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These insulated pipes now connect a new building to University of Warwick's campus-wide combined heat and power system. Local authorities could deliver many more projects like this, where profit-driven energy companies have failed. Photo: Mike1024 / Wikim
These insulated pipes now connect a new building to University of Warwick's campus-wide combined heat and power system. Local authorities could deliver many more projects like this, where profit-driven energy companies have failed. Photo: Mike1024 / Wikimedia Commons.
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Local authorities are key players in our renewable energy revolution

Councillor Mark Hackett

21st August 2014

Government energy policy is caught between apparently conflicting objectives, writes Mark Hackett. But there is a solution that is already working in the UK and abroad - to encourage the active participation of local authorities in delivering low carbon energy to the communities they serve.

If Munich, Copenhagen and Vienna can successfully develop a low carbon energy future, then why not Dublin, Cardiff, Glasgow, Aberdeen, Edinburgh, London, Manchester, Bristol, Woking and Nottingham?

Energy policy in the UK and Ireland is in a state of real flux at the moment.

This is largely due to contradictory policy and a preference for 'market solutions' to our energy trilemma: how to at the same time reduce energy costs; tackle climate change; and provide robust energy security.

Add to that high levels of public disquiet over the policies and excessive political power of the 'big six' energy companies, a largely right-wing domestic backlash against too many onshore wind farms, and continuing uncertainty over nuclear power.

Ministers must be wondering - are there any solutions out there capable of solving the energy trilemma they find themselves in?

Local authorities to the rescue?

In two policy papers, the organisation I chair, the UK & Ireland Nuclear Free Local Authorities (NFLA), offer up a possible and exciting relatively new solution - the development of more comprehensive and joined-up energy policies at local authority (LA) level.

Two models are available for LAs to become active players - Energy Service Company (ESCO) or Energy Service Trust (EST). I believe if Councils move in this direction it may even create an 'energy renaissance' within local government, harking back to the pre-war days of municipal gas, electricity and water companies.

In our submission to the Republic of Ireland's Green Paper on the future development of energy in Ireland, and in our policy briefing on the development of Local Authority ESCO's, NFLA argue that the time is right for local government to be far bolder.

As well as setting up municipal energy generwation schemes, LAs should also take a much more active role in developing low carbon renewable energy projects, ramping up energy efficiency programmes, and supporting community-level microgeneration.

With potential reform of the energy markets on the horizon in both the UK and Ireland, the report argues that local government need to be putting forward innovative energy models now.

Tackling fuel poverty with low-carbon energy

In the NFLA ESCO briefing, we argue that a huge appetite in local government already exists to develop energy policies that can generate low carbon electricity.

Our Member Councils are acutely sensitive of the need to alleviate fuel poverty and they are constantly looking at ways to meet annual carbon reduction targets.

A number of Councils are already producing significant amounts of renewable energy and some are now considering ways to develop surplus energy that could be sold to the local communities. Decentralised energy models like an ESCO offer real opportunities for councils and communities.

An ESCO is a commercial structure, created specifically to deliver a decentralised energy service to customers. It recognises that what clients want is a warm home which is light and has appliances that work, rather than simply electricity and gas.

So, for example while an ESCO may ask a customer to continue to pay the same amount each month for energy services, these services may be provided by delivering extra insulation or energy efficient appliances instead of continuing to provide the same amount of electricity and gas.

Then, once the capital costs for insulation and appliances have been recouped by the ESCO, bills can fall.

Aberdeen, Woking, Bristol, Nottingham lead the way

The NFLA report highlights that some Councils have already developed smaller-scale ESCO models, such as with Aberdeen City Council's arms-length Aberdeen Heat and Power Company, or Woking Council's ESCO with a Danish energy utility to develop Thameswey Ltd. Both provide renewable energy and district heating to the local community.

More comprehensive schemes are being developed by collaborations of local authorities, such as the Association for Public Service Excellence's (APSE) Local Authority Energy Collaboration or joint work by the 'Core Cities' group, particularly led by the likes of Bristol and Nottingham City Council. Both of these Councils are looking to establish an ESCO as early as 2015.

Nottingham City Council's scheme, for example, is setting £1 million aside to develop an ESCO. The Council predicts that 177,000 households could be £120 better off once the scheme is fully operational. The not-for-profit independent ESCO will include a high street shop, call centre and specialist staff.

In the initial phase of the Nottingham ESCO, it will use electricity generated from the Council's Eastcroft incinerator as well as excess power from solar panels, waste food plants and electricity and gas bought from the market at competitive rates which will be sold to the public.

Any profit gained from the ESCO would be reinvested into electricity supply to build up the company. As a part of generating excess electricity Nottingham is developing large solar panel 'canopies' above two car parks. These schemes are estimated to generate around £121,000 a year for the Council.

Similar schemes are being considered by city councils such as NFLA members Glasgow, Edinburgh, Cardiff and Manchester.

Capital cities of Europe mobilising green finance

The report notes that the Greater London Authority is developing a slightly different 'licence lite' style 'Energy for London' scheme. This envisages initially buying power from small-scale generators owned by individual London boroughs and other public bodies and then selling it on to the likes of Transport for London and the Metropolitan Police.

Our report also reviews the energy models put forward by the likes of the IPPR's city energy report and the Green New Deal group's proposals for developing new local green energy infrastructure.

It also provides case studies of the hugely ambitious energy policies of European cities like Munich, Copenhagen and Vienna which are aiming to be 'carbon neutral' by the mid 2020s.

We advocate that Councils, working through the likes of APSE, the Core Cities Group and Local Government Associations, develop these models further and lobby central and devolved governments for financial and policy support.

Municipal green bonds, support from the Green Investment Bank and the unlocking of finance from Local Authority Pension Schemes are all recommended by the NFLA as ways to provide the financial ambition to deliver such comprehensive local authority energy schemes.

A time to be bold

In our view, with the required political will, considered strategic decision-making and careful risk management, Local Authority ESCO's and similar local authority energy schemes can be successfully developed within the next few years.

Councils across Britain and Ireland - leaders, councillors and officers - should read our report and look seriously at the developments it advocates. This is a time for them to be bold and move decisively forward with developing their own low carbon energy solutions.

Above all, if Munich, Copenhagen and Vienna can successfully develop a low carbon energy future, then why not Dublin, Cardiff, Glasgow, Aberdeen, Edinburgh, London, Manchester, Bristol, Woking, Nottingham and a growing number of other authorities?

I beleve it's something they can do, and urge them to bring about this badly-needed energy revolution.

 


 

Councillor Mark Hackett is Chair of UK and Ireland Nuclear Free Local Authorities. He represents the Charlestown Ward on Manchester City Council and server on the council's Audit Committee, Economy Scrutiny Committee and Finance Scrutiny Committee.

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