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Ofgem’s current competition enquiry into the Big Six is the latest in a series of events pushing communities to take back control of energy. This year’s Edelman Trust Barometer revealed that trust of the energy sector has fallen to an all-time low, with only 32% of the UK population trusting the sector. That puts it in last place behind the banking sector.
Just over 70% of respondents said the industry isn’t being regulated enough at the top, and many consumers frequently vote with their wallets (using the plethora of switching websites available) to get a better deal on energy.
But aside from switching, a new form of consumer activism on energy is emerging. Increasingly, communities are collectively reducing, purchasing, managing and generating energy locally.
‘Community energy’ is of interest to any organised body that stands to gain more from managing its own energy interests than leaving them in the hands of a supplier, from Scottish islands and rural farmlands to urban settings and large corporations. Community energy is already popular in Europe; in Germany, for example, almost 50% of an energy-generating plant is owned or run by local groups.
Price rises are one of the main reasons for discontent; energy prices have roughly doubled over the last 10 years and government figures predict a further 50% increase over the decade to come. A recent survey commissioned by DECC revealed that 42% of people said that they would be interested in taking part in community energy if they could save money on their energy bills.
The combination of mistrust, price rises and the need for grid modernisation are creating the right conditions for a shift to community energy. There’s currently in excess of 60MW of community-owned renewable electricity capacity in operation in the UK.
At the launch of its Community Energy Strategy, DECC estimated that, by 2020, community electricity could generate up to 3GW (from a mixture of solar PV, onshore wind and hydro projects) – enough to provide electricity for over 1 million homes.
The UK public is increasingly joining the dots between the infrastructure they see, the energy they use and the price they pay for it.
For example, the blackouts caused by Hurricane Stephen on Boxing Day left around 350,000 homes in the South East without power. Network operators compensated consumers with up to £75 a day for the inconvenience caused. While for many that didn’t make up for Christmas in the dark, it did cover the daily charge to hire a diesel generator. That’s exactly what many people did – spawning a new group of first-time energy generators.
Self-sufficiency learned in a crisis can be a powerful thing. In the US, when Hurricane Sandy caused mass blackouts, the lights stayed on for large groups across Maryland, New Jersey, New York & Connecticut. The reason those communities were left unscathed was because their power was separate from the main national grid; it was generated by small-scale diesel, wind and solar, supported by energy storage. They were operating microgrids.
This is not new thinking. The UK’s National Grid didn’t start out life as a centralised network, it was only conceived in 1938 so that urban dwellers didn’t have to live next to the dirty coal power stations that supplied them. We created a centralised grid system to transmit energy to our homes, via pylons and cabling, from the power stations where it was generated. Before that, power came from a patchwork of small, independent supply networks which serviced small village communities.
Significantly, looking back, energy was a revenue generator, not a cost, for communities – up until the end of the end of World War II, UK local authorities generated around half of their income from trading energy from town gas works and local electricity plants.
With renewable technologies of all shapes and sizes now available at falling prices, there is a serious case for communities to shift away from the National Grid, to a model where energy generation is clean, limitless and, most importantly, local.
Moving from the Big Six to the ‘Big 60,000’ represents an ideological shift, making energy a matter of devolution where the more local the energy, the greater the independence gained by its consumers.
Nick Hay is the Director of Edelman’s UK cleantech practice, a specialist communications team dedicated to helping clients catalyse growth in the new energy economy.
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