The councils driving local energy production

Rising fuel prices and climate change are pushing energy to the top of the agenda, and local government is taking steps towards  self-sufficiency. Which councils are leading the way towards localised energy production? 

It may be that the tiny Black Forest village of Schönau represents the future, at least as far as energy is concerned.

After the Chernobyl nuclear disaster in 1986, local people began to plan how the might generate their own renewable energy.  Ten years later, they took the opportunity to take over their local electricity grid themselves.

It was a small step and celebrated as a David-versus-Goliath battle against the big energy suppliers, but now – a generation later – the same pattern is being repeated in the big German cities too.

What’s more, Schönau’s own community energy supplier, EWS, has 140,000 clients all over country.  They are even supplying people across the border in Switzerland and France.

The success of EWS is part of a peculiar phenomenon which seems to be emerging around renewable energy where both left and right wing administrations embrace the idea – because it gives them some measure of economic independence. In Georgia, Tea Party activists linked up with the Sierra Club to force the local energy monopoly to buy solar power. In Western Australia, there are battles with the big power companies which want to tax solar panels.

But in Germany, the situation seems to be changing fastest, because it is happening in local government.  Hamburg has now voted to municipalise its own grid.  Stuttgart is planning a similar vote, and Berlin is in the middle of a bitter struggle between the mayor and local energy campaigners on the same issue.

In Hamburg, the vote took place on the day of the federal election which brought Angela Merkel back to power in September.  But in Berlin, the vote was moved and – as a result – although 83% of the vote backed a local takeover of the grid, it narrowly failed to reach the required quarter of the electorate.

But the Buerger Energie Berlin is now applying more formally to take over the energy supply of the city.

The changing borders between left and right on the renewable issue is exemplified by Projekt Sonnenschein, the brainchild of energy campaigner Alban Thurston, trying to twin local authorities in the UK and Germany to encourage some of this energy radicalism here.

There is also some way to go before the UK looks like Germany in this respect.  There are now 600 community energy co-ops in Germany, providing anything up to a fifth of Germany energy.  In the UK, as much as 99% of energy is still generated by just six companies.

Brixton Energy has installed solar panels on the Roupell Park estate

UK slowly emerging as a local energy player

But things are beginning to shift here.  Partly this is because the then climate secretary, Chris Huhne, allowed local authorities to sell their own energy back in 2010.  Partly it is the government’s brand new community energy strategy, and the £10m community energy fund which goes with it.

Partly, it is because of the emerging community energy sector, with organisations like Brixton Energy and Community Energy Warwick.

Partly it is because of the first signs of the new community financial institutions which are needed to provide the sector with finance. Wessex Home Improvement, Street UK and the London Rebuilding Society have all developed a retrofit energy-saving package for lenders specialising in housing repairs.

Because of these shifts, local government in the UK is slowly emerging as an energy player – perhaps more accurately a re-emergence, since the days of Joseph Chamberlain in the 1870s, who based his revitalisation of the city’s economy on the municipalisation of local energy and water.

The first signs of local government ambition in the UK emerged in Woking in Surrey, which began back in 1999 when the council voted to have its own environmental audit.  Woking is now home to a range of mini-power stations, communal heating schemes and thousands of electricity-generating cells on roofs, making the town centre a net energy exporter to the town.

It also launched the first UK energy service company, an Esco, a Hungarian idea which allows investors to profit from selling less energy.

Local government is now following Woking’s lead.  Southampton linked up with a French energy utility to run district heating systems to 40 buildings; Eastleigh and Kirklees led the way on photovoltaic cells on schools, homes and civic buildings – and Bristol was one of the first to get involved in wind, launching its own wind farm at Avonmouth Docks.

Stoke-on-Trent has gone further, committing itself to be energy-self-sufficient and has linked up with the technicians AECOM to help use wasted heat across the city.

Stoke is using warm water from flooded coal mines underground, borrowing a successful idea implemented by the Dutch city of Heerlen, which opened the world’s first mine-water power station in 2008.

Solar panels installed on housing in Huddersfield as part of the SunCities project

A partnership approach

The most enthusiastic UK cities met in Balliol College, Oxford, after Huhne’s policy shift and continue to share ideas and knowhow.  They include Peterborough, which runs the Blue Sky, another Esco, developing a solar and wind farm outside the city, and which involves 14 other local authorities.

But the implications of what is happening in Hamburg and Berlin is that local authorities will use the best of both approaches, so that the real direction of travel seems to be a series of these partnerships between councils, community energy suppliers, financiers and others.

So Bath and North East Somerset council linked up with Bath and West Community Energy to put community energy widely into practice.

Aberdeen Council also backed the community-owned Aberdeen CHP Company, which has reduced the electricity bills of those taking part by half.

Haringey in London has forged an important partnership this month, with Durham University’s Energy Institute. This is a two-year link-up designed to develop new low carbon approaches and business models on a much bigger scale.

Haringey is interesting because they were the first local authority in the UK to sign up to Friends of the Earth’s pledge to reduce borough wide carbon emissions by 40% by 2020.

They then worked with the New Economics Foundation to appoint an expert ‘carbon commission’, to lay out a road map to achieving such a major reduction, and making sure the economic benefits include the whole population.

It helps that the cabinet member in charge of their energy strategy, Joe Goldberg, is also in charge of finance and employment.

Haringey’s plan involves launching a series of enterprises, operating at different scales, which make much more local change possible – including a low carbon energy infrastructure, a trained local workforce to create it, local institutions to finance it, and a powerful, healthier population which is capable of providing more support to each other.

But if the community energy entrepreneurs can provide the excitement, then local authorities have something else to contribute – the ability to co-ordinate at scale.

For example, it makes environmental and economic sense to make use of the waste heat that comes from generating electricity, and after co-generation comes tri-generation: heating, electricity and cooling.

Beyond that is the idea of quag-generation, because one by-product of hydrogen fuel cells is water.  In the future, local authorities will almost certainly find themselves – not just in the energy business – but in the cooling and water business too.

Eastleigh’s leisure centre is already providing hot water for the civic centre next door.

The real problem is that the Green Investment Bank and other Whitehall initiatives have been designed with giant energy projects in mind.  The new community energy strategy may shift this, but until now the official institutions have been difficult to navigate for community organisations.

Even if they do navigate them, local energy suppliers get a lower return than the big players would for the same project – because they have to distribute via the Big Six rather than selling direct to the market.

Up to a third less, in fact.  It is a perverse incentive against doing things small, but local authorities can provide the context which begins to solve this problem.  They can become distributors in their own right, as they are in Germany.

There are risks, but the potential benefits are huge – local jobs, local returns, the ability to hold onto money that would otherwise be flowing out of the area to distant utilities.

‘Energy is a huge opportunity for civic regeneration,’ said Alban Thurston of Projekt Sonnenschein.  ‘But it means facing down the dying, but still malign, influence of the Big Six energy companies.’

We are in the early stages in the UK, but my prediction is that – given the political realignment around the issue – things will soon be moving much faster.

One way forward for local government, inspired by the Haringey Carbon Commission

1. Launch energy supply mutuals to operate across a council area, along the lines of those in Aberdeen and in Malmo in Sweden, to finance and deliver network energy services, to provide local energy at a stable cost and to create local jobs.

2. Develop a cross-area co-operative network to install energy efficiency measures in buildings at a big enough scale to make a real local impact.

3. Link up with other local organisations to support this, including training providers, local estate agents and local voluntary organisations too.

4. Set up local demonstration projects for low carbon innovation, using public buildings to speed the transition.

5. Lobby for low-cost finance from the Green Investment Bank and new British Business Bank, along the lines of the German government, which offers energy retrofit loans at 2.5%.

• Read more about the Haringey Carbon Commission here.