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Policies to support local energy systems: do they go far enough?
Jim Watson, Research DirectorUK Energy Research Centre
EG&S KTN Annual Conference, London, 27th March 2014
3. Innovation systems & developmentLocal energy: back to the future?
3. Innovation systems & developmentCurrent / future role of local energy
More attention to local energy in recent years, but still plays a minor role in energy policy
Community Energy Strategy: ’Putting communities at the heart of energy policy’
Modest ambitions, e.g. community renewables could supply 1.4% of electricity by 2020
Also important for public engagement and legitimacy?
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3. Innovation systems & developmentLocal investors less important than in some other EU countries
• 11.3% of electricity in 2012 (41TWh)• EU target implies ~ 30% by 2020
Source: DECC
14-15% in 2013?
3. Innovation systems & developmentPolicies to support local energy:some considerations
Governance not government Key role for government, but many
other actors are also involved The UK is a centralised state: how
can government enable diverse, bottom up action?
Community benefits debate: benefits for which members of communities?
Not just an energy policy agenda Community development (CLG) Financing and incentives (Treasury) Transport (DoT)
3. Innovation systems & developmentPolicies to support local energy:some considerations
Government at several levels National government (UK), including devolved
administrations with significant differences EU legislation is part of national policy framework Local authorities: capacity varies; some already leading
developers and/or supporters of community schemes
Scaling up and replication Can community energy become more ‘professionalised’?
Is this appropriate for this type of local energy? Importance of local context for many initiatives: some
limits to learning and knowledge transfer
3. Innovation systems & development
Electricity Market Reform Mainly focused on large scale, low carbon electricity
generation and the provision of large-scale capacity But it highlights the risk of a ‘missing middle’ in energy
policy; local energy could fall between the cracks Larger community / local projects are eligible for long
term contracts, but the mechanism is complex Fairer power purchase agreements for smaller players
has been discussed extensively, but not fully resolved Links to broader issues of competition in energy markets:
see today’s Ofgem announcement!
Electricity market reform
Click to add titleElectricity market reform
‘To complement EMR, we should unleash a completely new model of competition and commercial opportunity … we will need companies, communities, public sector and third sector organisations to grab the opportunity to generate their own energy at real scale and start to export their excess energy on a competitive, commercial basis. Not just a few exemplars, but tens of thousands of them.’
Minister of State Greg Barker MP, Sep 2013
3. Innovation systems & developmentOther economic incentives
Demand-side incentives Opportunities for more ‘collective’ local action through
ECO and the Green Deal Dedicated incentives for communities & Green Deal Both policies struggling due to politics and slow uptake
Energy supply incentives Grant schemes and FITs have both been essential for
community energy; frequent policy changes problematic Proposal to raise FIT threshold to 10MW welcome More support for local heat network development from
central government
3. Innovation systems & developmentA key role for Local Authorities?
Many Local Authorities are already developing and implementing projects and/or have energy strategies
But many less active, and do not have significant capacity to act
Key barriers include attitude to risk, lack of competencies
Multiple targets and restrictions from central government
Prudential borrowing is possible, but risk aversion reinforced by pressure for them to reduce debt levels
3. Innovation systems & developmentInnovation and learning
Many local energy schemes are not innovative from a technical perspective: they use familiar technologies
But institutional / financial arrangements and business models are often less well known (at least in the UK)
Important to support demonstrations see ‘what works’ Some notable examples:
• Ofgem Low Carbon Network Fund
• ETI Smart Systems and Heat programme Not enough emphasis on learning from experience, both
for future implementation and future policy development
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Thanks
http://www.ukerc.ac.ukhttps://twitter.com/watsonjim2