105: The Local Power Plan and community energy – with Energy Minister Michael Shanks MP
Matt and Fraser discuss some of the highlights from our event at Strathclyde Business School, "The Local Power Plan: Powering a community energy revolution in Scotland?", hosted by the Strathclyde Institute for Sustainable Communities and the British Institute of Energy Economics (BIEE).
The event featured a keynote speech from Michael Shanks, Under-Secretary of State at the UK government Department for Energy Security and Net Zero, and a lively panel discussion between Minister Shanks, Professor Keith Bell from Strathclyde University, Claire Mack, CEO of Scottish Renewables, and Zoe Holliday, CEO of Community Energy Scotland.
Links:
Professor Keith Bell profile: https://www.strath.ac.uk/staff/bellkeithprof/
Scottish Renewables: https://www.scottishrenewables.com/
Community Energy Scotland: https://communityenergyscotland.org.uk/
Episode 102 – Shared ownership of clean energy projects: what, how and why?: https://www.localzeropod.com/episodes/102-shared-ownership-of-clean-energy-projects-what-how-and-why
Transcript
Michael Shanks: The principles of community ownership are right at the heart of our politics. For far too long, communities have been a bit of a passenger in some of this journey, and we know that in Scotland, where there's a significant amount of infrastructure that has to be built, where we think people too often feel like they're being used for the energy that they're generating and not feeling the full benefit.
Well, that's something we want to shift. Uh, and this Local Power Plan is really key to how we do this.
Matt: Hello. I'm Matt and I'm here with Fraser. Welcome to Local Zero.
Fraser: Hello.
Matt: So this is a very, very special episode.
Fraser: It is indeed.
Matt: Because today we'll be sharing some highlights from a very special and recent event at Strathclyde Business School. It was hosted by our very own Strathclyde Institute for Sustainable Communities, together with the British Institute of Energy Economics.
Our keynote speaker for the evening was Michael Shanks, Under-Secretary of State at the UK Government Department for Energy Security and Net Zero. The event was titled The Local Power Plan: Powering a Community Energy Revolution in Scotland.
Fraser: After his keynote speech, the minister was joined by a panel including Professor Keith Bell, who's also from the University of Strathclyde, and is a member of the UK's Climate Change Committee; Claire Mack, who's CEO of Scottish Renewables and Zoe Holliday, CEO of Community Energy Scotland. So quite the panel. We will also be sharing a full recording of the event, so if you'd like to hear more, look out for that in your podcast feed.
Matt: Absolutely. But before we get into the episode proper, a quick reminder to follow us on LinkedIn if you'd like to stay up-to-date with all things Local Zero. That's also the best place to let us know about people, projects, and topics you'd like us to feature. Just search for “Local Zero podcast”. And wherever you listen to Local Zero, remember to subscribe so you never, ever miss an episode.
Matt: So welcome back, Fraser. Where on Earth have you been, and how are you?
Fraser: Where have I not been? Uh, I'm well, Matt. I'm well. Things have been intense for the last few months.
Matt: Yep.
Fraser: Things at home are chaos, as they always are.
Matt: Mm-hmm.
Fraser: Um, but things in UK policy, UK energy, climate, have been moving especially quickly, which I have to say is busy, busy. And at times exhausting. But I would say quite, quite exciting as well.
Matt: Yeah. Obviously with a, a little one at home and also a nascent government trying to stamp its identity on the energy policy landscape. You will be a very, very busy man indeed. Um, and I think, you know, energy policy, climate policy more, more generally, it feels like, the UK government is starting to kind of crank up a gear on that front. There's various things going through Parliament. The one that we’re gonna talk about today is part of the GB Energy bill, which is moving, as I understand, proceeding pretty swiftly and intact, I would say through, uh, through UK Parliament.
And we're gonna be talking specifically about the Local Power Plan, which I know has been, uh, a little hobby horse of yours, uh, and mine indeed. So I wonder whether you might just speak to listeners a little bit about what the heck it is and why we're gonna spend another hour talking about it on top of the event that we've, uh, we've also recorded.
Fraser: Yeah. “Hobby horse" is an interesting way to say “the thing that I see in my nightmares at this moment in time”. Um, but the Local Power Plan, um, has been a bit of a flagship policy for the UK Government. It was, it was in Labor's manifesto for the election last year. And essentially it's about turbocharging, locally-owned and community-owned energy.
Matt: Mm.
Fraser: Within the Local Power Plan, they are keen to unlock eight gigawatts in total, which is a, a pretty hefty number – eight gigawatts of local and community owned energy projects. So when community set up their wind farms, when local authorities are installing solar on their, their public estate, trying to get that number up to eight gigawatts with the express purpose of enabling people to take charge of more of their energy generation and enable all of the, you know, the social, the economic value and the, the democratic participation and engagement that goes alongside that.
Matt: Yeah.
Fraser: So there were some numbers banded about before – we know the eight gigawatts. They're also committed to roughly a billion pounds in, in spending on this, which we expected. 600 million to local authorities, 400 million to community organisations. Big asterisk next to that as the Treasury gets their, gets their teeth into it. But Matt, you've been, you've been close to this as well, yourself.
Matt: Yeah, I, I have, and I think maybe there's two points to, to flag here. One, there's a whole debate about definitions of community energy, local energy. I think for the purposes of the Local Power Plan – we’ll, we’ll get into what community means a little bit later – but generally speaking, community energy is, uh, something which is, uh, you know, owned by citizens who are sort of connected, uh, by a community of place. And it's sort of in the hands of those, those local citizens and they have some meaningful ownership and control over that project.
That might be wind farm, might be hydro. Increasingly it's not just electricity generation. It could be district heating, it could be EV car club, it could be – you, you name it. It can take that shape. Uh, but the local point is interesting. In the context of the Local Power Plan, this is local authority is, is what they're, they're pointing at, primarily.
However, as we will talk in more detail shortly down the line, there's a lot of other stuff that could fit within that. And actually I think there's a lot of crossing of the t's and dotting of the i's around the details of that. Okay? Because you know, that, that’s where a manifesto pledge, once it moves through parliament, it then lands back on the desks of, of ministers and civil service, and they have to work out the fine detail and that will be one of them. Okay?
The point there about the, the total, uh, sum of funding. Absolutely. You know, I think originally it was, talk of it being sort of 600 million, I think for local authority, 400 million for communities per annum. I've then heard that being rounded down for the term of Parliament from five bill down to about three, 3.3 is what I've, I've also read, and that could come down further as the Treasury wields its knife. As we record now, there have been reports that GB Energy could be the focus of some further shrinking.
However, I think spokes, uh, persons, whoever they might be, they always do this anonymously. So spokespersons from, from DESNZ point out, well, actually no, no, not, not GB Energy. And I think one of the, one of the things we've, we've heard through this is that Labour is wanting to protect parts of this, which could support the lower-income communities.
So at the moment, it's, it's noise. It's, uh, quite chaotic. And if we were to come back to this in six months’ time, I think we'd have a lot more clarity about the scale and focus of the policy.
Fraser: I think that's right. I think there's, there's some chatter about, maybe we think less about cuts and more about targeting to maximise value, to maximise progress in the first instance.
Um, so yeah, still optimistic. I think it's also, it's worth a little note here about scale of that funding.
Matt: Mm-hmm.
Fraser: So in terms of roughly, if it sticks, 400 million for community energy within, within the next Parliament. In Scotland, we have the Community and Renewable Energy scheme, which has been refreshed a few times. Now runs on four-year cycles, that's 9 million pounds for community energy groups.
The community energy fund at UK level was at 10 million pounds at one point. So the, the scale in terms of the numbers that have been proposed by government so far, again, pre-Treasury scalpel, is significant. And the language, the rhetoric, the narrative from government has been, particularly strong on this, so it could really signal, and I think we're optimistic that it could really signal a, a step change for community, democratic, local ownership of renewables going forward.
Matt: Absolutely. And I think, again, before we get into the meat of some of the, you know, the real kind of talking points from the event, we have focus here not just on, these projects being wholly owned by local authorities or communities. Shared ownership is very much a core focus here. That could be between a community and a local authority. Could be between a community and a multinational. Could be between a local authority and a multinational. It's all on the table.
So, you know, I think that's a really important focus of, of, of the proposal. Yeah, and, and I think, you know, going forward it's also important to note to, to listeners, that this is both finance and grants. So this is the focus. So, so grant is essentially money you're not gonna have to give back to the state.
The finance, you know, this is repayable. There'll be all sorts of terms and conditions. Could be a soft loan. If, whatever the reason the project doesn't progress, the, the debt might be written off. It could be low interest, could be zero interest. Okay? But at the end of the day, you're gonna have to pay something back if you meet certain criteria.
That's important because we need to know what kind of funding is on the table, not just the level of it. But generally this could be a real step-change. So before we get into the meat, Fraser, you were there at the event.
Fraser: Mm-hmm.
Matt: Almost a hundred people were, were there. We had, uh, Minister Michael Shanks. We had an a esteemed panel, folk who have been involved in this space – either, uh, community energy or energy policy much more broadly. And we had a really good chinwag about this, and we also managed to have a, a catch-up afterwards. Um, but you and I haven't debriefed one another. So how, how did you find it, warts and all? Anything you were quite surprised to hear and, and generally, how did you find the kind of presentation of this, uh, from the minister?
Fraser: I enjoyed the event a lot. It felt lively, it felt, in the room, people were enthusiastic. I was doing my thing schmoozing and, and chatting with people before the event and after the event, and there were so many different sectors, people from different organisations, backgrounds and stuff there, that maybe you don't always see at events around this topic.
So I think my, my first takeaway was that this has, this has cut through beyond the, the typical, the typical sector of people interested in community energy for, for whatever reason that may be. So that felt good. It felt like there was a lot there and I think the, the panel did well to speak across these different sectors.
The, the people on the panel, uh, Keith, Claire, Zoe, are leaders in their respective fields. And to have all of them in chiming in trying to figure out how to, how to make this work or, or give their expectations for it, I thought was a really heartening. Um, I thought it was really, really heartening. And the, the discussion was great.
I'm not sure there was anything massively surprising. Um, I guess we've, we've heard the minister talk about this a few times recently.
Matt: Yeah.
Fraser: And I think he's, one, he's honed that speech very well, but two, um, he's maintained a real buzz about it. A real enthusiasm about it, which I think is quite contagious actually.
Matt: Yeah. Well, I'm glad you enjoyed it 'cause I organised it so, you know, it would've been one of those things, “Did you enjoy the party or the wedding?”, it’s like “Actually, it wasn't all, all that”.
Fraser: Yeah.
Matt: Uh, so thank you for your kind words. I think, yeah, the point there in terms of what the minister could or could not tell, obviously it's moving through Parliament and then it will kind of go back to the civil service.
So there's always a timing piece here, about what they can and can't say. I don't think there was really much in terms of further detail. There are also announcements that came out, I think it could have even been the next day, but there was certainly shortly after it, which were about, um, what the government was minded to do in terms of community benefit payments from transmission lines.
So the big pylons that you see, you know, crisscrossing the country, and they were looking to make, you know, payments per, uh, kilometre, per mile of installed, but also payments for substations and other infrastructure, and then annual cuts off bills. So he kind of pointed to that. I think if we'd have had the event just after that, there might have been more detail, but we're at that point, we're, you know, six, nine months from the government, I mean, taking office, I think you're right.
That's all he probably could do was to come out and, uh, you know, same old hits, but actually I thought there was some interesting points that came out. So I'm gonna come to point number one.
Michael Shanks: Community energy for us isn't a nice thing to add on to the end of our Clean Power mission. It is right at the heart of how we deliver this, how we improve community acceptability, how we deliver real social and economic benefits.
Now, not just community benefits, but community ownership. And this comes to the heart, I suppose, of as a government, the question of ownership isn't one that we are agnostic on. Um, we think it matters who owns infrastructure in this country. We think there is a real benefit as a member, not just of the Labour Party, but of the Cooperative Party.
Uh, the principles of community ownership are right at the heart of our politics. Uh, and for far too long, communities have been a bit of a passenger in some of this journey. Um, and we know that in Scotland, where there's a significant amount of infrastructure that has to be built where we think people too often feel like they're being used for the energy that they're generating and not feeling the full benefit.
Well, that's something we want to shift. Uh, and this Local Power Plan is really key to how we do this.
Matt: I'm gonna speak candidly, but I think supportively of what I heard here. There has been a lot of commentary about what this Labour government stands for. Does it stand for some of the principles that you might normally associate with a Labour government?
So that's public ownership, expansion of state to support, uh, citizen welfare, the, these kind of basic principles. So I'm not speaking in support of these or against them. What I'm simply saying is, you expect a Labour government to do certain Labour things. And I think there's been a lot of commentary and criticism from some quarters – some of it valid, I think.
Some of it, I think pointing towards confusion over the identity of what this government is trying to achieve.
Fraser: Mm-hmm.
Matt: And I thought Minister Shanks came out and actually said, look, this Local Power Plan, GB Energy more broadly is classic Labour. This is about a change of ownership. This is a different ideological standpoint that we are taking about who should own energy infrastructure, energy generation, and who should benefit from that.
And I thought that was really interesting. He was positioning this as a fundamental shift in the status quo of a privatised, liberalised energy system where we are simply consumers and not owners. And I think as Claire Mack points out, there's this emphasis on creating citizen shareholders, rather than stakeholders.
Fraser: I think that's right. That line stuck out to me as well. I thought that was really neat. But the, the line within the minister's opening remarks was exactly that. It was “community energy is not just a nice to have", as, as they see it – it's very much fundamental to the whole kind of Labour, Clean Power project.
They see it as fundamental to the delivery of Clean Power, full stop. Because the, the perspective is that with community ownership, you get better engagement with the public, better engagement with the citizens, you deliver more value and you create a bit more of a, a positive vibe around, around the whole project.
Matt: Yeah
Fraser: We would argue that as well, and we have argued that, and when we go out and talk to people about it, or when you poll people about it, you find very much the same thing that nobody dislikes this idea within a community itself. We had a lot of very smart people and very serious people in suits who maybe are skeptical because ownership is quite fluffy.
“But what does it do to the market? What does it do to finance?” But on principle, I think you're right: that ideological stance that this is almost, if we can be as bold as this, a little bit about a redistribution of power, of who gets to have a seat, who gets to have some control, who gets to experience the profit and the benefit.
Matt: Yeah.
Fraser: And, um, I'm really, really happy to see it. You know, the rubber will meet the roads, as we've said, once it meets the Treasury, once they get their scalpel out and once it starts to move through parliament into delivery in terms of how serious they are about that. Um, but on the messaging, I like it.
Matt: Yeah. So sorry, I, because I'm about to say something important, I've just taken my glasses off and chewing the end of them. So you can't, listeners can't see this, but: prepare yourselves. Yeah. So community energy is not just a nice to have, but I think he then wrapped this up around the point about the sort of public consensus about climate action being a good thing that we all need to do. That consensus is fracturing.
Fraser: Mm-hmm.
Matt: Now, I think that's, I think that's correct and I don't think it's just happening in the UK. I think listeners from, from outside the UK will probably recognise that on their own home turf. We certainly see it when you, you look across the Atlantic over the US but in, in European politics: Germany, Netherlands, discussions, you know, across the European nations.
And this matters then, because who owns, ultimately, is about who benefits. We're gonna come to this other point that it's not as simple as that, 'cause there is this risk-reward point. Okay? If you own, you know, you've got some skin in the game. And the question is, how do you do that in a way that doesn't over-expose parties to undue risk?
Particularly those who, who aren't able to absorb that, or the losses of it. But ownership as an antidote, or part of the antidote, to consensus fracturing is a really interesting position. Because otherwise you're just experiencing this as a consumer. And then cost is king. Cost is everything. Reliability, yes.
But the green parts of it. Hmm. You know, if I can cut my energy bills from 3000 to 2000, and I say “the hell with, uh, you know, the, the, the carbon emissions off that”, you know, and if you're struggling to put food on the table or, or, or gas in the tank, that, that matters. So ownership as an antidote to the consensus fracturing. Where, where do you stand on this?
Because your point about redistribution, I think it speaks to that broader narrative.
Fraser: It does. It does. And I agree. I think it does matter, and I think it, it matters predominantly because part of what we're seeing in terms of the, the backlash to net zero, the increasing support across the UK, across Europe, across other parts of the world, for the far right, hasn't happened in a vacuum.
It's happened for a multitude of complex reasons, but predominantly because people’s living standards, livelihoods have gotten significantly worse over the last 10, 15, uh, 17 years, now, since the 2008 crash, is kind of where we can trace it back to.
Matt: Yeah.
Fraser: Living standards have plummeted. There's been no semblance of optimism or opportunity for that to improve.
Matt: Yeah
Fraser: And what you have then – along with soaring, you know, inequalities in, in wealth financially – but what you then have are the likes of Farage or Trump or whoever else come in with very, very easy, albeit controversial, uh, solutions to very, very complex problems.
And in my mind, the only way meaningfully to counteract that isn't by just horsing on with the things that you want to do around clean power, or whatever else it is, horsing on with that and hoping that it, that filters its way down to people to, to improve their lives. Maybe it's a couple hundred quid a year on a bill – which is no bad thing to be fair – but it's about meaningfully making things better for people, and that redistribution of, it's part of that community energy can be, it's not, it's not the silver bullet, it's not gonna solve the whole thing, but that ownership, that participation, that we have something that benefits all of us in this local area, in our community and more nationally. I think that ownership component is really, really critical to all of this. So when they say “it's not just a nice to have”…
Matt: Yeah.
Fraser: It doesn't mean that we need every single corner of the country, every community, every person involved in this. But we should think bigger because the problem, the solution, the opportunity is bigger than individual communities alone.
Matt: One can draw an analogy between community ownership of power generation assets and also energy efficiency retrofit and – and hear me out here – is, if done right, both can cut bills, but actually, and the time you need to cut bills is when you can least afford to pay them. Those that can at least afford to pay them have, are likely to have, the least amount of money available to invest. Whether it's a share in an onshore wind farm, or putting in some double glazing, or lagging your loft, you haven't got the cash, but you either need to reduce your energy bills or to bring in some kind of dividend, which can then pay for those bills.
So this is where the Local Power Plan is so important, is because it's the state recognising that these communities need either subsidy or affordable finance to get these projects off the ground, to then generate income for decades. If you don't put that money on the table from the state and you don't put it on the table at scale, these projects simply won't emerge. And so you, you're stuck with the status quo.
Right, on to point number two, Fraser.
Keith Bell: And I have a lot of sympathy with the idea of obliging a certain share, a certain proportion of a project being made available locally. What that proportion should be, I don't know. We were talking beforehand that something happens like that in Denmark and Germany, whatever.
So there should be some lessons there. But I, as we said already before, I, I'm also conscious that we want every energy user to benefit from the benefits of low-carbon energy and the low cost. And, uh, a bit nervous, kinda sitting in a business school and talking about, uh, markets and well, we have a very decentralised energy market in this country, deliberately so.
That was kind of part of the design way back when, when the whole thing was, was liberalised. Uh, which in principle – and the practice of it we can talk about – opens up all sorts of investment models, all sorts of kind of platforms and avenues. And so, so, you know, why not, miss – okay, the “why not” is if you've got access to the capital and the knowledge and the information.
Uh, so, so I think that's kind of a big part of the challenge in opening this up, kind of, you know, almost sounds – this is getting really dangerous, like you say, in a business school of come almost like popular capitalism or something – but, um. Yeah.
Matt: It's, it's a broad church, Keith.
Matt: So this was our colleague, our pal, Professor Keith Bell, member of the Climate Change Committee…
Fraser: Living legend.
Matt: Absolutely. Raising the point that which the Climate Change Committee are, are regularly tackling with, which is about who pays, but also who benefits. It's not just a Climate Change Committee, Just Transition Commission in, in Scotland and, and, and International Energy Agency, you name them, people are asking this question: who pays, who benefits? Now I'm putting this to you because I know your PhD tackled this and also your work at, uh, Regen, but about the socialising, the costs of community energy investment.
So if you do community energy badly, what happens is the people who can afford it, pay for it and benefit from it. And the people who can't pay for it, don't. If you do it really badly, the people who can't pay for it are actually subsidising it through their bills and helping those who can pay for it, pay for it, and benefit from it.
So Keith raises the point, if we don't do this right, we’re going to hell in a handcart and we, you know, we've actually made the situation worse, I think.
Fraser: Yep. It's a, it's a fundamental point about inequality – or just transition, if we can pull that phrase out again. So we know from the community energy sector who have done immense things over, over the last 15 to 20 years or so – often in spite of a very challenging policy environment – to get projects up-and-running, to innovate and to deliver value to the people in their community around them. Often that is very much focused on tackling fuel poverty and retrofitting houses and all that good stuff as well.
But what we also know, across the UK, particularly in England – slightly less so in Scotland, but not completely less so – is that it has tended to be more affluent communities – who have, you know, say a couple of retired engineers living close by, they've got space for a wind farm next to them – that have led, that have established more community energy projects than in low-income areas.
Now this balance has been shifting, particularly through the 2010s, the balance started to shift away from, you know, leafy rural village with a wind turbine to urban community with solar PV on a block of flats or council housing, et cetera. So it has started to move, in terms of who can deliver those projects, who does deliver those projects.
And we know that most projects, um, do immense, immense thankless work to bring in lots of different people from their community to get involved in the ownership of these projects and to try and shape how the benefit comes out. But what we want to see happen, ultimately, and what we need to see happen to avoid what, what Keith describes – this kind of “Oh, well you’re just subsidising middle class people to have more nice things” – what we need to see is that capacity building and support, to make sure – which we, we heard from the minister as well that GB Energy will serve this function to some degree – to make sure that those lower-income, less affluent, marginalised working-class communities, are also primed to take advantage of this, to lead, shape and deliver their own projects to meet the needs of the people around them and the the place around them, as well.
It's less about, we don't want to stop or penalise more affluent places from doing this, so long as they're doing it minded in a fair way and inclusive way, to bring everyone in the community with them. But we really want to see those sort of more disadvantaged, typically excluded communities brought up to par so that they can capitalise and, and get on in this action as well. Because that's where ostensibly most of the value is to be had.
Matt: I, I just wanna draw out that rural-urban divide. It's something I think we've talked about before. It's something I certainly talk a lot to, uh, colleagues, uh, I work with, uh, South Seeds, which is a, a charity, environmental charity that does a lot of work on fuel poverty, south side of Glasgow. And you know, and the opportunities that these urban collectives have, community collectives for renewable power generation, are obviously very limited. Yes, there's lots of great examples about rooftop solar. Uh, you know, I'm gonna shout out to Edinburgh Community Solar and the work that they've done.
There's others – Gwent Energy in the south of Wales – there's tonnes of stuff we've, we've written about, but generally speaking, your opportunities, particularly for hydro and wind, you know, you're not gonna see that in, in sort of central Glasgow, just by the, the M8 there.
Fraser: You do have hydro in Aberdeen though.
Matt: Okay.
Fraser: There is hydro in Aberdeen.
Matt: There, there's always gonna be exceptions to this rule.
Fraser: Yeah.
Matt: But the point is that the, the rural communities may have more of the resource, but often what you hear, the flip side of that is that because it, they're less population dense, often you've got you know, a very different kind of demographic from sort of, you know, urban, peri-urban spaces in, into truly rural ones. You know, oftentimes, it’s about this capacity point: there's only so many people that you, you could reasonably ask to kind of, uh, take this massive, massive undertaking on. So I think whether it's urban or rural, I’d really like to see the Local Power Plan acknowledge that there are different opportunities and challenges in these spaces.
And to tailor that support accordingly. Because I think if you have a one-size-fits all policy that is meant to blood, um, projects in urban areas for just the same as rural, I'm not sure it's gonna work as well. And we have seen policies try to do that. We've seen the sort of rural community energy fund, which acknowledges that there's different challenges to urban and vice-versa.
Fraser: Yep. I think that's right and that's part of the whole point, isn't it? Is that we don't need a specific policy package for every feasible type of community. But some of these big differences are, are significant.
Matt: Yep, yeah.
Fraser: Particularly when we get rural and urban, but also, particularly when you're sliding up and down the income or the deprivation scale, that are different things that people care about, different things that communities will need support with.
Some people are coming from a complete cold standing start. Others have been moving in this space.
Matt: Yeah.
Fraser: Another dimension to this though is we need new groups to come through, and that means partly, you know, a bit of a, a fact-finding, a bit of a mapping exercise to understand the different organisations that exist on the ground across the country.
Matt: Mm-hmm.
Fraser: Which people like Community Energy England, Scotland, and Wales know very, very well. Um, but there are also established groups, who have been here for a while now, who have quite broad geographical remits. I'm thinking about people like Community Energy South. I'm thinking about uh, Community Energy London.
I'm thinking about Community Energy Scotland and, and others, who are well-established organisations and who have very, very often helped – the Big Solar Co-op is another one – helped – and Communities for Renewables. I could keep going. Who have helped other organisations and new communities come into this space through sharing expertise, through establishing new projects, or helping to establish new projects, and then handing over the reins down the line.
So I think this, this idea that, well, how on earth do you get into a place like Forfar or, or the, the East End of Glasgow – which does have a project – but how do you get into those places and convince people that they should do or might want to do community energy? There's a way that you have that conversation, but also the other organisations and groups that exist.
There's a lot of learning out there already. We're not coming into this as a brand new idea. There are people who know how to do this stuff, and it's how we one, build capacity in new places. But two, how do we leverage the existing knowledge and expertise to make sure that it's being disseminated?
Matt: Yeah.
Fraser: Um, and reflective of, of different places, needs and opportunities.
Matt: I, I think the power of intermediaries is a, is a really big one. And these, it isn't just that the money and a community and a project developer – that you need the glue in the middle. Um, there's a whole episode we've done a few episodes ago on shared ownership from Communities for Renewables, uh, which I strongly recommend listeners to have a, have a little gander at, because there's a lot of good stuff in there.
Zoe: The biggest thing that I would like to see is clarity around what constitutes “local and community energy” in that eight gigawatt target. Because as somebody who works in the sector, that gives me a lot of fear, because the Scottish Government, um, target of local and community energy includes absolutely loads of things that I would not consider in any way to be, um, community energy.
So 44% of what's currently the capacity, um, included towards that target is, is farms and estates. There's also significant numbers of local businesses, um, housing associations, local authorities, and community energy itself only, um, counts as 10% of what we've currently got, um, in Scotland. And so I think that is really important, is that gets defined early so that it can't be misused, um, and that we're not putting the wrong type of, um, energy in, that actually doesn't create all of these positive impacts that we're all talking about.
Fraser: So, Matt, I guess it's, it's worth taking a second to define what we mean here, because we're talking a lot about local, about community energy. Um, but what are we actually talking about? And this came up in the conversation.
Matt: Mm. Well, I, I mean, I've spent far too much time trying to define community energy, local energy. I think this came up because if you look at Scottish Government's own definitions – so, so they collect data around community and locally-owned energy, because this links to their own targets around, you know, getting this out.
Welsh Government has a similar kind of, uh, approach to this, and once you unpack this, it's quite interesting what's in that basket. So we have to remember this is Scottish Government's definition, or at least their basket of data.
Fraser: Mm-hmm.
Matt: UK Government, uh, either has their own or will have to come up with their own for local power plan. But in here, yes, we've got community groups. Yes, we've got local authorities. Would you like to hazard a guess, Fraser, of another group that would fit into this category of community and locally-owned energy?
Fraser: I dunno if it's cheating Matt, but I do know the answers to this.
Matt: We'll, we'll, we'll edit that bit out Fraser, and you can just go directly to the answer and sound very knowledgeable. Um, okay, so, okay, let me, lemme rephrase that. What was the most surprising inclusion then, in that group, for you?
Fraser: Uh, give me Matthew. Small to medium enterprises.
Matt: Yes. Zing. Yeah. That's 10 points to you, sir. Uh, yeah, they're in there. Any, any others?
Fraser: Uh, how about everybody's favourite, farms and estates?
Matt: Yeah, I think that was mine, and was surprised to see that in there. But again, you know, yeah, if you've got a local Scottish business in there, why haven't you got a local farm and estate? But if you ask the everyperson, how would you define community and locally-owned energy?
I think a key part of this is it being collectively owned, not privately owned. So there is, there is an element to this, which it is not privately owned. It is not in the hands, worst case scenario, it’s not in the hands of a single person or single family. I'm not criticising private companies. I'm certainly not criticising farms and estates or small Scottish enterprises.
But what I am saying is that I think it's difficult to include in that locally and community-owned energy, these private companies. And looking forward, if the Local Power Plan takes a similar definition, I could imagine quite a bit of criticism coming its way about support for private enterprise, when the whole thing, we've opened this whole thing about Minister Shanks saying this is about alternative types of ownership. This is about…
Frasers: Yeah
Matt: Public, collective, citizen ownership, not private.
Fraser: This is a, this is it. It has to be. And I think there's a public understanding of that as well. While, you know, academics, the sector itself, has gone round the houses for way too long on specific definitions – which we do need, right, for, especially if we're gonna unlock this at scale. You need a good working definition, but particularly for something like a target. So for further context, I suppose, um – and Zoe did, did point to this in this session – of the current progress that Scotland has made on local and community owned energy, which is over a gigawatt now, and they plan to hit two gigawatts by 2030, slightly behind on that.
Only about 10% of that is actually owned by a community energy organisation or a community interest company, or a development trust. About 10% of that in total. We know that in terms of the, the scale of the value of energy projects, that full community ownership tends to be the gold standard. That doesn't mean it's the only thing that we need to or have to do, but that's where the bulk of the value is.
Yeah. And that's what people think about when you say “community energy” as well. So I think if government wants to uh, go great guns on this, as it sounds like they do, and if they really want to go for the biggest prize, that target has to, has to include something specific for community ownership.
Matt: Yeah, and, and I think actually this was prompted by a question from Ellie Harrison, who's a former colleague at Glasgow Community Energy. I think the thrust of the question was if there are these private companies, uh, or bigger entities in the same pot, there're all gonna be scrapping over the same money. And you can then see an issue where you've got a, you know, major estate in the Highlands of Scotland, basically challenging for the same money as the local community, in a roundabout way.
And, and again, I don't think that does anybody any favours, particularly in terms of these, these inter-organisational relationships, not least when we're talking about shared ownership. Right? That's something else we'll have to come onto in a second, but yeah.
Fraser: Before we do, because it's a nice segue, but if I can extend that principle, when we think about a definition of community energy, it's not just about who has access to the money.
If you want to give community energy projects some kind of priority in the grid connections queue, that needs to have a robust definition behind it, so that it can't be manipulated. If you want to provide any kind of exemption or new framework for community energy projects to supply their electricity locally – which is very difficult at this moment in time – you have to have a strong legal definition so that it can't be easily worked around by different actors who see a chance to, “oh, you know, maybe we can save a few quid with this exemption, or with, maybe get our connection bumped up the line”. So it's, it serves a purpose of making sure that, one, you set the big prize that you actually want.
Two, you're not over-competing for the pot. It's actual community groups and maybe local authorities competing for that money. But three, any processes that you then tailor for this sector, or new opportunities you try to open up for this sector, are manipulated or exploited by others who see a chance to maybe save themselves or make themselves a, a few quid either way. So it is, it is important to get right from the outset.
Matt: I think that's a really interesting point about partnerships having to be on, uh, in good faith. You know, you don't wanna bring in a community group for the wrong reasons. You mentioned the potential prioritisation of grid connections and stuff. I, I'm always fascinated about the unintended consequences of policy, and so you could actually set up something where it gives communities preferential treatment.
Um, be, because, you know, less capacity, maybe more limited capabilities versus some of these bigger companies. But then somebody's always gonna game the policy.
Fraser: Yeah.
Matt: That is the game, right? That is the game.
So we have one more point to raise I think Fraser. And then we will conclude.
Claire: The appetite from some developers is, is greater than from others in that, you know, the developers themselves sitting at the moment, are sitting on incredibly complex finance deals.
Where shared ownership can just add an, an additional complication to that, and that's what I'm talking about gaps about the Local Power Plan is helping to, to, to mitigate that risk somehow or other by acting some way as a guarantor or whatever is needed to, to happen to, to make that shared ownership pathway but smoother. I think is really, really important.
Matt: That is point number four, which is about shared ownership. We've kind of been weaving through this, and we've done a whole episode on this, so we don't need to dwell too much on the, the, the broader principles of, of this, but this is something that's in the Local Power Plan, which is quite different, I think.
What did you make of the discussion there? We, we had quite a bit of chat around the business models for this, the risk-reward balance of the investment, mandatory offers of shared ownership. There's a lot going on here.
Fraser: There is, and shared ownership, linking to our last conversation, shared ownership is not currently in anyone's definition of community ownership for the Scottish targets, for the Welsh. But we do expect it to be big guns for the UK target, because UK Government, and the National Energy System Operator reckon that they've already got pretty much all of the wind, the solar, the batteries and stuff that they need, to do this Clean Power 2030 thing. It's all in the queue already.
Matt: Yeah.
Fraser: So if you want a further eight gigawatts of community ownership or local and community ownership, which is committed to in the the GB Energy founding statement, then you're gonna have to do bits of shared ownership here. So I thought the discussion was great.
I was really, really, uh, heartened again to, to see it come up. What I find really, really challenging about it, it was great to have Community Energy Scotland and Scottish Renewables there – the kind of developer body and the community body. What I find, um, challenging about it is it kind of feels to me that if we could just demonstrate it with two or three solid projects, that would overcome a lot of what is actually quite difficult about it just now. So what we hear, and we did a big bit of work on this at the end of last year, what we hear from developers is that actually they're not completely sure where to start. Um, communities can be risky.
They don't always know where they're supposed to start, and the process for navigating this can be really, really complex, complicated, challenging, et cetera. A lot of them are actually more open to it than you would think, but there seems to be complexity around it. So targeting this, you know, demonstrator project.
Really, really good examples, some of which we have coming through already. The likes of Eden Renewables, Bath and West Community Energy, Communities for Renewables, doing this stuff on the ground. A little bit more demonstration feels like a fairly small step to, to push this forward further than it is just now, but the big one that sits behind that, Matt, is this question of mandatory ownership, which we've gone around the houses on, but I'm interested in terms of the conversation that was had, where, where you came to.
Matt: Okay, so I'll get my little soapbox out briefly. Um, so I've been doing a lot of work looking at community benefit payments. So these are the payments that are made to local communities, um, particularly in Scotland.
Not to say it doesn't happen elsewhere. Um, and the recommended value is £5,000 per megawatt installed per annum. Now you can make the payment or you can provide these community benefit packages at the same value, but in kind. So what you could do is say that “we're not gonna pay you any money” – which can be a huge amount for these small communities, half a million pounds a year, you know, sort of regularly hearing, you know, for a decent-sized, uh, onshore wind farm.
Instead of paying them the money, they just say, “look, take the ownership. You can take that, that slug”. And then, because Fraser, I'm, I'm sad and I've got, uh, far too much time in my hands. I then looked at the community benefits register, okay?
Fraser: Mm-hmm.
Matt: So this is a register of all the payments made by these developers and owners to communities. So of the roughly sort of 300 that are in there, 10 of them, 10 of them had some kind of shared ownership. So it, it's not, not really happening, okay?
Fraser: No.
Matt: It’s certainly not happening at any meaningful scale. Going back to the mandatory point. I don't know, because I think, I think communities should be able to make that decision, at least through those negotiations with project owners and developers to say, look, “yes, we would like the money”, or “no, we would like the ownership”, or a blend thereof.
And so it's not for me to dictate, but uh, what I am saying is the current policy setup in, in Scotland isn't meaning that that's rolling out at any, any major scale.
Fraser: Yeah, absolutely. And it's not really happened in England in particular, because largely of the onshore wind ban. That that's the, the argument there. There was a shared ownership task force convened at UK level. Becky Willis, Professor Becky Willis chaired that panel. There was a few other noted, uh, well-kent faces on that panel, and the task force came out with a set of recommendations.
And what they'd recommended, the big recommendation, was a mandatory offer – not mandatory shared ownership, but the mandatory offer – and then if a community can take it up, great. If they can't, they can't. That fell by the wayside. So this is 2014, 2015. It fell by the wayside with the onshore wind ban. But an interesting little nugget of policy insight for the wonks out there was in 2015, UK Government passed the Infrastructure Bill, which within it included a voluntary protocol for shared ownership – a community right to electricity, as it was called – with the proviso that we're gonna see how this goes, if developers do offer it over the next seven years. And at seven years we will review this and if they're not offering it, we'll make it mandatory.
So kind of, you know, dangling the axe a little bit. “Go out and do this yourselves and if you're not doing it, then we'll make you do it”. We are now three years past the seven years…
Matt: Mm-hmm.
Fraser: Refresh of that piece of legislation. The condition's still in there. I don't know if government internally is checking this or having a look at it, and, but there is recourse to making this mandatory based on previous legislation of trying to get this done in the past.
However, with the onshore wind ban, with less support for community energy in general, there’s an argument there to be made that actually, even if developers wanted to, they probably couldn't at the time. So I guess the, the prevailing perspective is can we clarify this process? Can we encourage it? Can we do that best practice piece?
Maybe it's in the connections queue. Maybe it's in the planning process. Can we make it more of a material consideration to give a positive incentive, demonstrate it a bit more, and then take it from there? But I think there's no two ways about it, Matt. It's gonna have to happen to do the eight gigawatt thing.
Matt: Mm-hmm.
Fraser: Otherwise, I think there's a big nervousness that it will fall by the wayside.
Matt: Hmm. No, it's absolutely, and it kind of, everything else falls on underneath that. In order for the communities to be able to do this, and crucially, the developers and owners, there needs to be, as you say, those, those kind of pathfinder projects that point to “this is what good looks like and this is how you do good”. So, yeah, look forward to seeing those coming down the line.
We could carry on, Fraser. There's plenty in there.
Fraser: Yeah.
Matt: Um, I think for listeners who want to have the full-fat, uncut, director's version of the event, then it will be online alongside this. And we strongly recommend you listen to that because there was far, far more detail than we can do justice.
But I really enjoyed that Fraser and, and thanks for the post-match analysis.
Fraser: Yeah, fun as always, Matt. And thanks for getting me out the house for an evening.
Matt: Any time. Any time. But to our listeners, thank you for listening to Local Zero.
Fraser: If you enjoy the podcast as always, please help spread the word. If you know someone who'd be interested in this episode, give them a shout.
Matt: Yeah. And if you listen on Apple Podcasts, please leave us a review, and if you're on Spotify, you can now comment directly on this episode to share your thoughts, questions, or suggestions.
Fraser: And we do, we say it jokingly, but we do actually love hearing from our listeners. So if there is a topic, a project, or a question that you think we should cover – so much going on in this day and age – please do get in touch at localzeropod@gmail.com or find us over on LinkedIn.
Matt: Until next time, see you then.
Fraser: Bye bye bye.