Backbench Business Committee nominated debate on Enabling Community Energy - July 1

Friday, 2 July 2021 08:30

Enabling Community Energy

Wera Hobhouse (Bath) (LD)
I beg to move,

That this House has considered enabling community energy.

It is a pleasure to serve with you in the Chair, Sir David, and I am looking forward to the Minister’s response. I thank the Backbench Business Committee for granting the debate, which I secured with the hon. Members for Waveney (Peter Aldous) and for Ceredigion (Ben Lake). We want to make the case for enabling community energy by removing the blockage that is preventing its huge potential from being realised.

The evidence that the climate crisis threatens to destroy human civilisation and the natural world is increasingly alarming. We must achieve our emissions reduction targets and get to net zero by 2050 at the latest, as set out in the Climate Change Act 2008 and the Paris accord. The UK is way off track in doing that, as the Climate Change Committee has made clear. Currently, only 12% of our power comes from renewable sources. The only sector that has made reasonable progress is the production of electricity. In all other sectors—heating, transport, agriculture and heavy industry, let alone shipping and aviation—Britain is failing to reach its own targets.

The two big challenges facing householders are heating and transport. How do we rapidly transition from powering our heating and transport with fossil fuels towards doing so with clean energy? A change of this scale can be achieved only through the active involvement of people, because they will have to pay for it through their energy bills, the products they buy, and the taxes they pay. People will need to host the new infrastructure in their neighbourhoods and communities, and they will ultimately need to change their routines and practices. If people do not agree to pay for it, host it or do it, progress to net zero will be more costly and more contested, and it will be less inclusive, equitable and environmentally sustainable. The individual householder or consumer must be at the centre of our transition to net zero, and it seems the Government have not quite understood this; otherwise, they would by now have developed a coherent plan to engage people along the way.

Community energy is one of the few existing tried-and-tested means of engaging people in the energy system. Indeed, the strength of community energy comes from its connection to people and places, because people make community energy. Community energy means smaller-scale, renewable power generation that is owned and run, at least in part, by local community companies or co-operatives. The individual providers might be small or medium-sized, but when taken together, community energy could be done on a very large scale. A 2014 Government report stated that we could have had 3,000 MW of clean community energy generation by 2020. The Environmental Audit Committee’s recent community energy inquiry said that

“by 2030 the community energy sector could grow by 12-20 times, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions every year.”

Let us imagine a future in which we can all buy clean electricity directly from a local supply company or co-operative and in which every pound spent powering our homes, workplaces and transport supports local jobs and helps to fund new facilities and services in our communities and in turn contributes to the building of more renewable energy infrastructure. Right now, UK community energy generation is just 319 MW—just 0.5% of our total energy generation. That is a great failure of potential.

The huge potential of community energy is being blocked by our energy market and licensing rules, which are largely unchanged from when they were designed in the 1990s. They make the cost faced by community energy groups insurmountable. A report by the Institute for Public Policy Research states that the financial, technical and operational challenges involved in setting up a licensed energy supply company mean that initial costs exceed £1 million.

Let us imagine setting up a microbrewery. We plan to deliver our beers to local pubs, off-licences and homes, but then we are told that we have to pay £1 million in road tax for our delivery van. These businesses would never be started, and the savings in transport costs, greenhouse gas emissions and prices would never be realised. That is the reality that the community energy sector faces.

The 319 MW of installed community energy capacity exists because of the dedicated efforts of the people who make up the UK’s few hundred community energy groups—groups such as Bath and West Community Energy, which is in my constituency and which uses its revenues to support energy efficiency in homes, fuel-poverty programmes and low-carbon transport. Often, these groups reach those who are traditionally left behind. They are staffed largely by volunteers, who work hard to survive in an unnecessarily harsh regulatory environment.

Our outdated energy market rules mean that the groups must sell their power to large utilities, which sell it on to customers. That makes it impossible for community energy to scale up. The market structure does not recognise and incentivise the efficiencies and savings that community energy’s distributed generation creates by enabling power to be consumed closer to where it is physically generated.

The Government say that there is no problem. In answer to a parliamentary written question on 1 March, they said:

“The right to local energy supply already exists under the Electricity Act 1989. One of Ofgem’s key strategic priorities is increasing flexibility across the electricity system to support the delivery of net zero and ensuring that consumers benefit from these innovative changes.”

That misses the point: the fact that the right exists does not mean that it is practically possible. In answer to a written question on 2 November 2020, the former Minister of State, who is now Secretary of State, said:

“Ofgem can award supply licences that are restricted to a geographical area and has just consulted on how to use this facility more effectively to bring forward innovation. Ofgem’s Licence Lite regime also aims to reduce the cost and complexity of entering and operating in the market for suppliers.”

Clearly, neither has been able to achieve the potential of at least 3,000 MW of community energy generation that was identified in the 2014 Government report.

The intention behind Licence Lite was commendable, but it has not delivered what was intended. Its key flaw is the need for local renewable generators to partner with a willing licensed energy utility. None of the existing community energy groups in the UK is licensed to sell its electricity directly to local customers. That is why community energy has hardly grown for more than a decade when it should have been multiplying many times over. The flexibilities and allowances for local supply that Ministers referred to have not delivered. As the call for evidence for the Environmental Audit Committee’s recently launched community energy inquiry put it so well,

“the ability of communities to sell the energy produced locally is limited in the UK’s centralised regulatory system, meaning that projects often have to sell energy directly to the grid, then buy it back at additional cost.”

The solution is a right to local supply that enables community energy schemes to sell their power directly to local customers. That would make it viable to expand existing schemes and to construct many new ones. The Local Electricity Bill proposed by the hon. Member for Waveney in the last Session would do that. Think of it—a surge in clean energy and a surge in public buy-in for climate solutions, because people would see the local economic benefits happening in their own communities.

The Government have said they want to enable community energy. They have agreed in principle with the need for a right to local supply, but they have not agreed to look at the detail of how the true potential of community energy could be unleashed and why there are persistent barriers. Words must now become actions. I therefore ask the Minister to engage with me and other lead Members supporting this reform, and the campaigners and experts behind it. Together, we can get the detail right and implement it quickly and effectively.

The need to get to net zero is becoming more and more urgent. We will not get there without the consent and active engagement of the people who have to pay for it, host any infrastructure and change their habits. Community energy could make a large contribution, not only to produce the clean power we need but to bring people with us in our ambition to get to net zero before it is too late.

13:40:00

Peter Aldous (Waveney) (Con)
It is a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing and leading this debate and the hon. Member for Ceredigion (Ben Lake) on his supporting and campaigning work.

On 10 June last year, I introduced the Local Electricity Bill. Unfortunately, due to the pressures on the Parliamentary timetable, the Bill made no further progress. What it did do was vividly illustrate that there is an enormous appetite from all corners of our four nations for an upsurge in community energy projects.

While credit should go to the campaigning work of Power for People, it is abundantly clear that local councils, cities, towns and villages want to play their part in the transition to net zero. This is not a straightforward journey, and we need to use all the tools in the box to ensure that we reach our destination on time and, hopefully, after a smooth ride. This means removing those regulatory barriers that currently prevent community energy from playing its full role.

The main obstacle prohibiting local communities from getting involved is that the current supply licensing regime is highly complicated, national in scope and has onerous credit requirements. It is a one-size-fits-all approach, heavily skewed in favour of the status quo. There is an exemptions regime for supply of less of 5 MW and a Licence Lite supplier licence, but these are not fit for modern purpose.

There have been recent reviews by both Ofgem and the Department for Business, Energy and Industrial Strategy into the current energy supply licensing arrangements, and there is an acknowledgment that the current regime is opaque and difficult to interpret. However, as yet there is no route map setting out the path to reform. The Government now need to commit to that regulatory reform, reaffirm support for community energy and remove those values. They should start by answering a number of questions, which I will list.

First, what has happened to follow up on Ofgem’s derogation policy review and other calls for evidence on aspects of the energy supply market? Does Ofgem intend to progress its consideration of a local licence?

Secondly, as indicated in the energy White Paper, does BEIS intend to ask Ofgem to provide latitude in the supply licensing regime for local suppliers?

Thirdly, as part of its ongoing review of the licensing derogation review, will BEIS consider widening the exemptions regime to enable local supply?

Fourthly, when is Ofgem planning to issue its review of the smart export guarantee and come to a conclusion on potential enhancements to provide a more certain route to market for community providers?

Fifthly and finally, are the Government proposing to consult more generally on community energy and local supply in advance of the net zero strategy?

This is a highly technical and complicated subject. I shall be writing to the Government and asking those questions. It would be easy to put this whole matter into the “too difficult to do” tray, but that would be a dereliction of duty. We would be letting down those thousands of communities who want to play their part and get involved. The Government, parliamentarians and Ofgem need to work together to get over those barriers. I hope that the Minister will indicate a willingness to do so.

13:45:00

Ben Lake (Ceredigion) (PC)
It is a pleasure to serve under your chairmanship as always, Sir David. I congratulate the hon. Members for Bath (Wera Hobhouse) and for Waveney (Peter Aldous) on their work on this matter and on securing the debate this afternoon. They have laid out the huge potential of enabling greater community energy across these islands. The hon. Member for Waveney went into some detail on some of the mechanisms that we believe can realise that potential—namely, a right to local supply.

In advance of this afternoon’s debate, I have been contacted by supportive Members from all political parties who were unfortunately unable to attend. They include the hon. Member for Gower (Tonia Antoniazzi), the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), the hon. Members for Bristol West (Thangam Debbonaire), for Milton Keynes North (Ben Everitt), for North Down (Stephen Farry), for Brent North (Barry Gardiner) and for Nottingham South (Lilian Greenwood), the right hon. Member for Kingston upon Hull North (Dame Diana Johnson), the hon. Members for Norwich South (Clive Lewis), for Glasgow East (David Linden), for Brighton, Pavilion (Caroline Lucas), for Bristol East (Kerry McCarthy), for Falkirk (John Mc Nally), for Richmond Park (Sarah Olney), for Romford (Andrew Rosindell) and for Lancaster and Fleetwood (Cat Smith), the right hon. Member for East Ham (Stephen Timms) and the hon. Member for Nottingham East (Nadia Whittome). This is an issue that enjoys considerable cross-party support.

I was delighted to be one of a cross-party group of some 250 Members who supported the Local Electricity Bill introduced by the hon. Member for Waveney in the previous Session. That Bill proposed a mechanism to implement a right to local supply. As the hon. Member for Waveney mentioned in his remarks, that proposal has quite an impressive and broad coalition of support behind it. There is a national campaign co-ordinated by Power for People, which is a coalition of 76 national non-governmental organisations, charities and trade associations, and 70 local councils. Impressively, three of the six distribution network operators—the companies that own and run the UK’s regional energy grids—publicly support the campaign and back calls for a right to local supply as enunciated in that Bill.

It is worth reiterating that a right to local supply was specifically recommended by the Environmental Audit Committee in its welcome and thorough investigation into how to enable more community energy generation. The possible benefits, although they may sound too good to be true, are very real. The “Community Energy State of the Sector 2021” report states that the existing community energy groups operating across these islands reduced energy bills by £2.9 million last year and created £3.1 million-worth of community benefit expenditure. We should just imagine what those figures could be if community energy was fully enabled and grew from its current 319 MW to more than 3,000 MW.

In Wales, we have the highest number of community energy organisations per head of population relative to the rest of these islands, but if a right to local supply was established, even more people and communities could become electricity customers of local enterprises—communities such as Cardigan and Ceredigion, which has a budding local energy club and ample local generation of renewable energy, but where local demand is not currently being catered for by local supply. A right to local supply would help connect consumers with locally generated electricity and the knock-on effect would be seen in communities across these islands.

This measure is not just about addressing the climate crisis, as important as that is. It is also about supporting more local skilled jobs, and it is about cheaper energy bills. It is very much a win-win-win. It can be done. While we welcome the Government’s support of the principle, we believe that, if we work together with the Minister and the Department, we can get the detail right and enact a local electricity Bill that enshrines the right to local supply. I hope the Minister will be open to such a meeting.

13:49:00

Simon Baynes (Clwyd South) (Con)
It is a pleasure to serve under your chairmanship, Sir David. It is also a pleasure to follow the hon. Member for Ceredigion (Ben Lake), my near neighbour in Wales and a doughty champion of community energy.

My own interest in community energy originates from growing up at Lake Vyrnwy, where my father ran a hotel, a few miles south of my constituency of Clwyd South, where the mighty Vyrnwy masonry dam, the largest in Europe when it was completed in 1890, contains a hydroelectric unit that used to supply the surrounding valley with electricity until it moved on to the mains in 1960. I strongly believe that we need to return to that model of community energy. Therefore, in Clwyd South, I have been championing the hydroelectric potential of the River Dee in Llangollen with town councillor Stuart Davies. I warmly welcome the recent decision by members of the town council to set up a task and finish group to investigate the feasibility of using the site of decommissioned hydro-units in the town.

Further up the River Dee in my constituency, in Corwen, is the perfect example of a community energy project—the Corwen community hydro scheme. People came together as a community to build a 55 kW high head hydro scheme in the town. It is 100% owned and run by the community, which raised more than £300,000 for the construction with a share offer five years ago, of which 50% was bought by people in and around Corwen. The success of that first project has led to a second larger project in Bonwm, near Corwen, where work is expected to start this autumn on building a 100 kW hydro scheme, which will be completed ahead of the end of the feed-in tariffs in July 2022.

The Corwen projects have benefited significantly from the support of the local landowner, Lord Newborough, whose Rhug Estate has put sustainability firmly at the heart of its business mission, particularly through its own renewable heat and power generation. That has led to the welcome announcement this week that Rhug has won a net zero award from the North Wales Mersey Dee Business Council.

The Local Electricity Bill lies at the heart of this debate, and I, like many other Members, have put its key points to the UK Government. I know that the Minister and the other BEIS Ministers are keen to take as constructive an approach as possible on what I appreciate is a highly complex issue. While we debate these matters, the Corwen community hydro scheme is actually putting into practice the aims set by the Local Electricity Bill—namely by creating a market between the local generators and the local householders directly. It is doing that by using its electricity to benefit homes in Corwen via the model developed and run by Energy Local, the community interest company that is transforming the electricity market for communities with small-scale renewable generators, which was referenced in the Government’s energy White Paper. The Energy Local model enables consumers to benefit from cheaper electricity if they use power when Corwen’s hyro is generating. The participants pay only 7.5p per kWh, compared with the average market price of 11p to 15p. Of course, that is facilitated by the arrival of smart meters and Energy Local clubs.

I strongly support community energy schemes, as proposed by the hon. Member for Bath (Wera Hobhouse), my hon. Friend the Member for Waveney (Peter Aldous) and the hon. Member for Ceredigion. I am proud that Corwen is the second Energy Local scheme in the UK. The first was also in Wales—in Bethesda, in north Wales. I wish every success to similar schemes that are in the pipeline in England and elsewhere in the UK.

13:53:00

Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) [V]
It is a great pleasure, as others have said, to serve under your chairmanship, Sir David. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this debate, and the hon. Member for Waveney (Peter Aldous), who has been diving into the detail of this, as we have observed over a period of time. I praise his impressive cross-party work, which is very good indeed. I thank the hon. Member for Ceredigion (Ben Lake) for his cross-party efforts in this area. The list of Members he read out showed that there is a broad feeling that this should happen. It is an idea whose time has come. It is a modern idea, and it needs to happen.

At the moment—I checked before the debate—the UK is using 35 GW of energy, 38% of which is gas. Being June, there is 18% solar and 6% wind; 8% comes from France and 7% comes from Belgium, Norway and the Netherlands. Surely, when only 250 MW of energy is being produced locally, with the potential of 3 GW, it is time to change. That 3 GW would eclipse the 0.5 GW of coal that is being used this afternoon, according to the energy app.

It is vital that we take this step and move forward. Ofgem, as we know, is a bureaucracy. There is no energy market really in the UK; it is a bureaucracy, and it needs fixing and tinkering with. That is why local energy is an idea whose time has come. In my constituency of Na h-Eileanan an Iar, it is presumed that energy is transmitted towards London, given Ofgem’s bureaucratic models, and then distributed back from somewhere such as London. There is a distortion of reality because of those presumptions.

Stòras Uibhist, a local energy provider in South Uist, has wind farms that generate about 7 MW, and it is quite easy to see in South Uist what is happening, because of the power station at Lochcarnan. In Lochcarnan, it is possible to see when energy is being imported and exported. When energy is being produced in Uist, it is being used in Uist in the main. Some of it is exported, but very little energy is imported, which is why we need to have some sort of change to reflect that. We cannot have the most expensive distribution and transmission charges, when the reality is that we are not transmitting or even receiving energy.

The Scottish Government are trying to do something—they say it will be in the next Parliament—about working with Scottish islands to demonstrate the idea of carbon neutrality within islands. It is possibly already there within Uist and other islands, but it works well in the demonstration at Lochcarnan power station. I hope that this moves forward in the way that has been suggested cross-party. As our islands are 40% closer to the Arctic circle than London is, we have very long days at the moment—17 hours and 46 minutes. Some people in London might be surprised that solar power can be used. The former First Minister Alex Salmond said we are sitting on the “Saudi Arabia of renewables”. Unfortunately with wind, that is particularly true when it comes to ferries and travel, but when it comes to energy, we have huge potential. It is something that we can use, so I would like to see the efforts coming forward.

I would like to see the UK Government accept the reality. They have power over this issue at the moment, and they really should listen to the cross-party voices—from the Conservatives, the Labour party, the Liberal Democrats, the Scottish National party, Plaid Cymru and elsewhere—and make the change to enable the potentially huge increase. As I said, 35 GW of energy are being used this afternoon. Three of those gigawatts—10%—could be coming from local energy production, which would also be a stimulus economically for many local communities. With that I will stop, because I do not want to take too much time and I know there a lot of Members who want to come in.

13:57:00

Simon Fell (Barrow and Furness) (Con) [V]
It is a pleasure to serve under your chairmanship, Sir David. I thank the hon. Member for Bath (Wera Hobhouse) for securing this important debate on an issue that could fundamentally change not just the electricity market, but people’s ability to access cheap, sustainable and locally produced energy across the whole of the UK.

I was really pleased to be able to support my hon. Friend the Member for Waveney (Peter Aldous) in his efforts to enact the Local Electricity Bill in the last Session. To my very inexperienced eye, the Bill appeared to be a win-win. It drove the creation of new local electricity markets, lowered prices for consumers and created a path for households and businesses to access renewable and sustainable energy in a new way. A 2014 Department of Energy and Climate Change report on community renewable energy suggested that by last year—2020—3,000 MW of generating capacity could have been in place. Instead, we generate around 278 MW from community renewable energy.

The scale of the opportunity here is absolutely vast, and we need only look across to our neighbours in Europe to see the prize on offer. In Germany, there are over 1,000 community-based supply companies producing renewable energy. In that country, the four large utilities control only 40% of the market, which drives real consumer choice and consumer benefit. Unleashing community energy would enable local economic resilience in communities across the UK. Bypassing the large utilities would allow them to keep significant value and economic returns within their own economies. It would create skilled local jobs, more viable local businesses and stronger local bonds. I would argue that the necessary reforms are not just about cheaper electricity bills; they are about helping us get to net zero too. To be honest, I see them as a form of levelling up in action.

Last year, I was pleased to visit Hobkin Ground Farm in the Lickle valley in my constituency. Megan and Mark want to run a low-impact, sustainable farm, leaving as little mark on the environment as possible in their farming. In pursuit of that, they have installed a hydro generator. They power their own farm and a couple of cottages, largely removing themselves from the electricity grid. They would like to go further, but the cost of connection is prohibitive for them. Across the valley from them in Broughton-in-Furness is another project, which aims to bring together local residents in a co-operative to buy renewable electricity from a hydro plant at Logan Gill, allowing them to benefit from cleaner air and cheaper energy. Potentially 400 customers could benefit, saving about 20% off their electricity bills.

The model is great, and I praise local residents Jennifer Sanderson, Rob Dunphy and others, Cumbria Action for Sustainability, and Ellergreen Hydro for working together to deliver it. However, for the project to succeed, it is reliant on the benevolence of Octopus Energy, a nationally licensed and huge utility company, to turn the taps and get them going. If we enable the right to local supply, that ceases to be a problem.

Reforming market rules so that local and regional-sized renewable energy generators could sell their electricity direct to local customers would mean that my constituents in Broughton would no longer be reliant on having to choose from a few large national suppliers. They could go local and go sustainable. If we can achieve that, the effect will be to take community energy schemes, such as that one, from being a smattering of projects across the country to thousands. They currently generate only around 0.5% of the UK’s electricity, but let us think of the scale we could generate. With a few small changes, a thousand flowers could bloom. That will happen only if local community-owned interests are given a route to market.

I very much hope that my hon. Friend the Minister will see the opportunity in community energy to be a tool in levelling up our local communities. I look forward to hearing her response.

14:01:00

Mick Whitley (Birkenhead) (Lab) [V]
It is a pleasure to serve under your chairmanship, Sir David. I thank the hon. Member for Bath (Wera Hobhouse) for securing this important debate.

The question of energy cannot be separated from the survival of our planet. That is why today’s discussion is so vital and why I welcome the broad cross-party support for community energy and the Local Electricity Bill. Energy production and consumption both lie at the heart of our battle to combat climate change. To win the battle we need to meet the targets we have set for cutting carbon emissions. The UK Government have now set in law a cut in emissions of 78% by 2035, bringing us more than three quarters of the way to net zero by 2050. To help us meet the target we need to put the Local Electricity Bill back on the agenda.

The Bill could establish a vital local supply that would give the energy market regulator, the Office of Gas and Electricity Markets, the legal duty of establishing new market rules that could help community energy growth. The cost of setting up organisations that sell locally generated renewable energy to local people, together with their running costs, should be proportionate to the size of the business. That reform would make local projects financially viable, unleashing the huge potential of community renewable energy. This has been shown to work in other countries. In Germany, there are 1,000 such supply companies, most of which are local community-owned suppliers, and almost all provide renewable energy.

In the UK, the slow but steady growth of the community energy sector has brought tangible results, with local organisations now serving more than 358,000 people. But further growth is blocked because of cost. A report by the Institute for Public Policy Research stated that the financial, technical and operational challenges involved in setting up a licensed energy supply company mean that the initial costs exceed £1 million. Most community energy companies cannot afford that. Yet providing community energy organisations with the right financial and legislative support could result in a huge expansion of renewable electricity generation.

The Community Energy 2030 Vision estimates that with such support the growth of the community sector could power more than 2 million homes, create up to 9,000 well-paid and highly skilled jobs, shave millions off the cost of domestic bills, and contribute almost £2 billion to the economy every year. We need to unleash that potential. The Committee on Climate Change states that the UK is way off track to reach its greenhouse gas emissions reduction targets. Renewable energy generation currently accounts for only 11% of all UK energy use. That must change. The extension of community energy production can help us move faster to our goals.

I want to end by supporting the recommendations of the April 2021 Environmental Audit Committee, which outlined a positive way forward: remove the barriers to the development of community energy by passing the Local Electricity Bill into law; support the vital role that community energy plays in achieving net zero carbon emissions; and give practical support to the community organisations that help us achieve our targets.

As COP26 moves ever closer, let us ensure that the UK catches up with our neighbours, such as Germany. Let us help community energy to generate electricity for our children and grandchildren. If we miss our target, we are putting those future generations at grave risk of a climate breakdown.

14:05:00

Wendy Chamberlain (North East Fife) (LD) [V]
It is a pleasure to serve under your chairmanship, Sir David.

I thank my hon. Friend the Member for Bath (Wera Hobhouse) for securing this important debate, and I also recognise the work of the hon. Members for Waveney (Peter Aldous) and for Ceredigion (Ben Lake); indeed, the hon. Member for Ceredigion allowed a number of interventions during his recent Adjournment debate on this subject.

We know that we face a global climate crisis, which will require significant shifts in how we go about our day-to-day lives. Supporting such changes clearly requires Government direction and support, and many communities recognise the importance of proactively transitioning to green living. I am proud to have examples of that in my constituency of North East Fife.

For instance, Sustainable Cupar is a charity that was set up 10 years ago to focus on the protection of the local environment and on supporting local residents in transitioning to a low-carbon, sustainable and ethical future. Since its formation, it has engaged with the local council and the Scottish Government on programmes for fewer road emissions, better public transport and walking routes, and the building of more sustainable homes, as well as exploring issues around direct heat schemes.

Also in my constituency is the University of Saint Andrews, which is North East Fife’s largest employer. The university is led in this regard by its environmental sustainability board, which is chaired by Professor Sir Ian Boyd, previously chief scientific adviser to the Department for Environment, Food and Rural Affairs and now the professor of biology at the university. The university is taking on the net zero challenge, alongside community organisations and businesses, and I attended the first meeting of the outreach group back in May.

Under complementary environmental, sustainability and carbon management plans, the scope of the group’s approach encompasses procurement activities and the travel of international students coming to the university to study. The aim is to reach net zero by 2035. A new biomass plant and a potential onshore wind farm development will deliver energy to meet the university’s needs and potentially those of the wider community, too.

Communities are clearly vital in the move to net zero; they are best placed to know what changes work best for them. Where communities are ahead of the Government’s policies, which we are hearing today, they should be enabled to act, not blocked from acting.

I look to the success of wind power energy in Denmark and Germany, and I see systems that empower such citizen engagement. It is achieved through the formation of wind guilds in Denmark, which are forms of partnerships or co-operatives that own or part-own wind farms. Indeed, so ingrained is this idea of citizen ownership that there is now a law in Denmark requiring that the local population must be afforded the ability to purchase up to 20% of the value of any new wind installation.

Although no system is without faults, we see that countries such as Germany and Denmark lead the way on clean energy through community energy programmes, while the UK, which arguably was initially an early-market entrant in relation to wind, is sadly being left behind.

We do not have to be left behind. Just this week, I visited Orkney with the Scottish Affairs Committee, as part of our inquiry into renewable energy in Scotland. Orkney has long been home to renewable energy and it is now expanding its scope into marine renewables. It recently became the home of the European Marine Energy Centre’s orbital tidal turbine, a prototype that is the world’s most powerful marine turbine.

Altogether, Orkney produces 120% of its own energy needs, and again community engagement and collaboration with local authorities are vital. Orkney Islands Council’s Responsive Flexibility, or ReFLEX, project is a £28.5 million scheme, aiming to create an integrated energy system for the islands, with the communities in those islands at its heart.

Those developments should be applauded, but on my trip to Orkney we spoke to a local community news outlet that highlighted some of the issues around fuel poverty on the islands. As other Members have already said, it is clear that issues such as transmission charges need to be addressed and that all Governments need to provide a focus on ensuring that such innovative energy sources are used to heat energy-efficient homes. Communities must be put front and centre in the shift to clean energy, and given a stake in this change.

The Government say they are committed to reaching net zero, in order to avert the worst impacts of the climate crisis. This is not the time to be stuck in the old ways of doing things; those ways will not work now. We must embrace new ways of working with and for our communities without delay, and community energy is part of that process.

14:09:00

Jeremy Wright (Kenilworth and Southam) (Con)
It is a great pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate, and all those who have spoken on this subject not just this afternoon, but on other occasions.

I join the consensus that locally generated energy has huge, partly technical, advantages. We can, if we make use of this method, increase the volume of energy generated and, more importantly, the volume of sustainable and renewable energy generated. If energy has to travel less far from where it is generated to where it is consumed, we lose less in transit, and of course, we know from the examples of community energy that we can already see, that it brings huge broader decarbonisation benefits and educational advantages, too, so there is technically very much to commend it. There are also psychological advantages. As others have said, if we enhance our capacity to generate energy locally, we help people to participate in the combating of climate change, and we make that effort local, rather than distant from them.

Of course, as has already been observed, we have had the right to local energy suppliers for about 20 years, but that is a distinctly theoretical right at the moment. The broader issue that we face is how we go about realising the current unrealised potential of locally generated energy. To do that, we have to address the obstacles. As others have already observed, the entry costs for local energy enterprises are far too high, and their inability to sell directly to local customers is the fundamental problem, which was addressed by the Local Electricity Bill that my hon. Friend the Member for Waveney (Peter Aldous) so ably introduced in the previous session. I would not claim—nor, I suspect, would he—that the Bill was perfect, but its fundamental purposes and objects are worth pursuing. I hope that this afternoon, the Government will accept that they will do exactly that.

There is so much growing local enthusiasm to assist the Government in delivering their climate goals. Everybody wants to help, and this is a practical way of doing so. I can think of examples in my constituency, such as the Napton Environmental Action Team, or the Harbury Energy Initiative, which has been in receipt of Government financial assistance in environmental pursuits and is keen to do more. The Government need to help them to help the Government deliver our collective climate goals. The Government can look at tax incentives and at the role of local authorities, and they should look at ways of ensuring access to the cable network at a fair price, but if we cannot ensure that local enterprises producing locally generated energy can sell their product locally, we will still have a fundamental object to the way that we want to deliver locally generated energy.

As I understand it, the Government will produce their net zero strategy refresh this year. I hope that my hon. Friend the Minister will say that as part of that exercise, the Government will look carefully at how they can deliver the fundamental objects of the Bill introduced by my hon. Friend for Waveney, and make sure that we can assist others to assist us in delivering those climate objectives on time.

14:13:00

Darren Jones (Bristol North West) (Lab) [V]
It is, as usual, a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Members who have already spoken.

Whenever there is a debate on community energy, I have the great pleasure of speaking on behalf of some of the innovative and hardworking community energy groups that operate here in Bristol North West. On that note, I ought to declare my interests: I am a founding member of the Bristol Energy Cooperative, and my wife works for the Association for Decentralised Energy.

Any colleagues who drive through my constituency—most probably over the M5 at the mouth of the River Avon—will see that we have a scattering of onshore wind turbines. Soon, we will have one more, and it is primarily that wind turbine that I will talk about. Ambition Lawrence Weston is a community group that works with residents in Lawrence Weston, the area of my constituency where I grew up, to create the best possible community for local people. They have developed and implemented a local neighbourhood plan, they are building affordable sustainable homes for local residents, and they are now investing in community energy projects, too.

Their latest project—the wind turbine—is community-owned and will be built on land owned by Bristol City Council in the industrial estate adjacent to Lawrence Weston. Standing 150 metres tall, it is estimated that this one turbine alone will generate enough low-carbon energy to power 3,500 homes, reducing carbon dioxide emissions associated with the generation of that power by nearly 2,000 tonnes each year.

Lawrence Weston has only 3,200 homes in the area, with many homes of families on lower incomes. Although it is clear that not every home in Lawrence Weston can be powered by only one intermittent source of power, it is a great shame that local residents cannot benefit from the lower energy costs associated with the low-carbon energy that is generated locally by their local community energy group, especially when those residents know that any surpluses will be reinvested into their local community.

We have already heard today how difficult the process is. It has taken years of hard work to even get to this stage. Ambition Lawrence Weston did not just have to secure the site from the council, it had to bid for financial support from the council, as well as Bristol and Bath Regional Capital and the West of England Combined Authority—funding of £500,000 from the combined authority came from the European regional development fund. That was in addition to other grants required to fund all the detailed groundwork needed in order to get planning permission and, in this case, sign-off and approval from the Secretary of State. That has all been achieved, after years of hard work.

The Minister will know that, as part of our net zero target and the pathways to net zero set out by the Climate Change Committee, we need to double the size of our electricity system. As with heat, we are increasingly talking about the right technology in the right place, with some areas better suited to heat networks or hydrogen pumps more generally. The same is true with electricity. With a more flexible distribution network comes the opportunity for more decentralised, local sources of power; it is a great opportunity for community energy to fulfil that need.

In addition to answering the questions that colleagues have asked already, will the Minister set out how she thinks community energy will play a role in doubling the size of the power sector? Will she also confirm that the shared prosperity fund will replace the funding sources previously available for community energy groups made available through the European regional development fund?

14:17:00

Duncan Baker (North Norfolk) (Con) [V]
It is a pleasure to serve under your chairmanship. I thank the hon. Members for bringing this debate. My nearby colleague, my hon. Friend the Member for Waveney (Peter Aldous), has been a real champion for this cause.

There is no doubt that we are world leaders in decarbonising. Our target to go further and faster by cutting carbon emissions by 78% by 2035 is now enshrined in law. To get to that target, we all have to play a part. That is why I support enabling community energy. Giving powers to local communities to play their role is vital for many reasons—we have already heard some of them.

At the top level, we want total buy-in from the community, not just in contributing to decarbonising with innovative and imaginative schemes such as those we have heard about, but also so local communities can create their own income streams by selling green power to the grid. The role is even bigger than that, because I wonder what part they can play in helping to fill the energy gap. Local sourcing and generation can play a significant role—its potential is vast.

I sit on the Environmental Audit Select Committee. Our technological innovations and climate change inquiry has examined the subject, and our report clearly suggests that, with greater public engagement on net zero, more financing, local authority engagement and a reduction of regulatory barriers, community energy has enormous potential for real growth. That enormous potential gives us the opportunity to fill the energy gap.

If we think about the amount of power we will need for the grid to charge electric vehicles in future, for instance, it will be phenomenal. That is why we are already aiming to produce 40 GW of wind power by 2030. The more community energy projects there are, the more we can meet that demand and help stabilise peaks in demand.

My constituents in North Norfolk have local supply constraints: we are rural, fuel poverty is a serious issue, and there are significant problems with a lack of connection to mains gas. On top of that, my community also bears the serious issue that it has the largest concentration of offshore windfarms, whose cable corridors are being chased through the countryside, and from which we have little economic benefit.

If Germany can get community energy schemes to work and the complexity of market obstacles can be overcome, why can we not do that here? The benefits of local employment, greater awareness and a drive to give licensing power to local authorities so that local communities can play their role will all add to the notion that we can continue to drive the cost of production of power down and continue to hit our net zero targets. It is really heartening to see cross-party support for this. I hope the Government can really begin to embrace the situation and bring community energy to the fore.

14:20:00

Mohammad Yasin (Bedford) (Lab) [V]
It is a pleasure to serve under your chairmanship, Sir David. I thank the Backbench Business Committee for selecting this debate and the MPs who have led on it.

Hon. Members will be aware that I supported the Local Electricity Bill in the previous Parliament. I strongly believe in giving power to the people by allowing local communities to have much greater control over the energy that brings them to life.

In March 2019, Bedford Borough Council declared a climate emergency, and it has pledged to become carbon neutral by 2030. I know that many other local authorities have done so too. It has committed:

“To reduce its own carbon emissions by implementing projects and policies and encourage the residents and businesses of the Borough to reduce their carbon emissions so Bedford Borough is seen as the place to grow and has a good quality local Environment.”

It asked me to speak in this debate, as did a number of my constituents, because they recognise that community energy and participation are key to achieving those goals. I agree.

Many of my constituents are deeply concerned about climate change. They want to make a difference, despite how overwhelming the task feels. They can make a difference, however big or small, with initiatives such as community energy projects. The Government must do all they can to support and encourage such projects.

Bedford Borough Council was awarded more than £1.8 million from the South East Midlands local enterprise partnership’s Getting Building Fund last year, enabling plans for the all-new Bedford Green Technology and Innovation Park to become a reality. A former landfill site is being transformed into a green energy innovation park, and work is now under way at Elstow in Bedfordshire. Work to cap the closed 30-hectare site with clay began last year, and the site is soon set to become home to more than 1,800 solar panels, which will generate and supply on-site buildings and local businesses with low-carbon, clean energy.

Plans are also progressing to use the site as an education and training centre. Early support has been pledged by the University of Bedfordshire, Cranfield University and local colleges. It is really exciting to see a former landfill site being transformed into such an innovative energy park, which will provide low-carbon clean energy and green jobs for people and businesses in Bedfordshire. I congratulate everyone who made the project a reality. However, there is so much more that could and should be done. There is a huge swell of support from the public, who are desperate to get involved at a local level with green initiatives. They want a green recovery from the pandemic, not business as usual.

There is a huge consensus of support for initiatives such as solar panels in schools. What better way to show the generation that is most going to have to deal with the consequences of the rampant abuse of fossil fuels that we mean business than to have their schools run on green energy? Although the Government talk the talk on such initiatives, they are not walking the walk. We need urgent and early action, not words.

14:24:00

Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in the debate, Sir David, as always. I congratulate the hon. Member for Bath (Wera Hobhouse) on setting the scene and giving us all the opportunity to participate in the debate, and thank her and the hon. Members for Ceredigion (Ben Lake) and for Waveney (Peter Aldous) for initiating it. In particular, I want to mention the hon. Member for Ceredigion, whose Adjournment debate had the best turn-out for such a debate that I can recall and saw consensus of support for what he was saying that night. It is good to have the chance to reiterate and underline those points in Westminster Hall today.

I am pleased to say that I added my support for the Local Electricity Bill. Although it does not specifically apply to electricity services in Northern Ireland, I am always interested to learn more on such issues—I believe we should do so—to analyse whether we can avail ourselves of similar strategies. That is what I wish to do in Northern Ireland. We have only two examples of such schemes in Northern Ireland; I wish we had more. There is a challenge for us to try to achieve that.

Community energy paves the way for wider decarbonisation goals and drastic improvements in localised renewable energy, making electricity services more sustainable in our communities. We should be trying to grasp the principle of what we are trying to achieve.

The pandemic had a significant impact on Government funding for community electricity programmes. The United Kingdom has witnessed the emergence of 424 community energy organisations, with England having 290, Scotland 72 and Wales 60, whereas in Northern Ireland we are in the very poor position of having only two. It is not that we do not want to, just that the opportunities have not been there.

The Local Electricity Bill seeks to change the Electricity Act 1989 in England, so that Ofgem is permitted to grant local electricity supply licences to local generators that are not designated in existing legislation. With five local energy hubs in England, it is clear that they are leading the pack, as they are in football. Reports show that as of 2020, community energy contributed 278 MW of renewable energy. If we take it to what we can do, there is hope that by 2030 2.2 million homes will save over 2 million tonnes of carbon emissions every year. The challenge is there. I believe that the Government are committed to that, and all the regions of the UK should try to their best to achieve it.

Let me make a quick comment about Northern Ireland. Communities across the United Kingdom are starting to recognise the increasing popularity of localised energy organisations, including in Northern Ireland, despite there only being two electricity corporations there, and in Strangford in particular. The first, Northern Ireland Community Energy, was the first solar community-owned energy co-operative in Northern Ireland. To finance its recent innovations, £150,000 was raised and this was the first time Northern Ireland was able to buy into a community energy benefit society. Its continuing aim is to increase awareness of community electrical shares in Northern Ireland. The second, Strangford Lough tidal turbine, is the world’s first commercial-scale tidal energy project. I am very pleased to say that it is in my home constituency. I have visited the site and seen what it can do, and the possibilities, and I am pleased to see that this wonderful landmark can be used to promote the use of sustainable energy.

I believe we have an opportunity, given that in 2020 358,000 people were engaged with energy and climate change. I would like to think these numbers will be on the increase. I welcome the content of the Local Electricity Bill, introduced by the hon. Member for Waveney. I hope that it progresses as it has real potential to succeed. It encourages energy organisations to engage with local authorities as opposed to largely populated and financed firms. The debate is about local communities, and I certainly encourage that.

We must ensure that the funding for these projects is allocated. I call on the Minister and all involved to engage with Members in the Chamber today, along with the members of the community energy organisations. We can do better, and I believe we must.

14:28:00

Patrick Grady (Glasgow North) (SNP)
It is always a pleasure, Sir David, to serve under your chairmanship. I congratulate the hon. Members for Bath (Wera Hobhouse), for Waveney (Peter Aldous) and for Ceredigion (Ben Lake) on not only their efforts to secure this debate but their ongoing championing of the issue of reforming the energy market to support community production and distribution. They have consistently demonstrated, and have done so again today, the wide cross-party and cross-country support—I think every nation of these islands has been represented in the debate today, and every party, more or less—

Jim Shannon
Better together.

Patrick Grady
Some might say that. My hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) might have slightly different views. This is all about devolving and empowering local communities, so I suppose it depends on what level we want to devolve it down to—[Interruption.] My hon. Friend is very sorry that he cannot intervene, but we can see him on the screen.

One of my local communities, which I am sure would quite happily be an independent country if someone would let it, is in Partick, in the west end of Glasgow. It is very supportive of the idea of the community council there; it backed a related Bill in the last Session and wants to see it come back again. Indeed, the Scottish National party as a whole support that; our usual spokesperson on these matters, my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), sends his apologies for not being here today, but we can all be assured of his ongoing support, too.

Very briefly, in order to leave time for the Minister to respond to the debate, I will look at the importance of the principle and the concept of community energy, and at some of the experience that we have heard in Scotland. I also have a few questions for the Minister.

One of the best descriptions of the concept of community energy that I have come across came from the Glasgow Community Energy co-operative. Its share offer successfully completed on 18 June; it had over 170 applications and raised £30,000 of financing, which is helping to put solar panels on the roofs of a number of schools in the city. It has said:

“For us ‘community energy’ has a double meaning. Glasgow Community Energy aims to connect and empower local people through community-ownership and democratic involvement in our renewable energy co-operative, as well as by inspiring and sustaining community activism through our Community Benefit Fund.”

So, for the Glasgow Community Energy co-operative, community energy is about not just providing energy for the community but harnessing the energy of the community as well—that galvanising effect, that psychological effect if you like, which the right hon. and learned Member for Kenilworth and Southam (Jeremy Wright) referred to.

Of course, behind that are the long-standing pressures for reform of the electricity market, or the electricity bureaucracy as my hon. Friend the Member for Na h-Eileanan an Iar said. There is a need for energy production and supply to be reformed, particularly in the face of rapid climate change. The need to get to net zero, as we heard right at the start of the debate from the hon. Member for Bath, requires low-carbon production and transmission. In the year of COP—the year when the UK is supposed to show global leadership—this is an incredibly important opportunity.

Community energy is also important for other reasons, including for energy security, so that we are not dependent on imported gas or electricity, or any other form of energy from overseas. Increased domestic energy production is safer and better for everyone. It is also important to tackle fuel poverty, which is a growing problem. Community energy also relates to the concept of localism, ownership and democratic control. We heard from a number of the Conservative Members that this process could be seen as part of what is supposed to be the Government’s levelling-up agenda—I think the hon. Member for Barrow and Furness (Simon Fell) said that, and he was quite right to do so. We also heard about international examples; Germany and Denmark were referred to by a number of Members, including the hon. Member for North East Fife (Wendy Chamberlain). All of that speaks to the economic benefit that can be gained by local energy production companies. Employment opportunities also come with community energy, in installation, management, maintenance and so on. It is a win-win situation.

The Scottish Government fully back and fully reflect all of those positions, particularly the importance of decarbonising the entire energy system. Their most recent local energy strategy was published in January 2021 and says that the Scottish Government

“recognises that local energy cannot be delivered in isolation. It is not a standalone policy, but one that integrates and aligns with other key policies, including energy efficiency, eradicating fuel poverty, heat decarbonisation, local heat and energy efficiency strategies, and consumer protection. It will develop alongside and within a vibrant national energy network.”

The Scottish Government had a target of 500 MW of community and locally owned energy by 2020; that amount has been exceeded, so now we intend to increase the target to 1 GW for 2020 and 2 GW for 2030. Progress towards these targets has been positive, but changes to some of the UK Government’s subsidies, not least the closure of the feed-in tariff scheme, has undermined that progress. However, we continue to encourage shared ownership models as a means of increasing community-led involvement in commercial projects.

My hon. Friend the Member for Na h-Eileanan an Iar will be very happy to hear—indeed, I am sure he already knows—that the Scottish Government are particularly committed to helping the communities on our islands to become carbon-neutral. Indeed, some of the pioneering work in this area has been done on the Isle of Gigha, with its early adoption of wind power. The SNP manifesto for the recent Scottish election said quite clearly:

“We support Carbon Neutral Islands which would be in the vanguard of reaching net zero emissions targets by 2045. This will include pilots for some islands to run on 100% renewable energy, to create circular economies tackling and processing waste, and exploring more sustainable transport options. We will work with at least 3 islands over this Parliament to enable them to become fully carbon neutral by 2040.”

My hon. Friend has the opportunity to lobby for many of the islands he represents in his archipelago to take part in that pilot.

That brings us to the Government. The short question coming from all hon. Members is, why not? What is the harm? I thought the Tory Government was supposed to believe in the free market, entrepreneurship and the flourishing of local enterprise, so why do they seem to be in hock to the big players? Why are they in hock to the traditional companies, who perhaps have the most to lose?

The simple ask coming from Members today is to let the Local Electricity Bill progress. It has wide cross-party support and a wide range of civil society support, from the Churches through to different manufacturers of the technology that would be used, and more. The Bill provides a very simple framework that would overcome existing barriers to entry into the market.

There are other things the Government could be doing as well. They could look at a replacement for the feed-in tariff that was so important in bringing so much renewable energy to the market in the first place. They could also help to stimulate demand for better local, greener energy by diverting funding away from damaging new nuclear technologies.

At the end of the day, much of this is about a vision—a vision for a fairer, cleaner, greener, locally led energy future. Unfortunately, that seems to be a vision that the UK Government are currently sorely lacking.

14:36:00

Dr Alan Whitehead (Southampton, Test) (Lab)
I was not going to say that it is a pleasure to serve under your chairmanship this afternoon, Sir David, because everyone has said that already, so please take it as read—well, I have actually said it now, so it is pleasure to serve under your chairmanship this afternoon. [Laughter.]

We have had a powerful debate this afternoon, put forward by a number of hon. Members who clearly know what they are talking about and who have a substantial dedication to the idea that we should be able to get a substantial part of our energy by local means—by local people, in local areas, providing for their own energy needs and taking part in those arrangements. I am not particularly precious about who is to organise those local arrangements, be they co-operatives, collections of individuals, community enterprises, local authorities acting in partnership with those with those bodies or, indeed, a variety of bodies coming together and developing that local energy for local purposes.

The benefits of that are pretty self-evident. Not only is there a completely different stream for developing the renewable and low-carbon energy that we need, but that method of providing for our energy future does wonders for the ownership of that low-carbon energy, in terms of the close relationship that it provides between people consuming energy and providing for their energy at the same time. The notion of community energy really does fulfil one of the central things that the Climate Change Committee has been talking about recently, which is the need for behavioural changes as far as low-carbon living is concerned. Surely, an arrangement whereby people are producing, owning and consuming their own low-carbon energy is, or should be, a prime example of that behavioural change in action as far as our climate change targets are concerned.

However, as hon. Members have said this afternoon, that clear vision has tremendous barriers set in front of it. As has been set out this afternoon, those are manifold, and I could add substantially to that list. In essence, we can say that the barriers are threefold. First, in terms of getting any sort of enterprise going locally, there are tremendous issues with funding and the cost of entering the market. Hon. Members this afternoon have mentioned estimates of about £1 million for getting a local licensed arrangement under way, so it is completely out of the reach of the vast majority of people who want to set up such an enterprise at local level.

Secondly, we have the view taken by Ofgem, and I am afraid the Government, on the nature of electricity, which is that electricity consists of electrons that should travel from John O’Groats to Land’s End and back again, and be taxed and charged as if that is what they had done, when in fact local energy completely overturns that model. Electrons in the case of electricity, or the heat that is produced, is produced locally and consumed just down the road, and the whole loop is closed as far as that local energy is concerned. Yet the arrangements that we have in this country, strengthened by Ofgem’s targeted reviews and various other activities recently, mean that we should be charged as though it were entirely a national endeavour. Indeed, the licensing for local energy makes the same assumption. The Minister might mention moves to put geographically situated licences in place, but in general the licence is assumed to be on a national basis. We saw with some local energy retail companies that the licences they had to operate were as if they were operating on an entirely national basis.

Then we have the central issue that it is not possible in this country simply to produce electricity and sell it to a next-door neighbour, the person down the road or collectively for the local good. We cannot do that at the moment, and this is where the Local Electricity Bill, mentioned by various hon. Members, comes to the fore. I had concerns about the Bill’s previous iteration—about the problem that might arise within the arrangements in it for unleashing high-carbon energy into a local environment, rather than the low-carbon energy that we need to produce. So I would not like to see any local energy Bill enable local diesel reciprocating engines to come forward as a local energy supply when what we want is to decarbonise our electricity supply. I am delighted to see that the promoters of the Bill have now put a carbon intensity clause into it, which resolves that problem.

We now have in front of us a Bill that really could cut through the problem of how local energy can be produced, generated, transmitted and consumed locally. It is a Bill that every hon. Member with an interest in this area ought to fully support. Having said that, it really should not be promoted by a group of people hoping to get some traction in Parliament. It has not got support from any of the top 20 people in the private Members’ Bill ballot, and is therefore not likely to make progress in Parliament this year. It should be promoted by the Government, who ought to be putting it forward as their plan for community and local energy.

In that context, I continue to be dismayed that there exists no Government community energy strategy. I will not suggest a guessing game for how many mentions of community and local energy were in the recently published energy White Paper, but if anybody were to guess “one”, they would be roughly right. There is no community energy strategy, and it does not look like there will be one in the near future, but we have had them before. Historically, this country has had community energy strategies, such as the one in 2014, which projected that by 2020—meaning now—with the removal of the barriers to community and local energy that I have mentioned, and by putting in place other arrangements to support it, we could have had about 3 GW of energy being supplied by local projects. As hon. Members have mentioned, only around a tenth of that is supplied by brave and dedicated local community energy projects, such as those mentioned by my hon. Friend the Member for Bristol North West (Darren Jones) and the hon. Member for Clwyd South (Simon Baynes), which have defied the odds and pushed forward their projects in hydro, wind and the various other things that are happening locally.

We can no longer be in the position of hoping that some dedicated community activists try to defeat the odds on community and local energy. It needs to be mainstream in Government, with full support and the breaking down of barriers at Government level on the basis of a strategy to really get that community and local energy going for the good of all of us and our communities, as well as for our local energy resources and our low-carbon future overall. I hope the Minister will tell us that the Government intend to start taking that on board and to give local energy the support, promotion and backing that it really needs for the future.

14:47:00

The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway) [V]
It is, as always, a great pleasure to serve under your chairmanship, Sir David. I thank the hon. Member for Bath (Wera Hobhouse) for securing this important debate. I am representing the Department in place of the Minister for Business, Energy and Clean Growth, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan). As I am taking part virtually, I am unable to take any interventions, but I will happily write to people if they have specific questions that are not covered in my remarks.

I reassure the House that this Government absolutely recognise the valuable role that community and local renewable energy projects can and do play in supporting the UK’s national net zero targets. I know that all Members will agree that excellent work is already under way in the community energy sector. We have heard about a number of such projects from several hon. Members, including my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright), my hon. Friends the Members for Clwyd South (Simon Baynes) and for Barrow and Furness (Simon Fell), and the hon. Members for Bristol North West (Darren Jones) and for North East Fife (Wendy Chamberlain).

We need only look at the recent state of the sector report by Community Energy England, which identified 424 active community energy organisations across the United Kingdom run by 396 volunteers, to note that community energy projects can contribute to achieving net zero, not only by stimulating clean growth, but by acting as catalysts for raising awareness. As the hon. Member for Bath and my hon. Friend for Barrow and Furness pointed out, the promotion of behaviour change and the ability to build communities is a key outcome for us to achieve our 2050 goals.

To support community energy projects, the Government currently fund the rural community energy fund. The £10 million scheme supports rural communities in England to develop renewable energy projects, which provide economic and social benefits to the community. Since the fund’s launch in 2019, it has received 1,214 inquiries and 188 applications, and it has awarded more than £4.5 million in grants to projects focusing on a variety of technologies, including solar, wind, low-carbon heating and electric vehicle charging.

Many Members spoke about the recent Environmental Audit Committee inquiry into community energy and its several recommendations. As many Members will be aware, the Secretary of State published a response last month—it can be viewed on the EAC website—and stated that we are considering future plans for community energy in the net zero strategy, which will be published later this year. As my right hon. and learned Friend the Member for Kenilworth and Southam mentioned, we will draw on evidence from this country and around the world when assessing the most effective way of meeting our net zero goals.

Many Members also spoke about the Local Electricity Bill and the need to establish a right to local supply, which would allow electricity generators to sell their power directly to local consumers. That Bill sought to establish that right through the creation of a local supply licence and to ensure that the costs and complexities of being a local energy supplier are proportionate to the scale of its operation.

As my hon. Friend the Member for Waveney (Peter Aldous) stated, the Local Electricity Bill was unsuccessful in receiving a Second Reading in the previous Session. While the Government agreed with its broad intentions, we did not support the Bill as a means to enable local energy supply. There is already flexibility in how Ofgem regulates energy supply to allow for local suppliers. Ofgem has powers to award supply licences that are restricted to specified geographies and/or types of premises. However, many Members have observed that, while the right to local supply exists, the costs of becoming a supplier currently act as a barrier to entering the market.

Making more substantial changes to the licensing framework to suit specific business models may create even wider distortion elsewhere in the energy system. Artificially reducing network costs for local energy suppliers, as the Bill appeared to suggest, would be distortive. It would mean higher costs falling on to consumers, with costs increasing as more local suppliers entered the market. It is important that we take a broad view of all consumers when making changes to the energy market, including consumer protection measures, which form an important part of the supply licence.

The Government support the development of new business models to supply energy consumers and to help achieve our net zero ambition. The 2020 energy White Paper committed the Government to review the overall energy retail market regulatory framework. That review will assess the changes that may be needed to ensure that the framework is fit for purpose and allows new business models to come forward. We will engage closely with community energy stakeholders as part of the review, and I welcome the various offers from Members today.

To support the establishment of more local energy schemes, we will also continue to look at a full range of other options to support local involvement in tackling climate change in the net zero strategy, which will set out how we will meet our net zero goals overall. My hon. Friend the Member for Waveney raised several additional points, and I look forward to receiving and responding to his letter.

As my hon. Friend the Member for Clwyd South suggested, I am happy to recognise the role that Wales, Scotland and Northern Ireland play in taking forward community energy projects. I was interested to learn from the hon. Member for North East Fife about the community-owned project on Orkney. I note that community energy is a devolved policy, and each nation has different policies and financial support. Indeed, they may use different definitions of community energy. The hon. Member for Bristol North West asked for information on the role of the shared prosperity fund and, again, I will be pleased to write to him in response.

This debate is testament to the fact that there is clear cross-party support and a growing appetite for community energy. I close by reiterating that this Government are supportive of community energy. We absolutely understand that communities are key to the Department’s wider efforts to decarbonise the country and create a cleaner, greener future for us all. I thank the hon. Member for Bath once again for securing this important debate.

Sir David Amess (in the Chair)
I call Wera Hobhouse to sum up. You have until 3 o’clock.

14:54:00

Wera Hobhouse
I thank everybody for their powerful contributions this afternoon. There is clearly widespread cross-party support for community energy from all corners of the nation and fantastic enthusiasm in our communities. We have put the Local Electricity Bill, which everybody has supported today, at the centre of this debate. While I hear that the Government are in favour of local communities getting involved in projects and local energy supply in principle, it was disappointing not to hear the Government give consent to the principle at the heart of the Bill—the right to local supply.

Sir David, I fear that there will be another Westminster Hall debate, or a bigger debate, because, as someone else said, the Government always say no before they say yes. Let us not give up. Unleashing the potential for community energy and offering support in principle for local supply is where we need to get to in the end. I thank all Members and the Minister.

Question put and agreed to.

Resolved,

That this House has considered enabling community energy.