This year’s report was produced by Community Energy England, Community Energy Wales and Community Energy Scotland, and is available to read from today. It describes the progress of the community energy sector across the UK in 2021 as well as providing a breakdown of the sector’s activities in each nation. This marks the second year that Scottish data has been gathered and is the first year that the survey and report was produced in-house by the three national community energy organisations.
As always, we are very grateful to all organisations that took the time to complete the survey this year. Maintaining an up to date database is crucial if we are to encourage and persuade policy-makers and other stakeholders to create a more supportive policy landscape for community energy at local, regional and national level.
We are also grateful to SP Energy Networks, our sponsors of this year’s report. Scott Mathieson, Director of Planning and Regulation at SP Energy Networks said:
“We are delighted to support the State of the Sector report for a fourth year. This year’s report is providing timely data for us, which we will be studying carefully to ensure we can support our local communities in the best possible way to help them realise their net zero ambitions.”
Community Energy Fortnight is a social media platform held over two weeks that enables groups to share their experiences of community energy – both the challenges and the success stories.
Your opportunity to amplify your voice!
This year’s programme emphasises the cost of living crisis and increasing rates of fuel poverty experienced within our communities. Using the hashtag #EfficiencyFirst to raise awareness of the real-life effects on the lives of communities and individuals, we will share the ways in which you support those you represent.
#EfficiencyFirst spreads the word and highlights our sector’s significant contribution to a just transition and climate crisis solutions.
Quick and easy to get involved – a simple image, comment or quote will do. Click here for more information & suggestions.
Tag us in so we can spread the word: we have +1k followers on Facebook & +4k on Twitter!
Decision-makers need to know about what we do in our sector and the solutions we create – make that message loud & clear between 11-24 June!
For the last two years, in addition to his regular role, CES’ Benny Talbot has been inputting to the RIIO ED2 process for deciding how our energy networks are invested in. Below he reflects on the process, and the likely changes ahead.
What is RIIO and why does it matter?
RIIO was created as a way to agree 5 year investment plans between Ofgem (the energy system regulator) and the Distribution Network Operators (DNOs) who own the network. This is needed for two main reasons. Firstly, because DNOs are sole network owners and operators in a given area, overseen by the regulator, Ofgem, which aims to create economic competition, ensuring that existing and future consumers pay a fair price for the cost of running these networks and get the services they require – the DNOs must balance this with the need to ensure the UK remains internationally competitive to shareholder investment; and secondly because ownership of the UK distribution network is divided between 14 regions, owned by 6 separate companies, so RIIO is there to help Ofgem set common standards for investments and standards of service across the whole of the UK.
While in practice RIIO is a long and complicated process, the essence of it is quite simple – first Ofgem sets out its expectations, then each DNO draws up and costs an investment plan to meet those expectations, and finally Ofgem reviews the plans and makes a decision on which parts of the plans to OK, and which to challenge or reject. All investment agreed upon is ultimately charged by the DNOs to energy consumers via their bills, plus a regulated profit margin.
However, the Climate Crisis has transformed RIIO from a complex but routine budgeting excise for maintaining the grid, into a key strategic forum to ensure we can achieve net zero, due to the massive strategic investment now needed to enable the grid to support the electrification of heat and transport, and the continued expansion of renewables.
This has also placed a dilemma at the heart of the RIIO process. Keeping investment as low as possible would mitigate the already spiralling cost of living crisis, but exacerbate the very real risk that constraints on the electricity network prevent or delay effective climate action. A better way forwards would be to pay for strategic investment in our networks via progressive taxation, not energy bills – but that decision is rests with the government. Until then, Ofgem is forced to navigate between two competing demands: fuel poverty, or climate action?
The RIIO process is struggling to evolve to meet these new tensions. In particular, given the rapid changes we are seeing in climate plans, targets, and the technology evolving to help meet these needs, the 5 year planning cycles of RIIO are beginning to look increasingly clunky. Instead, an increasing number of ad hoc ‘uncertainty mechanisms’ are being proposed to allow decision making within the 5 year periods. However, the devil will be in the detail of these new uncertainty mechanisms, and it remains to be seen whether they will be able to reach the right decisions, decide fast enough, or enable meaningful consultation with energy system users.
‘DSO’ and the implications for Community Energy
My role in all of this was as a member of the Consumer Engagement Group (CEG) for the SP Energy Networks (SPEN) region (the SP Energy Networks region covers southern Scotland, northern Wales and Merseyside). Over the course of the last two years, as SPEN developed their plan, they were to provide us with regular updates and the CEG was tasked with challenging SPEN’s plans to ensure that the needs and preferences of the energy system’s users were being taken into account. The CEG then wrote our own report on SPEN’s plan, to help Ofgem make its final decision.
Within the CEG, I led on responding to SPEN’s ‘DSO’ plans. DSO stands for Distribution System Operator, and describes a change in how networks could operate, in order to free up significant extra capacity. The basic idea is that instead of running a ‘fit and forget’ system, with enough spare capacity to ride out even the largest expected surges in demand or generation, DNOs could use modern digital technology to monitor and control power flows in real time. Much more demand and generation could then be connected to the existing wires, because the DNO would be confident that when the occasional surge in generation or demand arrived they could detect it and respond in real time (eg. by temporarily turning down some loads or generators) and keep the network safe. While there is no way to avoid the need for massive new investment in the network to enable net zero, DSO could reduce these costs and free up network capacity faster than would otherwise be possible.
However for DSO to really succeed, there will need to be a change in how we as energy users relate to the network. This is beginning to be seen as a need for ‘democratisation’ of the network, with energy users becoming more important and active participants – and also an opportunity for customers to earn money by providing ‘flexibility’ services to the DNO, in turning energy use or generation up and down to help manage network constraints. Of course, sharing more data on our energy use and installing new smart technology also comes with risks. Foremost among these are a loss of privacy, increasingly complex electricity bills, and/or those who are less tech savvy being left behind, ending up with systems they don’t understand and paying more for their energy.
Community energy groups, as local trusted intermediaries, should have a key role in bringing people together to navigate this new system, and support those who will otherwise be left behind. Meanwhile DSO could also open up new opportunities for community-led local energy projects, for example where groups bring together local energy users or generators to contract with their DNO and collectively deliver ‘flexibility’ services to the network.
SPEN’s RIIO ED2 DSO plans contain significant commitments, including; to roll out network monitoring and real time control via ‘CMZ’ zones (which can include Active Network Management) across around half of their network by 2028; to provide 80% of new generators with a flexible connection option alongside their standard connection offer; and adopt an ’assumed open’ process for the data they collect, sharing it via an online hub.
Among other issues, I challenged SPEN on how well they were able to consult on their DSO plans given the complexity of this new field, to provide much more specific commitments on what network data they will share, and to give meaningful consideration to where supporting domestic energy efficiency could be used as an alternative to network reinforcement. SPEN now propose to set up an independent panel to ensure that customers and stakeholders’ needs are represented as the DSO rollout continues, and have fleshed out their proposals for data sharing to include real time data and impending curtailment forecasts on ANM networks to enable curtailment trading – data that community generators on Orkney (in the SSEN rather than SPEN zone) have been requesting for the last 5 years.
Challenges from me and colleagues in the CEG also played a key role in SPEN deciding to publish a Just Transition Strategy and a Community Energy Strategy for the first time, both of which SPEN now propose to maintain and update regularly. I was impressed at how SPEN staff took forward these issues, recognising the significant role that community groups could play, and coming forwards with proposals significantly beyond the baseline required by Ofgem, including proposing a £30 million Net Zero fund (of which 25% would be ring fenced for support of community energy), and to provide dedicated community energy advice, awareness raising and technical support services, as well as support to local authorities in making Local Area Energy Plans.
Some key outstanding questions remain. Firstly, whether (and how) SPEN and other DNOs will recognise the potential for domestic energy efficiency upgrades to be used as an alternative to reinforcing the network. Secondly, how far DSO should be run as a separate entity to the DNO to avoid conflicts of interest – SPEN haven’t gone as far in separating the two as some UKPN, for example. Finally, it remains to be seen both exactly how much extra capacity DSO will free up, how cheaply, and how fast new capacity will actually be needed in the network; but the crucial mechanisms for monitoring its effectiveness, and scaling DSO and traditional network investment accordingly are not yet entirely clear.
SPEN’s RIIO ED2 plan and their DSO plan have now been published and can be viewed online, as can the CEG’s report on these plans to Ofgem. Ofgem will hold an open hearing on SPENs plan on 24th March, which is open to the public to attend, and expect to make final determinations on all plans this winter. The RIIO ED2 plans will then guide network investment from 2023 to 2028.
Benny Talbot, Innovation Development Manager @CES
At Community Energy Scotland we value our team’s and communities’ opinions. Blogs are a chance for us, our members and guests to share personal opinions and expertise, and do not necessarily reflect the views of Community Energy Scotland as an organisation. Please note opinions may change and Community Energy Scotland does not offer any endorsements.
The State of the Sector Report is rapidly becoming a go-to reference point both within and outside the community energy sector. The 2022 State of the Sector survey is live from today and you can find it here.
The report remains the most comprehensive dataset on community energy in the UK, even more so since Scotland’s community energy groups joined forces for the first time with England, Wales and Ireland last year.
Informative and inspirational, it has been building traction and growing the voice of the community energy sector in the wider world. As well as being cited in the UK government’s Net Zero Strategy, the report has been referenced by the Environment Audit Committee and numerous MPs during debates about local energy supply and the Local Energy Bill.
The data we captured last year, with thanks to community groups for their co-operation and sharing of their information, has been stored and we are looking for updates in 2022. If you took part in the 2021 survey, you won’t need to repeat information already passed on to us, however any new information is critical for the report to remain accurate and relevant.
For those who may be completing the survey for the first time in 2022, it is difficult to stress the importance of the facts you intend to share, so please pass on as much information as possible. There is an email address in the survey for you to get in touch for any help or questions.
By working together producing these reports, we help create a policy, regulatory and support environment that empowers us all to drive the reduction and flexible management of energy demand at the local level, across Scotland.
The full 2022 State of the Sector Report will be available later this year and we are looking forward to the results.
Scotland’s community energy sector took part in the State of the Sector survey for the first time last year, providing a significant contribution to a widely recognised document.
Due to the success of the UK-wide report as a whole and our part in it, the Scottish community energy sector will continue to play an important role in portraying the region’s current and historic decarbonisation and energy activity.
This year’s survey is due out on 16th February and all community energy actors are encouraged to take part. If you took the time to supply your organisation’s information last year, you won’t need to repeat the information. However we do want to record you in 2022’s report, so please do fill in the survey where it is relevant.
The report, produced by Community Energy England, Community Energy Wales and Community Energy Scotland, and launched today, illustrates the progress of community energy in the UK in 2020. The ambitions and importance of community energy provide an additional important focus.
Written by our colleagues in Regen, from data contributed by a total of 424 community organisations, the report provides evidence-based recommendations to policy-makers and stakeholders on how the sector can meet its potential. It contains information aimed to help drive a committed and supportive wider environment in which community energy groups can thrive and further contribute to local economies and significant decarbonisation for the greater good.
This is the first year Scottish groups have taken part in the report and we are most grateful to the 72 Scottish community energy organisations that contributed their time and information to make this possible. We are delighted to confirm that Scotland demonstrates particularly strong power generation activity per capita, chiefly via wind and hydro power.
Located in the Outer Hebrides, Point and Sandwick’s community owned wind farm – the largest community owned windfarm in the UK and generating £900k a year for the local economy – features as a case-study in the report. The report also features an Orkney-based case study from the island of Eday.
In addition to providing information and inspiration for those who read it, this report will add to the collective voice of Scotland’s community energy groups in emphasising the undeniable evidence for greater national investment into the sector to build a more resilient nation as we head towards a net zero world.
For several years, Ofgem has been reviewing network charges, which set out how the cost of running the transmission and distribution networks should be apportioned between large and small generators and customers. This summer, they launched a consultation on part of this process, the Access and Forward-looking Charges Significant Code Review, which sets out their ‘minded to’ positions.
Community Energy Scotland has been working through this consultation to determine the likely impacts on community generators in Scotland. Some of the moves are positive; Ofgem propose scrapping reinforcement costs related to demand connections, which will make it significantly more affordable to connect things like electric vehicle chargers and heat pumps, particularly in weak areas of the grid. They also plan to reduce the reinforcement charges for distributed generation, which again we support.
However, there are a number of key areas of concern for us and our members. Ofgem has indicated it is are minded to impose transmission charged (TNUoS) on small embedded generators over 1MW in size, which could add very significant costs to both new and existing community energy projects. Transmission costs in Scotland, particularly the islands, are already the highest in the UK, based on a flawed principle which incentivises generation near the main UK population centres (which Ofgem assumes to be the south of England). This may once have worked for centralised, fossil-fuel generation, but is clearly incompatible with distributed renewable energy generation, which needs to be located where the best natural resources are found. It is also incompatible with community generation; a Scottish community wind turbine can’t be located in Cornwall.
We’ve prepared a detailed response to the consultation, which is available here. We’d encourage community energy groups to submit a similar response by tomorrow, the 25th of August, using our template if you wish. Responses should be emailed directly to Ofgem at FutureChargingandAccess@ofgem.gov.uk .
The New Build Heat Standard consultation requires new buildings consented from 2024 to use heating systems with zero direct emissions. CES put forward the view that action in this area is long overdue. The construction sector, and housing developers in particular, have been reluctant to take action in this area and the Scottish Government have been too too slow in enforcing higher standards. Low carbon heating systems are a proven technology but this must be accompanied by higher standards of energy efficiency if we are to reduce levels of fuel poverty and total energy costs for consumers.
The Draft Heat in Buildings Strategy sets out the Scottish Government’s proposed actions for transforming buildings and the systems that supply their heat, ensuring a transition to zero emissions by 2045. We welcome the long-term ambition and the comprehensive proposals, and recognise the intent to accelerate the timetable for action but questions remain about whether these go far enough.
The proposals highlight the considerable challenges ahead particularly around reconciling the cost of transitioning to low carbon heating systems and the financial burden this will place on many households already in fuel poverty, but it is difficult to see how the Scottish Government’s short-term targets will be met within the timescales proposed and with the level of financial support being offered.
As we move closer to COP26 in November we would like to invite you to discuss how CES and our members might engage with the event. We have been discussing a community energy presence at COP26 with a number of partners in the sector such as Community Energy England, Community Energy Wales and REScoop and are keen to understand how we can support and represent our members through this partnership.
To do so we are hosting a Zoom call on Tuesday the 23rd of March at 4pm (details below). This will be a fairly informal and discursive call with the main points of discussion below. We hope to be joined at the meeting by representatives from Community Energy England and Stop Climate Chaos Scotland who will be able to share their plans and ideas for COP26.
Current plans for engaging, participating or attending COP26 and associated events
Ideas, desires and areas of interest for COP26
Opportunities to engage, how CES can represent members and how members can get involved
23 March 2021 4pm: We hope to see you there and encourage you to come along if you are interested in taking part in, or learning more about, COP26.
To come along to the call, please click here to register your interest. If you’re not yet a CES member, it’s not too late to join!