybe even save some money by switching in the first place!
Record numbers of households switched energy provider at the end of last year, after the ‘big six’ firms announced inflation-busting price increases
An estimated 150,000 families left the big six energy suppliers altogether in protest at spiralling prices, and turned to one of the smaller alternatives. Many will have saved hundreds of pounds by switching to a cheaper tariff.
Just last week the new Which? annual energy survey revealed that the big six had scored the lowest overall customer score among energy companies serving Great Britain proving that it’s not all about price. Good customer service is of paramount importance to consumers. http://consumerinsight.which.co.uk/
Once you’ve sorted out your outgoings and household bills – aim bigger! If your mortgage deal ends soon check out what other deals might be available. The same applies to insurance policies – when renewing don’t just stay with the same policy provider shop around to see if you can save more money.
Step 3 – Keep on top of things
After you’ve done all that all you need to do is to keep it up. Think about all areas of expenditure where you can make potential savings and plan for the year ahead. Keep your own priorities in mind, whether it’s a pension, a family holiday or a new car. Use apps and online tools to help you stay financially fit – they will help you to keep track and remain in the driving seat.
These three simple steps will provide peace of mind helping you to kick Blue Monday into touch and giving you the motivation to make a great start to 2014.
It’s that time of year again. As we start 2014, plenty of people are starting to think about things they want to change with their lives. Losing weight is usually top of the agenda for New Year’s Resolutions, but what about saving money and while we’re at it, the planet? From heating our houses to doing the laundry, we use energy in our homes every day. It is essential that we reduce our energy consumption if we’re to prevent further climate change and keep our purse strings intact.
So in that spirit, here are a few energy-saving resolutions to consider for the New Year:
Upgrade your boiler – If your current boiler is more than ten years old, upgrading to a modern condensing model could easily slash your heating bills and emissions by a third.
Draught proof gaps – If you have poorly sealed windows and doors you may be losing a significant amount of heat through the gaps. Draught proofing is a simple inexpensive DIY measure and by saving warm air you’ll use less energy to heat your home.
Double glazing -Old single glazed windows can often be a major source of heat loss, so if you have them in your home, or even if you have broken or leaky double glazing it’s well worth considering modern energy-efficient replacements.
Time for a new thermostat – The latest thermostats are really clever, they can now learn how to program themselves based on your usage habits.
Replace old bulbs – Still using the old-school light bulbs? Switch them to energy saving light bulbs, you’ll save oodles on your bills.
Think – It may sound a little tired but it’s very important to remember that when you’re not in a room, you really should turn off your appliances to save energy. If you have children, ask them to follow this too.
Every big name brand seems to have a ‘community’ programme these days. From supermarkets supporting local community initiatives to developers desperately trying to get their heads around ‘community engagement’ the word community is everywhere, including in the Government’s Big Society ethos which is soon to produce a community energy strategy for the UK.
The prizes for making community energy projects mainstream are significant. ResPublica has recently estimated that more than 17% of onshore renewable capacity could be community generated in the UK, and with Germany already boasting 15%, the stakes are high. The big question, however, is whether this revolution can be achieved by communities working alone or whether a collaboration is needed. ResPublica’s figures are certainly predicated on a proportion of joint ventures between industry and community, and even the most ambitious groups would acknowledge the need for a corporate balance sheet when tackling larger projects. So how do businesses ingratiate themselves to the communities that are currently blocking their development aspirations and how do community groups harness the power of corporate infrastructure without losing their ethos….? At the recent Community Energy Conference run by Co-op Energy a number of workshop groups were asked to ponder these questions. The rooms were split, but a number of key themes emerged during the day:
Debunking the warm and fuzzy myth
Community groups were quick to break down the distinction between a business and a community group. ‘Community energy projects are businesses, and if they forget that they will fail’ was the simple conclusion of most groups. The fact that community energy projects face just as many challenges as any business but with none of the infrastructure of their corporate counterparts is often forgotten. However it is certainly an element of pride – and true grit – amongst community practitioners. If you want to be in the community energy business you have to be tough!
When is a business not a business?
Having established that a community project has to operate as a business the groups then acknowledged that there are significant differences between an incorporated community energy project and a traditional ‘company’. The most significant of these is the reason that each type of organisation exists in the first place. Businesses exist to make money, any business textbook will tell you that. There are ethical businesses and cut-throat businesses, but anything a business does needs to be tied back to its core purpose, and that will always be to make money. On the other hand the core purpose of community energy organisation is producing community benefit. In a nutshell, a commercial organisation will engage communities in their pursuit of profit (although ’tis often not as mercenary as that sounds) whilst a community group will seek a profit in order to deliver benefit to its community – a big difference!
Can we ever get along?
Does this make commercial businesses and community projects incompatible? The jury is soundly split on this matter. On one hand, those that see community energy as a market revolution, a way of bringing ownership and control of the energy system back into the hands of the consumer, warn against of the risk of losing your soul to the corporate machine. On the other hand, those that just want to maximize the uptake of renewable technologies take the view that it doesn’t matter who builds it as long as it gets built. It boils down to whether you see community energy as an essential element in the move to a decarbonized economy; some would argue that without community engagement and ownership we just won’t get there.
The common foe (or the best friend ever)
There was general consensus that Local Authorities and the regulatory bodies were often the bigger hurdle for an energy project, regardless of whether you are a community group or a corporate. Community groups tended to believe that corporates are better placed to do battle as they have the resources and balance sheet needed. This does raise the bigger issue of the role of Government in enabling as well as regulating the various energy markets. Certainly, having a supportive Local Authority makes all the difference in making projects a reality.
To partner or plagiarize?
Whatever they believed, the groups were in agreement that they lacked many resources that their commercial counterparts take for granted, but the specific debate was whether this necessitated partnership or just a more effective way of bringing these resources in house. The two points of consensus were that:
- It will be a while before the vast majority of community groups have the balance sheet necessary to take on the risk and financial commitment necessary for a large scale project (multi-MW)
- Not every community group will want (or be able) to start a fully-fledged community energy company.
There was tentative agreement that the level of collaboration with industry might just be down to the appetite and capacity of the specific community.
So what’s the wish list?
When considering a corporate partner community groups would put these at the top of
- Finance – the ability to leverage a balance sheet and take on the risk of a larger project
- Expertise and resource – community groups are reliant on volunteer support and lack the ‘back office’ that a corporate partner would take for granted.
- Influence – there was consensus that a ‘brand’ wields power and can influence on a level that a community group cannot
- Access to projects – the biggest challenge for an established group is often finding the next project to tackle.
In return a community group can offer a partner the trusted relationship with a local community this is generally unattainable otherwise.
At what cost?
Trust and control are the two big words for community – will these ever be truly compatible with profit? On one level they must be because a community project that doesn’t make a profit will not be around for long. There will always be a tension between profit and local benefit, and there is a communication gap that needs to be filled if lasting partnerships between the community and commercial sector are to be forged. Community groups are nothing if not pragmatic, however, and there is a an acknowledgement that the desired revolution is not going to happen at the pace and scale that everyone aspires to without finding some common ground. For community groups this means working out where collaboration becomes a compromise too far, and for commercial players it means working out how to buy communities in rather than buying them off. What is absolutely clear is that both sides need to evolve in order to take advantage of the significant opportunity presented by community energy in the UK.
Clare Hierons, COO, Pure Leapfrog
So, if someone asks you to find a way to educate the hyper stimulated hi-tech youth of today, on the value of becoming more sustainable and energy conscious you may think them mad, but also wonder how do you do it. As many of us know who are parents of teenagers the last thing you expect your son or daughter to do is to have them switch the TV/X-Box off when they go to bed, or even know what the off position looks like on a light switch never mind not charging their precious phone on the charging dock all night. Yet Midcounties Co-operative Green Pioneers have achieved this and much much more. So what is the secret recipe? Well, in the style of Jamie Oliver I will throw in some of this and a bit of that and try to explain in what we will call the Deep Immersion Green Recipe (weights and measure are estimates true Jamie style).
The Deep Immersion Green Recipe
Take 12 year nine students (13 years old) six of each variety with a mix of abilities
Add to the mix a teacher with some knowledge of sustainability and a passion for learning outside the classroom.
Bring together the students and teacher with a representative from Midcounties’ Co-operative Energy and invite the students in the nicest way to their worst nightmare of no phone, no electricity and lots of rain in Wales, with the promise of the adventure of a lifetime and lots of personal development.
After only a few moments show the students the animations of a thing called “Shhh” and explain what “DOES” (Democracy, Openness, Equality and Social Responsibility) really means when you work for Co-operative Energy.
Within a week take the students and teacher to the stunning area of the world called Aberdovey in Wales and immerse them into the deep learning environment called “The Outward Bound Trust”. Run them around a bit and jump into the sea as soon as you arrive. Keep the students very busy getting them to work in a democratic way and develop a team which relies on them all being equal stakeholders.
You now have the basic raw material, but to create the Green Pioneer the tricky bit now begins. Firstly give them a task called ‘Operation Impact’ in which they must navigate to places and live for 3 days and two nights in the most sustainable way possible using a limited amount of carbon fuels. To help them with the task they will be trained in leadership skills using Belbin profile and they will have a guide from Outward Bound and their teacher with them.
Now a very important and dangerous step, remove the mobile phone and iPod carefully, place them in a secure location. Pack a very large rucksack along with food in a silver bag, a cooker and some tents. Make sure that you remove the 10 kg of Haribo from each bag before the students depart and head off into Snowdonia by doing the thing teenagers hate most called walking up hills.
The recipe now gets a little more difficult as each Green Pioneer has its own growth cycle and time of being the leader. Allow the Pioneers to talk and review their growth at regular intervals and help shape them. After three days of living in tents, log cabins, paddling on the sea in canoes, using trains and walking late at night in the dark you add the sprinkle of magic dust called Outward Bound and you have your basic Green Pioneer.
The topping and finishing of the Green Pioneer takes more time and involves the help of many people from the Midcounties Co-operative. They must firstly explain what they learnt about “DOES” and how it works at a Green Pioneers board meeting, and then explain in more detail what they understand about being sustainable and Energy use aware. They must then prove over the next two weeks that they are more aware completing investigations at Co-operative premises and conduct some research into how they can become more sustainable, and energy conscious in their daily lives.
The final and most difficult part of this recipe is to gather all of the Green Pioneers into a group and put them together on display. They must present themselves to the Co-operative Energy Board, the Executive of Midcounties Co-operative and to all of their school showing off how they are now Green Pioneers and what this means to them. Their final flourish is to show how they have developed into excellent future leaders and environmentally aware citizens and to instil this in others.
This is the basic recipe which will vary according to weights and cooking time. You will however gain a young person who is able to explain how they have lived in a Democratic way with other people, demonstrating Equality with lots of Openness, (sometimes being a little bit too truthful) and having a great deal more Social Responsibility. This young person will go on and spread the message to others. In this batch it was not to charge phones overnight and be to be much more aware of sustainability and Energy usage. Why is it called deep immersion? By taking the Pioneers away you manage to get them working far harder and at a greater depth in their learning about Energy. This recipe can be used by anyone who has all of the raw ingredients, a sense of humour, and a passion to see young people develop. The next batch will be started in March 2014.
I feel incredibly lucky to be a colleague within Co-operative Energy. The reasons for this are long and varied, but a significant one is the people I get to work with. We have all bought into the ethos of a Co-op and work hard to make sure that we use those values to shape the way we do business. We do, however, make sure we enjoy ourselves while doing it. I am sure this is the same for businesses across the country – it’s certainly true of my previous career in rugby – but this usually takes the form of a light hearted ribbing (I refuse to use the word banter).
The two recurring themes aimed me are firstly, and somewhat predictably, that I am a ‘greeny’ and only interested in the warm and fuzzy parts of the industry. Secondly, that I spend my time having coffee meetings and attending conferences and this isn’t ‘proper work’. Now, as anyone who takes part in this sort of office chatter will know, to defend one’s position is to ‘bite’; something which is just not on. So, rather than validate my attendance at conferences coffee meetings, I shall come out and say it – I do love a conference. I enjoy spending my time with like minded individuals, discussing potential areas of business, hearing from experts in their fields and the obligatory exchange of business cards.
The most frustrating part of Co-operative Energy’s community energy conference (CEC13) for me was that I didn’t have 2 minutes on the day to catch up with old contacts or meet new ones. I did, however, get to sit on stage with all of our fantastic speakers and hear their stories, advice and expertise on Community Energy. I have listened to each talk from the day a couple of times since and remembered them vividly when I attended the Renewable UK conference last week in Birmingham. It was fantastic to see that community engagement played such a part in the seminars throughout the event. One particular talk really struck a chord with what I heard from CEC13. We heard about the potential scale of community energy, even the suggestion that offshore wind might be the next potential area to look at. An ambitious and exciting prospect.
It was also postulated that there’s a sliding scale of community involvement. This ranged from ‘the soft touch’ – a community benefit fund from a private developer; a ‘middle ground’ – where there was a joint ownership of a site between a developer and a community, to the last – a fully community owned and developed site.
We often hear that, when surveyed, the main benefits communities want from a renewable energy development close to them is cheaper energy bills – a point raised a few times at RUK. This takes me back to Becky Willis’s talk at CEC13. Becky suggested three delusions about the potential issues with the energy industry. One was that we can change to a low carbon economy without anyone noticing. It is going to take a significant change in lifestyle for most of us if we are to reach our energy targets. It seems to me that community energy could be the vehicle or, indeed, Trojan Horse which could engage people in the importance of a lower carbon way of life. There are several studies which suggest direct involvement in a community energy scheme can result in people taking a more active role in reducing their energy consumption and investing in energy efficiency measures.
I am not suggesting for a second that anyone should be peering into a gift horse’s mouth; the community funds from developers can be significant and potentially result in real benefits for a community, but as suggested at Renewable UK this may be a little ‘soft touch’. Getting the community involved directly in a project can have far more benefits than simply reducing energy bills. It could act as the catalyst to encourage the ‘powering down’ effect of energy efficiency as well as the ‘powering up’ of renewable generation.
You can see videos of all our speakers from CEC13 Here
Ramsay Dunning, general manager of Co-operative Energy discusses why having six companies dominating the UK energy market is bad news for consumers and the environment
The Secretary of State for Energy and Climate Change last week told Parliament in his Annual Energy Statement how welcome it was that independent suppliers are now springing up in the UK to take on the Big Six Energy companies. However, the Big Six continue to dominate UK energy markets with 98% of all supply and 70% of generation. Therein lies the problem, dominance of both sides of the generation and supply equation.
Independent suppliers are making inroads – for example, at Co-operative Energy we now have more than one hundred and fifty thousand customers since we established in May 2011. But, consumers are so utterly mistrustful of the industry that switching rates have fallen to woefully low levels. This summer’s Ofgem Tracking Survey found that the proportions of consumers who switched supplier in the past year had fallen for the fourth year in succession for gas (to 11%) and for the fifth year for electricity consumers (to 12%).
There is a barrier to competition currently which is that if you look at the industry from the outside it looks like a cartel. I don’t believe it is, but that’s not the point; the point is that all the time it looks like a cartel outside investors, potential competitors and the public will treat it as if it is. Therefore the Big Six position is protected from competition and the public continue to be frustrated. You hear that the Big Six are saying they will build the new power stations required, and as they control the supply market this makes a potential investor in generation think: ‘Who would I sell the power to? It’s the Big Six who are going to build their own, it’s too risky, therefore I won’t do it’. Likewise, while we now have more competition in supply, the big hindering thought is ‘how safe is my business if I have to buy power from my competitors the Big Six’.
I believe that an early and significant action from the Government would be for it to compel that all power generation is traded through a single wholesale market. If, as the Big Six claim, they currently ‘net off’ very little of their supply then they should have no reason to oppose such a measure. Such a development would not only help ensure markets are working optimally and drive down prices, it would ensure openness and transparency. We have confidence in share prices because of a single stock market and a single index, the FTSE. So why not a single power market? Not just ‘day ahead’, but trading long term contracts as well. There would be an Energy Supply Index (ENSI), and just as we have the FTSE 100 and FTSE 500, there would be other indices such as an ENSI 3yr.
There is a second hot topic we need to think about rationally and calmly: the so called ‘Green Taxes’. All charges connected to decarbonising the UK’s gas and electricity supply should remain within the Energy industry. It is right that measures designed to punish the old polluting technologies and reward new clean technologies are maintained in order to help us make the necessary transition from dirty to clean power sources.
There are, quite rightly, a mixture of measures designed to keep people safe, dry and warm in their homes – from planning regulations, to help with paying for heating with schemes such as the winter fuel allowance, cold weather supplement and warm home scheme. Additionally we have a scheme designed to bring inefficient housing up to an affordably warm standard, the Energy Company Commitment (ECO). These are a mixture of government schemes and those delivered by the energy companies. I would argue that these should be brought together under the government umbrella, and reviewed as a whole to ensure they are targeted at those most in need of help. Thirdly, energy companies should take pride in paying their full share of taxes in the UK. Energy companies should pay full taxes in the UK from profits earned in the UK and refrain from the use of legal loopholes in tax reduction.
UK energy policy is at a crossroads. We either continue to stick with a few large corporates and hope that they treat us fairly, or we engage in wholesale market reform and diversification. Small, independent generators and suppliers are more than up to the challenge – but we need Government to be truly committed to allowing us to compete on fair terms.
Co-operative Energy kindly invited me to speak about policy issues at its Community Energy Conference on 19 October. The main areas I focused on were grid connection, including a summary of Cornwall Energy’s recent paper Overcoming Grid Connection Issues for Community Energy Projects, routes to market for power generated by community schemes and why there is a need optionality of support mechanisms after 2017.
The report was commissioned by the Co-operative Group and identifies a number of barriers in the connection process, including high connection costs and grid reinforcement charges.
We were given access to project details for 21 community schemes that have come across grid connection issues. These show a huge variation in connection costs, ranging from the equivalent of £150,000/MW up to £7.4mn/MW. The vast majority (19) of these projects reported expensive connection costs as being the primary reason for schemes being reduced in size, delayed or even abandoned altogether.
So, what are the electricity distributors (DNOs), whose networks many community projects are connected to, doing to improve the situation? Well some progress has been made, much of which has been forced upon the DNOs by the regulator Ofgem. They have set up annual forums in London, Cardiff and Glasgow to discuss issues with the developers. Heat maps to show where capacity can be deployed without the need for reinforcement are now available on the DNO websites. Drop-in sessions and “surgeries” to discuss projects at early stages have also been introduced by some operators. And a steering group, which includes community energy stakeholders, has been formed to share best practice and communicate progress. These are all welcome changes, but still more needs to be done to ensure the industry’s development is not hampered.
A lot can be learned from our European neighbours who have more focused policies to support community energy projects. In Denmark, for instance, the costs of connection are socialised across all users and renewables projects receive priority grid access. And in Germany the grid connection process is transparent, renewables receive priority access (though this is changing), and almost a half of renewables projects are community-owned.
We made a list of 10 recommendations to improve the connection process for community schemes, including:
- providing priority access for community energy projects;
- allowing community projects to pay back site-specific connection costs over time (perhaps through feed-in tariff (FiT) payments over 20 years);
- connection offers based on standard cost assessments with higher/ lower costs recovered in general DNO cost recovery;
- socialisation of wider costs of reinforcement; and
- further information remedies to improve transparency, consistency and communication.
Once a generator connects to the grid, the next issue is how to sell the power. This is traditionally achieved through a power purchase agreement (PPA), but unfortunately the economic climate has made many lenders increasingly risk averse and risks of managing PPAs have led to larger reductions in pay-outs through long-term agreements.
Larger FiT generators, including community schemes, have tended to opt out of the guaranteed export tariff in favour of taking export to market. The generation tariff within FiTs can be seen by lenders as a floor price, meaning these generators are able to sell their power in more competitive short-term offtakes (where discounts are 2%-10%, rather than 10%+ in long-term PPAs).
The news that the government’s energy department DECC plans to extend the FiT threshold to 10MW is a positive step, but after 2017 projects above this capacity level will have to apply for a contract for difference (CfD) FiT. DECC expects CfD FiTs to eliminate price risk and lower the cost of capital. That may well be true but they also introduce more complexity compared to current FiTs or the Renewables Obligation as there are now prescriptive allocation rules. CfD FiTs are most suited to those that trade directly as they would benefit from achieving the full reference price. Therefore this hastens the point, there is a need for optionality for projects above 10MW after 2017, as on current plans the CfD FiT will be the only show in town.
Ben Hall is senior renewables analyst at Cornwall Energy. Ben leads Cornwall Energy’s coverage on the Renewables Obligation and Feed-in Tariffs, and tracks policy issues relating to low-carbon generators and developers. He is also vice-chair of a Cornwall Energy lead industry group for renewables developers.
‘You’ve blooming done it’. I’m sure Jon Halle from Shareenergy won’t mind me paraphrasing the first thing he said to me after our Community Energy Conference on Saturday. This is, after all, a blog for Co-operative Energy’s website and his actual words would be….inappropriate. An exchange of wry smiles was enough to say we both remember our first meeting a little under two years ago: Jon had wanted to know exactly what Co-operative Energy’s plans were to help community energy projects. My response, ‘we can buy their power’, was not a bad effort, but it was obvious we could do more.
It was actually something Jon said during his talk at ‘CEC13’ when I first noticed what would be the theme of the day. ‘It’s the Landowner, Stupid’ was, according to Jon, one of the five crucial things a community energy group had to remember when starting a project. A landowner – one person – can have a significant impact on a project’s success.
The hour and half train back from London to the Midlands gave my colleagues and me the chance to reflect on the day’s proceedings. My day job – setting up contracts with renewable generators to purchase their power to supply our customers – means I sometimes get bogged down in a world of acronyms and contract terminology, of pricing and meter details. On that train ride home, however, we didn’t mention any of that once. We talked about the unemployed families in Brixton in fuel poverty being helped by the amazing Repowering London. We talked about the households in the Forest of Dean who could invest in their local wind turbine at Great Dunkilns Farm from as little as a fiver thanks to the Resilience Centre and Abundance Generation. How the guy who sells fireworks to the local town every year was a huge influence on a project because he knew everyone in the community. In short, we talked about people.
A pound for every time someone came up to me on Saturday, with a big smile on their face, telling me there was a real ‘buzz’ around the Royal Geographical Society (the stunning, prestigious venue for our conference) would have allowed me to invest in a decent amount of community energy shares myself. We almost had to physically prise people apart from their conversations to make sure we kept within our timings – we overran by half hour, not too bad! People interacting and sharing ideas, stories and experience. People talking about people.
Community energy is about people. Duh, right? But, if I’m honest it’s sometimes easy to forget that. The aforementioned acronyms and pricing can sometimes cloud that for a supplier, as I’m sure the joys of planning applications and share offers can do the same for the groups themselves. There were many messages from Saturday, but the stand-out one for me was clear: helping the environment, raising money for a community, ensuring resilience in the local economy…It’s all about the people, stupid.
Tom Hoines, Renewables Manager, Co-operative Energy