Community Energy: does the Government protect private energy suppliers?

Philippa Parry

13 May 2013

Friends of Taff Bargoed in South Wales has found itself in what has become an all too familiar situation for community energy generation projects. Despite being backed by all relevant parties and confirmed to be viable and potentially lucrative, the project is being held up by financing issues.

The group, which plans to install a hydroelectric turbine in Taff Bargoed Park this year, counts on the full support of the local people, including the anglers and canoeists who use the river running through the park. They all see the value of using the profits to help meet the running costs of the park by subsidising the park warden's wages as well as the costs of the sports clubs run within it.

It's clear that it is a scheme that benefits everybody.

The group enjoys the support of the local authorities, and has received a grant from the Department of Energy and Climate Change (DECC). Previous to the scheme some hydro developers had done their own scoping and tried to buy the site, offering the local community 40% of the profits from the Feed In Tariff, or FIT (a Government subsidy paid to renewable energy generators).

But the group saw the potential for the scheme and wants 70% at least, and all the money generated to go into the community.

I am glad they are standing their ground - 40% of the profits would not have been enough to make a difference to the park, securing its future. So if the financial attractiveness of the project is beyond doubt, just what is the problem?

Here is where the perverse application of a FIT legislation sub-clause to community energy groups comes into play. It is currently being claimed that energy generation projects set up with any amount of 'state aid', i.e. grant funding from Government, are not eligible to then receive the FIT.

So while fossil fuels and nuclear receive enormous subsidies from government, with profits going into the pockets of shareholders, groups wanting to provide clean energy supply for the benefit of their own community are being cut off at the pass.

The majority of people who can afford to outlay all the initial costs are private developers, so the application of this restriction clause means that it is the private developers who are able to set up - and so benefit - from such schemes, not communities.

Something is becoming ever clearer as the latest Energy Bill makes its way through the House of Commons: political weight is put behind the incumbents of the energy system. Meanwhile, the newcomers who offer clean solutions that bring environmental and social benefits are at best discouraged and at worse forced out.

I hope very much that Friends of Taff Bargoed will be able to overcome its financing dilemma and pull this project through.

You can find out more on community renewable energy projects on our Map of Green Britain.

Philippa Parry is a former volunteer on Friends of the Earth's Clean British Energy campaign.