Community energy projects exist in both developing and higher-income countries. They involve local groups collaborating to generate or manage their energy in a specific geographical area. Many involve electrification.
They can promote environmentally friendly energy solutions at an attractive cost. Their diversity adds to broader system security in various dimensions – from operating reliability to national defence.
And there are more benefits, as we shall see.
But first, some context. We live in a society of built-up areas. In the UK, the percentage of the population living in an urban area is over 80%. Such environments are typical across Europe – even in Ireland, renowned for its rural beauty, the urbanisation rate is now 65% and growing.
Thankfully, community energy projects can flourish in both rural and urban settings.
In rural communities, examples might involve the installation of a single EV charging point, or the construction of a small renewable power plant contributing to local needs and allowing any surplus to be exported to the grid.
A good illustration is the village of Bethesda in North Wales, where locals have developed various pioneering initiatives. In one, a community generates electricity through a hydro system on the Ogwen river, transferring any profit to a fund that supports a complementary solar scheme for community-owned buildings.
Relevant projects can also involve large cities. The Edinburgh Community Solar Cooperative (ECSC) has already installed 1.4MW of solar panels on over thirty public buildings scattered across the city, including local schools.
Common sticking points for local initiatives are a lack of development, technical, legal and financial knowledge in situations that require the highest safety standards and engineering expertise. Here, the private sector can work for the greater public good. For example, ScottishPower, a part of the world-renowned energy and infrastructure group Iberdrola, is sharing its best-practice technical learnings with local groups across Britain, including educational outreach programs and problem-solving solutions to overcome barriers.
These examples suggest that the alleged dichotomy of ´private versus public’ ownership in a modern energy system frames things in a distorted way – ‘private and public’ is often what we need.
This message has not been lost on Great British Energy (GBE), the UK´s new state-owned energy company. Its corporate strategy states that it aims to support over 1,000 local and community energy projects across the country by 2030.
In a recent interview, the chair of GBE, Jürgen Maier, also emphasised the need for collaboration between public and private sectors.
“We are not going to take the SSEs, ScottishPowers and the RWEs head on. We want to collaborate with them.”
So, maybe GBE can be the Mighty Mouse I suggested in an earlier post: Great British Energy – avoiding the traps.
But there is much wider importance to community projects beyond energy supply and demand. They do less visible but equally empowering things.
What is this hidden value?
Building teamwork within and across generations is the ultimate bulwark for a sustainable society. Too much system thinking fails to join the dots and achieve this integration.
Community energy redefines the term ‘energy network’ to include not just the hard energy infrastructure scattered across the country, but its citizens.
By democratising energy, we unearth hidden benefits:
- We educate the young – there is no better way to nurture a future generation of engineers than for them to visit a local power plant when at primary school.
- We encourage working adults to take part in and support the complex energy system that underpins all aspects of our lives – taking the N out of NIMBY.
- We dilute the greatest enemy of infrastructure progress – the ´tragedy of the horizon’, where short-termism clouds longer-term investment judgement.
Overall, as young and old grow in their understanding of energy, support for larger national investments that are also necessary to underpin our energy future is more likely. They are better informed to assess the complex but inevitable trade-offs involved in terms of costs, risks, and benefits of different investment options,
The positive spin-offs stretch even further.
Community energy schemes encourage incentives for broader cooperation towards a sustainable economy. Examples include greater attention to local pollution control and nature, from the glens of County Antrim to the parks in Central London.
Indeed, we might give flight to the power of our imaginations and go one final step further in emphasising the benefits of community initiatives.
In Democracy in America, Alexis de Tocqueville explained how voluntary associations are crucial to support the “struggle against the evils and obstacles of life”. He considered voluntary local associations to be a core driver of innovation and a counterweight to monopoly interests – economic and political – throughout the country.
So, community energy has a lot going for it. Mighty oaks from little acorns grow – not just in nature but in energy, economics, and even politics.
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Disclaimer: The blog does not aim to give investment advice, but is designed to afford relevant longer-term context to investors, encouraging a broad perspective where uncertainty is high and a spirit of learning is important. The views expressed are those of the author, not those of Investec.
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