CEE Response to government's decision not to fund a National Community Energy Fund
Following the most challenging year ever for community energy as revealed in the State of the Sector 2022 report, the Secretary of State, Kwasi Kwarteng MP, has “decided not to provide further grant funding for community energy projects through a national Community Energy Fund at the present time.” This endangers the ability of community leaders to harness the increasing appetite for local climate action, crucial to achieving net zero and addressing the impacts of the energy crisis.
He was responding to our request to replace the successful £10 million Rural Community Energy Fund (RCEF) by funding a National Community Energy Fund, (an ask supported by the Environmental Audit Committee, the Labour Coop Party and 75 national and community organisations).
He points the sector to various sources of funding including the Voluntary Energy Redress fund, recently opened up to community businesses, and encourages the sector to “work closely with local authorities to support the development of community energy projects through UK growth funding,” for example, the Levelling Up Fund and the new UK Shared Prosperity Fund. CEE has been encouraging and resourcing community organisations to access these funds for months now. Our funding database is accessible via bit.ly/CEE-Funding.
These will be important sources of funding for the sector but are a mix of capital and revenue funding. Community energy organisations can raise their own capital from community investors.
What the sector really needs is a small amount of grant funding to get projects ‘investment ready’. At our national Energy Transition conference on Saturday, Lord Callanan, minister at the Department for Business, Energy and Industrial Strategy mentioned the successful Rural Community Energy Fund that did just that. He didn’t mention that the RCEF was allowed to end on 31 March.
In praising the RCEF he mentioned Plymouth Energy Community’s planned Chelson Meadow Solar Farm which has received some £130,000 of development funding from the RCEF. He didn’t mention that this will mobilise £7-8 million of community capital to actually build it. That means for every £1 the government puts in they get about £60’s worth of project plus £35 of community benefit over the lifetime of the project. A pretty good return on investment compared to the Levelling Up Fund grants, where £1 of government money will create £1’s worth of project.
We pointed out the difference in these returns on investment to the Secretary of State in our request and specifically asked for his thoughts on them. He did not respond to that request.
We also asked that the government’s “future plans for community energy”, which he promised the Audit Committee would be in the Net Zero Strategy, be contained in the upcoming Energy Bill and be supported in detail by a Community Energy Strategy. He was silent on this too. ITN reported on 13 April that the government "accepts that more could be done in future and says it will consider community energy in a future strategy." The Energy Bill is the next strategy. We will continue to push for this.
Community energy people are determined, enterprising and deeply committed to local climate action and delivering benefit to their communities in these increasingly difficult times. For this reason, our Community Energy Fortnight focussed on increasing skills and capacity around delivering fuel poverty advice and measures.
The sector is continually innovating new projects and ways to make them happen. We are working on putting in place long term sustainable development funding in the form of revolving funds. But in a climate emergency and an energy crisis the government should be ramping up activity, especially where relatively small amounts of seed funding can ripple out so much increased activity and benefit.
The Environmental Audit Committee told the government, “Due to the urgency of the climate crisis and the vital roles communities will have to play in reaching net zero, it is essential that a timely solution to support the long-term growth of community energy across the UK is found.” As previously mentioned, the returns on support of this nature for community energy would be huge in financial and social terms; community energy fuel poverty work alone delivers at least a 10:1 social return on investment.
Michael Gove, introducing the Levelling Up White Paper, told parliament that we need “every individual and community to achieve everything of which they are capable. We need to fire up every resource we have.” He is right.
Consistent, dedicated development funding which a National Community Energy Fund would provide, would enable organisations to grasp opportunities as they arise rather than wait on the boom and bust cycles of the big centralised capital funds, which also necessitate complicated liaisons with local authorities. Experience also tells us that bursts of funding do not enable capacity building and skilling up as people and businesses do not trust that work will be sustained.
The government will not fund community energy ‘at this time’. This must change very soon if we are to stand a chance of achieving net zero.
The Climate Change Committee, whom the government has a good track record of listening to, has said repeatedly that, ”It will not be possible to get close to meeting a net-zero target without engaging with people or by pursuing an approach that focuses only on supply-side changes”. In the Sixth Carbon Budget most recently they warned, “the utmost focus is required from government over the next ten years. If policy is not scaled up across every sector; if business is not encouraged to invest; if the people of the UK are not engaged in this challenge - the UK will not deliver Net Zero by 2050….people need to be brought into the decision-making process and derive a sense of ownership of the Net Zero project.”
The government has lost focus, scaled down policy and abandoned this sector. People and communities are vital, not least because nearly two thirds of measures for net zero are to some degree dependent on people decisions. The government is turning its back on huge potential for committed community investment in local energy saving and generation, which delivers high social returns and engages people in a deep and lasting way in the transition.
Instead, the government focusses on big-cheque, supply-side changes, such as Carbon Capture Usage and Storage, subsidised to the tune of £1 billion and new nuclear, which will likely fail to deliver in time, if at all. These subsidies will mostly benefit big business and are designed to enable business as usual.
It must remember what one of its own advisors said, that ‘citizens have a veto on net zero’, and put people and communities at the heart of transforming our energy system.