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Community renewable energy companies

Number: 
18
Stage: 
Building

One of the main pieces of infrastructure that a resilient community needs is control of its energy generation to the maximum possible extent. In terms of the ‘Plugging the leaks’ analogy, every time we pay our energy bills, millions of pounds pour out of our communities that could have stayed there creating jobs and a locally owned energy infrastructure.

How possible is it that a community could own and manage significant local energy generation? A few years ago, the answer would have been ‘not very’, but now many successful projects are emerging. Their experience leads to the following suggestions, which apply whichever renewable energy technology is being contemplated.

  • Form a group: A project like this will need a focused team, strong leadership and good, clear group processes. It will need to be honest about the skills it has, and happy to bring in skills it needs. Go as a group to visit and learn from successful projects. Establish quickly how much time people have.
  • Build community support: If this is to be a community initiative, it needs the community. Organise some fun, interactive events about the possibility of a community energy company. Is anyone interested? Is there support? What resources are there? What has already been attempted, and what lessons can be learned?
  • Establish feasibility: Do this soon to prevent time and effort being wasted, preferably by raising money for an independent feasibility study. An assessment should examine resources (how much potential energy there is), the forms of possible energy generation, the site location and ownership, environmental constraints such as noise, grid connection, delivery access (the lorries for wind turbine blades can be 40m long), infrastructure costs and planning permission.
  • Design the project: Your business plan should evaluate all costs, including project development, planning consent, advice, grid connection, financing and so on. Select your organisational model (most tend to take the form of charities and companies limited by guarantee). Ensure that you have strong leadership and skills for project management and financial accountability.
  • Secure your site: Without it, all else fails. If the community owns the site, there is no problem, but negotiations with a landowner need to be conducted carefully. The ideal outcome is a lease on the site for the lifetime of the project. You will need to secure wayleaves over the course of the whole access track, including any bits you might need in order to widen sections of track. Legal agreements should be in place before a planning application (if one is required).
  • Planning consent rests with the land, not the developer: there are cases where landowners have developed sites for which community groups had planning permission.
  • Planning permission: Talk to the planners early on to get their initial opinion of the project’s feasibility. Do your environmental assessment work. Be clear about the planner’s position; some assessments can happen only at certain times.
  • Financing the project: You are seeking finance for the three key stages of your project: pre-development, planning and preparation, and post-planning and construction. Your business plan should show a mix of debt, grant and equity finance, and be able to show that the project is viable and offers a good rate of return for investors. Will funding be via a community share option or private investors? The ‘holy grail’ (or at least the first major step) is planning consent and options/leases. From that point, the scheme has commercial value and can usually be financed one way or another.*

Eco Dyfi, a community regeneration initiative in Wales, have documented their experiences with community renewables schemes such as Bro Dyfi Community Renewables’ two wind turbines, and offer the following advice based on their experiences.

 

  • Initial grant aid makes a big difference, as otherwise such projects are only marginally viable.
  • People are unlikely to invest significantly before planning permission is obtained, so the early stages either need some form of funding or should be kept as cheap as possible.
  • Groups need support in the early stages from financial, legal and community development experts.
  • Working with communities can take a long time.
  • Successful projects usually rely on individuals with patience, enthusiasm and persistence. 

Awel Aman Tawe[i] is another community-run charity in south Wales which has planning consent for two turbines. They have held a detailed consultation exercise using a range of methods. The group, in common with most energy schemes, encountered opposition from some local people, which was difficult to deal with at times. The most effective awareness-raising method was encouraging local groups such as Old Age to go and visit wind farms. They then became the project’s spokespeople in the community.

The Totnes Renewable Energy Society (TRESOC) is an Industrial and Provident Society that emerged from a Transition Town Totnes Open Space day on energy.

A group got together at that event to work on community owned renewable energy, leading to the establishment of TRESOC as an independent organisation in November 2007. The Society then worked to identify a good wind site. Once it had found one, it then negotiated in confidence for over two years with wind developer partner Infinergy and the landowner, to secure agreement to develop a wind farm. At the time of writing, TRESOC is working with Infinergy to secure planning consent, and the parties will form a special purpose company to construct the wind farm when consent is obtained. The project will deliver two 2.3MW wind turbines on the edge of the town, capable of generating enough electricity for 2,500 homes.

The aims of TRESOC are: 

  • To develop the profitable supply of energy from renewable resources for the benefit of the community resident in Totnes and 15 surrounding parishes.
  • To ensure democratic control of the renewable energy resources by the local community through extensive society membership.
  • To ensure that the maximum value from the development of these resources shall stay in the local economy.
  • To provide an opportunity for public-spirited people and organisations to contribute financially to the community with the expectation of a social dividend as well as a financial return. 

TRESOC directors have invested personal capital, and a lot of their time, into the society to get it started. Following signature of the agreements to proceed with the Totnes Community Wind Farm, TRESOC was fortunate to obtain a short-term loan from the National Energy Foundation, now repaid, to support the costs associated with the launch of the share issue.

Anyone living in Totnes and Environs was able to become a member of the Society for an investment of between £20 and £20,000 worth of shares. The share offer was open for three months, and members can later increase their shareholding, if desired. Society membership stands at 378, with a further share issue planned for 2011.[ii] TRESOC is now actively engaged with local stakeholders and technology providers in developing a portfolio of renewable energy projects in wind, biomass, solar and hydro power.

Transition in Action: Harveys Brewery in Lewes becomes a community-owned solar power station

by Chris Rowland

OVESCO (the Ouse Valley Energy Services Company Ltd) was established in 2007 to encourage energy-saving practices in domestic, business and public buildings, and to create local generation of non-polluting energy. In 2010 the company directors founded OVESCO Ltd:

  • to help individuals reduce their energy bills and their carbon footprint
  • to contribute to local and national CO2 reduction targets to generate electricity from green sources (solar, wind, etc.)
  • to make jobs by supporting local firms
  • to assist local people whose houses are not suited to existing forms of renewable generation to make their homes more energy efficient
  • to support Lewes District Council with programmes and events to reduce energy consumption and fuel poverty.

In 2011 it took on its most exciting and ambitious project to date. Harveys Brewery and OVESCO Ltd began working together to install a 98kW solar photovoltaic array on the roof of Harveys’ main storage and distribution warehouse in Daveys Lane, Lewes. This ground-breaking installation is turning the building into one of the first solar power stations in the country, and continues to build on Harveys’ reputation as an environmentally responsible company. The 544 photovoltaic (PV) panels will generate 93,000kWh of green electricity each year – enough to save more than 40 tonnes of CO2 annually.

OVESCO has received planning permission for the installation and has raised the financing for the project through a community share launch.[iii] A launch event was held in April 2011, which was attended by 300 people.[iv] Within five weeks the target of £307,000 had been reached. Interest will be paid to shareholders via the solar PV feed-in tariffs, which are guaranteed by the government for 25 years. Money invested will be repaid in full at the end of the 25-year scheme, or earlier at the request of the investor and subject to conditions. While the investment is held, a dividend will be paid after the first year, which is expected to be around 4 per cent.

Transition in Action: Bath Community Energy.

Bath Community Energy (BCE) grew out of Transition Bath, in particular a meeting of its energy group where people looked at each other and said “we could actually do something about this”, and the ball started rolling. It is set up as an industrial and provident society, with the intention of installing renewable energy, wind, solar, biomass and hydro in a way that is locally owned, locally controlled, generates local income and provides local jobs. The project is established from the outset as an enterprise (as opposed to being dependent on grants), and as one that can deliver renewable energy at scale. Profits will be recycled back into the community.

One of the first things BCE did was to form a partnership with the local council. They also formed a partnership with Scottish and Southern Energy, who have offered them loan finance at very attractive terms in order to enable BCE’s first steps to get under way. Their first projects are to do with solar photovoltaics (PV) and, at the time of going to press, they were in discussion with 30 local schools and had signed contracts with 10. The plan is to install 10 PV arrays on local schools during the 2011 summer holidays: BCE will pay for the panels and the schools will get free electricity. The reason for doing these solar installations first is to build a solid foundation and confidence in advance of a community share launch. The aim is then to raise £500,000 in shares from local people, who will be offered a 6-7-per-cent return each year on their investment, which is very attractive.

In the longer term, BCE is looking at three local potential wind sites and a hydro project, which, combined, will need around £11 million, but which it is hoped will generate around £350,000 for community projects. They will also develop renewable-heat and energy-efficiency projects. It is a great model, very much replicable in other Transition initiatives. 

Transition in Action: Transition Linlithgow’s Solar Bulk Buying Scheme

by Alan Brown

In 2010 Transition Linlithgow (TL) began an ambitious bulk-buying project for solar thermal heating systems (STH). The project involved selecting a manufacturer and installer, and negotiating a discount to encourage participation. When selecting the hardware we looked at all aspects of manufacturing and the environment (green manufacturing processes with minimum waste) and local manufacture (no large carbon footprint due to shipping from somewhere in the world to Scotland). Other key criteria are performance, lifespan (guarantees) and an ethical business approach.

Initial interest and awareness for the project was raised through an exhibition organised by TL. Using a demonstration unit as well as promotional literature, people could leave their names for future contact. We linked the bulk-purchasing project to home energy audits, and whenever someone was interested in renewable technology we investigated the suitability of the house with an in-depth audit. Issues like boiler type, hot-water cylinder (whether a dual coil is already installed), roof design, etc. all play a part in the final advice provided. We created a multipurpose contract ‘to fit all’. A contract with pre-set prices allows for variations, with up-front pricing for extra design features. Householders can choose between a complete installed STH system (choice of three sizes) or a DIY kit, for the budding DIYers who wanted to save even more money.

As the project has grown, we have experienced a lot of interest from neighbouring community initiatives for assistance with their possible bulk-buying projects. Some wanted to hitch on the existing project with us, while others sought advice on how to embark on a bulk-buying project or wanted training from us in order to train their own staff in how to do it.

The success and positive experience of the STH bulk-buying project have led us to embark on other bulk-buying schemes, such as photovoltaic panels systems, ground source heat pumps and possibly micro CHP (combined heat and power). We are creating a social enterprise (community interest company, Ethical Solutions Scotland Ltd), which can apply potential income generation towards a sustainable group by giving back to the community. So far three new jobs have been created between the manufacturer and installer, and the bulk-buying schemes have the potential to create many more in the years ahead.

For more information see http://transitionlinlithgow.org.uk/

* With regard to financing, Dan McCallum of Awel Aman Tawe told me: “the cheapest source of finance will be bank debt, and banks such as Co-op and Triodos have funded community wind schemes in Scotland, such as the 900kW turbines owned by Tyree and Westray Development Trusts. The banks will fund up to 80% of the capital costs. It is therefore important to ensure that every aspect of feasibility is well documented and professional (‘bankable’), as bank finance will probably be needed to build the scheme. The banks lend on a 10- or 15-year term against the value of the planning consent, land agreements, Power Purchase Agreement, wind report, Turbine Supply Agreement and Balance of Plant contract. Tyree and Westray Directors had to sign over 60 contracts in order to reach financial close with the bank. The degree of bank finance in these projects should not be offputting to community groups – it actually protects them. If the banks are not satisfied that a project can repay its loan following the Due Diligence process, they will simply not lend.”

[i] http://www.awelamantawe.co.uk

[ii] Keep up to date with developments at http://www.tresoc.co.uk/.

[iii] You can download the full prospectus for the share launch at http://www.ovesco.co.uk/assets/files/offerdoc.pdf, it is a very useful model for other communities.

[iv] You can see a film of this launch event at http://youtu.be/3dCGReVTWd0.

 

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