a. How have community-led approaches delivered energy and climate change outcomes more cheaply or effectively than top-down Government action?

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1 Your response ID is ANON-XMK C Call for Evidence Questions: Potential benefits of community energy 6. We would like evidence or examples of the benefits of community energy approaches (please see Section 4 for more information on the types of evidence that we are seeking). a. How have community-led approaches delivered energy and climate change outcomes more cheaply or effectively than top-down Government action? Locality is the country s leading nationwide network of community organisations ambitious for change. Our networks have over 750 local community organisations in the United Kingdom, working in urban and rural areas. We all share a belief in our communities and a commitment to driving change through community enterprise and community asset ownership. The strength of this network has enable us to work with our sister networks in Wales, Scotland and Northern Ireland to enable community organisations to make significant savings on their energy bills and access expert advice on energy saving. These savings directly benefit local communities, often in our poorest communities, by making community based organisations more viable and ensuring that scare funding can be redirected to frontline community activity. The Energy Action Group lets Locality members and other third sector groups purchase energy collectively reducing bills and saving energy. The Energy Action Group cuts energy costs in two ways: 1. As a successful large scale energy buying group which is working with energy consultants Touchstone Services and the Development Trust Association in Wales. It offer free no obligation competitive quotes and on 30th September negotiates better energy prices with a basket of consumption. 2. Community Organisation are able to access energy bill advice, are recommended the best energy saving equipment and sign posted to other sources of advice and consultancy such as the Carbon Trust, Energy Savings Trust or the Green Deal. THE BURTON STREET FOUNDATION The Burton Street Foundation is based in Sheffield. They have over 50 charities, businesses, community organisations, clubs and societies based at their buildings. They were on 2 rolling 28 day contracts for 2 of their buildings with the other 2 contracts approaching. Tariffs for these two types of contracts are charged at a

2 Premium rate. The Energy Action Group successfully brokered 4 replacement contracts which will save them an estimated 30,000 per annum. b. How has participation in community energy projects changed attitudes to or increased engagement with energy and climate change issues? c. What are the wider social and economic benefits of community energy projects? These might include improving health, education, jobs or transport; strengthening communities; or tackling other local issues. Community Renewable Energy (CoRE) was established to support community organisations to establish renewable energy projects. The aim was to work alongside community organisations to develop projects of a significant size which would both contribute to combatting climate change and yield an income to the community organisation. Their main project has been the development of a 74m high wind turbine in Berwick upon Tweed. Installing an Enercon E the turbine is forecast to generate 2,139MWh annually sufficient to the equivalent of 450 homes. The total project cost is estimated at 1.7M and is expected to return more than 2.8M for the community over 25 years. This income will be split 80% to Berwick Community Trust and 20& to CoRE. The income from the turbine will be used to support the Trust s wide range of community activities including childcare, support for older people and the Low Carbon Berwick project. Barriers to community energy 8. What evidence or examples do you have of the barriers faced by community energy projects and the ways in which they have been overcome, or could be overcome? Locality s experience of the renewable energy generation market is drawn from our involvement with Berwick Community Trust, Community Renewable Energy (CoRE), the development of a 74m high wind turbine in Berwick upon Tweed and work to develop Roseland Community Wind Farm. Barriers at the first stage include: Getting clear unbiased information and support. In our experience, most members of community groups do not want to become experts in renewable technology. Some are unrealistic about their ambitions and what can be achieved. Most need support to weigh up the options for different technologies and make an initial decision on how to proceed.

3 Promotion. There are many organisations across the UK which are developing renewable energy projects and supporting others to do so. However, there appears to have been a decline in the promotion of options for community involvement in renewable energy. This has been compounded by the negative press coverage around changes to feed-in tariffs. Choosing the right technology. Renewable technology is constantly developing. Many activists in the field of community renewables have a strong personal commitment to environmental issues and an interest in innovation. There can be a mismatch between the interest in development and innovation and the needs of a community organisation to deliver a project. Often the only projects which are fundable particularly for a smaller community organisation are those using tried and tested technology. For example, the financial deal agreed on the Berwick turbine specified the size and make of the turbine. Long-term project. Developing large scale renewable energy projects are very time consuming and require a long term commitment. Berwick Community Trust has been developing the Berwick Wind Turbine for seven years - from the initial idea to a project which has planning permission, grid connection and finance. The turbine has a delivery slot for December 2013 and should be in operation early in We can identify areas where development work could be speeded up. There is, however, an overall timescale for turbine development which cannot be changed: getting outline planning permission, collecting wind speed data, applying for planning permission, arranging the grid connection, ordering the turbine and construction. Alongside all of this is raising finance at each of the stages. Berwick Community Trust has paid staff, a knowledgeable and experienced Board, a property asset and was supported by CoRE. Even then, the timescale and the level of staff and Board time involved was extremely challenging. Many community organisations interested in renewable energy generation do not have these advantages. Subsidy Rates Changes to subsidy rates for renewable energy generation, particularly changes at short notice, have significantly dented confidence and lead to problems developing once viable community business (see Just Power example below). We would argue that the impact can be devastating for community organisations. We have noted above the development time and costs. Communities need to have long-term confidence in the approach of the Government in order to invest their time, energy and extremely scarce resources in the development of a project which may take 5-7 years to come to fruition.

4 To increase community involvement in renewable energy generation, the Government needs to set a clear framework for subsidies and when they will be reviewed. Our view is that subsidies should be set on a ten year basis with a Government guarantee that they will not be reduced during that period. That then gives community organisations confidence and the financial ability to plan a long term project. Planning permission Planning permission for the Berwick turbine was successful; however a recent application to build Roseland Community Wind Farm was rejected by Bolsover District Council. Both applications involved high levels of public consultation and local support, with profits being re-invested in activities to support local communities. Although planning permission was granted for the Berwick turbine, the high number of requests by planners for more information during the process led to delays and incurred extra costs, which potentially could have been avoided. Access to Capital Raising capital has been a complicated and difficult process even where the proposition is clearly viable. For example, projections for the Berwick turbine show that it will generate in excess of 60K per annum after meeting its debt repayments. We have found that 70%-75% of the finance is relatively easy to access but making up the remaining 25%-30% is extremely challenging. To erect a turbine the size of the one in Berwick, 25%-30% of the capital cost is 400K. Most community organisations do not have property assets which would allow them to secure a loan of this size. The Government could offer a risk capital fund at no cost to itself. It could use Big Society Capital to take this forward. For example -The fund could explicitly offer unsecured loans of 30% of the capital cost based on a business plan which has been fully appraised and verified by renewable energy experts. The community organisation having secured the remaining 70% of the capital cost. Appraisal and verification costs would be borne in the first instance by the fund, but could be included as part of the final capital package. The fund could either be a long term investor, benefitting from interest payments over the period of the loan. Alternatively, the fund could be a short-term investor to cover the period of construction and initial operation. Once the community organisation could prove viability, then they could look to re-finance the fund could support community organisations to identify options for re-financing. Community capability and capacity 9. We would like to hear your views about sources of information and advice for community energy projects. In particular we would like to hear from you about:

5 A Which current sources of information or advice have you found most useful in setting up a community energy project? Members of Locality are able to access our Knowledge and Skills Exchange a peer learning network. Please see below for details (Q10) Community Renewable Energy (CoRE) was established to support community organisations to establish renewable energy projects. The aim was to work alongside community organisations to develop projects of a significant size which would both contribute to combatting climate change and yield an income to the community organisation. CoRE s main project has been the development of a 74m high wind turbine in Berwick upon Tweed. The Berwick Community Trust, working with CoRE, has also installed 48kW of PV panels on 6 schools and community buildings in the Berwick area. b. What information or advice would have been helpful when you were setting up a community energy project? Tried and Tested Packages Based on the Berwick turbine experience around size and type of turbine, it could be useful to develop packages which community organisations could adopt. Of course these would need to adapt to local conditions. However producing a package around wind which sets out that if the community has a specific type of location, suitable wind speed and potential grid connection then they could opt for a specific size and type of turbine which would come with a capital funding package. There would be options to work with specialist community developers and private companies to put such packages together. This does not stop communities innovating, but gives a clear route to market for those which want to work with established technologies. c. Do you think there is potential for a new information resource for community energy groups (see box above), and who might be best placed to develop and host such a resource? Promotion of Community Involvement in Renewable Energy A user-friendly information portal would be extremely useful. There is extensive information on the web about renewable energy systems and potential funding streams. The consultation document identifies the diversity of initiatives. Often the amount of information and different options can be confusing. Clear accessible information is the baseline for increasing community participation in renewable energy.

6 Locality has extensive experience of developing new web-based resources and tools (e.g. The Place Station), to share learning and good practice (e.g. the Community Knowledge Hub) and support and advice to enable local community to utilises Community Rights (My Community Rights). The Community Rights service has dealt with nearly 7,000 enquires since its launch in May d. How could more be done to build interest among those communities who are not already involved in community energy? Locality and our members have extensive experience in engaging local people and providing the support to enable people to bring about change in their local communities. Locality (and before our merger the Development Trust Association) has worked for a number of years on promoting the Asset Transfer Agenda. Our approach included sharing the experience of our members and local communities as they transform buildings and land into vibrant community spaces. Our highly successful twitter channel has nearly 5,000 followers and an introductory cartoon video reached more than 50,000 people elevating the Asset Transfer Unit to the no.1 English Non- Profit on You-Tube. Giving communities the opportunity to tackle local issues and ensuring that experiences can be shared, is key to spreading the word and getting more communities involved. 10. We are interested in your views about peer mentoring. In particular: a. Do you have any examples of successful peer mentoring schemes? Locality has a Knowledge and Skills Exchange Programme which provides small grants to our members to facilitate the sharing of good practice and to cover the cost of peer support. Members have used funding to visit wind farms and other renewables in Scotland, to explore sustainability, to learn about eco-housing, -industry and technology and to set up a wood recycling scheme. For example Wiltshire Community Land Trust (CLT) eco-development Wiltshire CLT and a newly formed eco-development group aim to acquire and develop a local site for eco-housing, light industry and a centre of excellence for ecotechnology. Their 750 knowledge and skills exchange grant paid for the project manager from Comrie Development Trust (a Scottish member with a successful and sustainable community-owned resource), to visit Wiltshire in a peer learning exchange. In total, eight local organisations met with the project manager to understand how a community can successfully drive forward a large scale development and mange it effectively and sustainably; as well as to identify the clear and achievable next steps to help take Wiltshire s eco-park forward. After the visit members commented All in all, the visit has exactly the desired effect one community giving another comfort in the knowledge that it can be done and the confidence to say we can do it (Wiltshire Community Land Trust).

7 In March 2013, after two years of hard work the Community Land Trust, in partnership with a private developer, won the bid to develop the former Erskine Barracks in Wilton into an "eco park". About 450 homes and businesses will also be built on the site with the group aiming to create "a centre of excellence for sustainable living and working". b. What more could be done to support and enable peer mentoring schemes such as that described in Case Study 14 above? The BIG Lottery Fund has recently commissioned Locality and the Institute for Voluntary Action (IVAR) to undertake research into peer learning. We found examples of a wide range of shared learning activities across a spectrum from very informal arrangements to more structured activities. Our research found A need for flexible funding which recognises the range of peer learning opportunities Swift funding processes which enabled organisations to spot and quickly seize opportunities or deal with issues as they arise, were required The positive role of intermediary organizations to broker and support peer learning putting groups in touch with one another, spotting and highlighting good practice and capturing learning Access to funding 12. We are interested in your views on the potential for community groups to engage in delivering the Energy Company Obligation (ECO). In particular: a. What could be the role for communities in delivering ECO, either through participation in ECO brokerage or building partnerships with energy companies? Community organisation s could take on a variety of roles in enabling energy companies to meet their ECO. This could range from raising awareness of energy efficiency, all the way through to giving advice and installing energy efficient equipment. Locality, our members and Jon Fitzmaurice of Self Help Housing are working together to ask the government to join up two key areas of government policies - ECO and Empty Homes Grants. The Empty Homes Grant is a welcome HCA initiative which over two rounds has produced welcome grant investment for community organisations

8 enabling them to tackle empty housing blight within their neighbourhoods by buying or leasing properties with a long term commitment to make them available at 80% of market rent for social housing. Locality members have formed a good proportion of those community organisations successful in both rounds of EHG. We feel that there is a unique opportunity to make energy efficiency improvements during a programme of more general refurbishment of empty properties. This will reduce costs, disruption and most importantly, ensure that the most energy efficient housing is lived in by people who are at highest risk of fuel poverty. Our suggested model would be that ECO works alongside the Green Deal to provide additional support for packages of energy efficiency measures, including solid wall insulation or hard to treat cavity wall insulation measures which are socially cost effective, but unlikely to be fully financeable by Green Deal finance. ECO will also provide insulation and heating measures to low-income and vulnerable households and insulation measures to low income communities. 13. If you are a community energy project, what has been your experience of accessing funding from Feed-in-Tariffs (FiTs) or the Renewable Heat Incentive (RHI)? The experience at Just Power for Communities CIC (a MCS accredited specialist in Solar Photovoltaic (PV) systems for community owned buildings) is that the administrative process for Feed in Tariffs has been very slow, with a need to chase up to get it working. On average it has taken around 6 months from installation. 14. Do you have any other examples of, or ideas for, innovative revenuegeneration models for community energy projects, particularly for projects not based on electricity generation? Locality is working with community partners to manufacture, sell and install an energy saving device that has demonstrated in tests to save at least 20% of energy costs in central heating systems. The cost of this device is relatively low (around 300 plus installation) and are straightforward to install. The initial focus of the project is towards helping those in or near fuel poverty and working with social landlords and others to finance the upfront costs. Much of the target group will not be in a position to take on loans so getting finance and selling to landlords will be an important challenge to overcome. 15. We would like to understand the different types of funding available for community energy projects at different stages of their development and the barriers to accessing these. In this question we are particularly keen to hear from potential investors in community energy projects, as well as community energy groups.

9 a. In addition to those sources mentioned in questions above, what types of funding are available for community energy projects at different stages of their development? Locality s experience is that LEAF funding has been very effective in helping community organisations to initiate community energy projects. Having a small amount of resource to buy in expertise helps communities to make decisions about community energy projects. Our view is that this should be a rolling programme. Further down the line, there are a range of support packages around development costs for community renewable energy. Most are loans which are repayable when the scheme gets capital funding. We would like to see strong links between LEAF funding for initial exploration of options and the variety of support packages. Perhaps an add-on to LEAF funding would be that, if the final report recommends going forward with a renewable energy project, the community organisation would receive some specialist support around accessing resources to move to the next stage. The Community Generation Fund is a national fund created to provide a catalyst for the widespread development of community-owned renewable energy infrastructure. The Community Generation Fund provides commercial but creative loan funding for communities at the pre-planning (development) stage of their projects, as well as the construction (post-planning) stage: Development Loans: contingently-repayable loans for design, environmental and other external costs involved in achieving the required planning and other consents/licenses Construction Loans: long-term loans for equipment, construction and commissioning costs (post planning consent) either stand-alone or alongside bank finance The Fund aims to provide access to capital at project stages or scales where funding is needed most but is not readily available. Please note that the Fund is designed to supplement rather than replace traditional sources of funding. It is not a grant or low/nil cost scheme.

10 b. What barriers do community energy projects face in accessing funding at different stages of their development? Access to Capital Raising capital has been a complicated and difficult process even where the proposition is clearly viable. For example, projections for the Berwick turbine show that it will generate in excess of 60K per annum after meeting its debt repayments. We have found that 70%-75% of the finance (i.e. the main loan finance) may be accessible but making up the remaining 25%-30% is extremely challenging as this usually needs to be some sort of equity or risk capital, something that community organisations have particular barriers to access (for example because of their governance, charitable and ownership structures). To erect a turbine the size of the one in Berwick, 25%-30% of the capital cost is 400K. Most community organisations do not have property assets which would allow them to secure a loan of this size. One solution that can be used is some sort of partnership with the private sector. In essence this means that ownership is shared between the community and a private sector partner or even fully owned by a private sector company (who puts up the capital) but clearly takes a significant share of the benefits hence reducing the value to the community. An example of a co-ownership model is the 15.6 million, fourturbine Neilston Community Wind Farm. Whilst the above refers to examples for wind farms the access to capital applies to equally to other forms of renewable energy and energy efficiency schemes. This includes solar installations where access to capital even with the availability of FITs is limited. For community projects there needs to be better access to funding which is linked in with installation. For example there are many community organisations that interested (and indeed need) to save energy costs but do not have the capability to take on normal loan finance. What is needed is that the capital cost is funded to the installer (so that it is free or reduced cost at the point of installation to the community/organisation) and that the finance is paid back through a combination of FITs and energy savings. It is important that loans are not a formal liability on a community organisation s balance sheet as this will increase its overall risk and hamper its own service fund raising and it would be good to see loans linked to realised savings and/or generation income rather than fixed loan repayments. Regulatory framework 16. If you have been involved in community energy, what legal or regulatory or planning barriers have you encountered during your project? See Q8 - Planning permission

11 17. We would like to hear your views on the role of Government or others in making it easier for communities to deal with these regulations. For example: a. Are there any regulations or processes that could be improved or simplified? Our recommendation is that the Government sets up Ofgrid to monitor energy companies around grid connection. Ofgrid should take up complaints on behalf of the renewable energy industry both private and community around grid connection. Ofgrid should not just monitor but actually process complaints through to determination and, where appropriate, compensation. Where compensation is awarded, there should be compensation to the individual organisation plus the energy company involved will make a mandatory donation to a community renewable energy fund b. What support could help community energy groups navigate these regulations or processes? A combination of on-line, telephone and face to face support and access to funding to meet costs. Networks and grid 18. How could it be made easier for community energy projects to sell the energy they generate and connect to the grid? Specific Power Purchase Agreements tailored for community energy schemes including access to pricing arrangements similar to that of the large companies would help community organisations access similar (or better) terms. Evidence and evaluation 19. Research published alongside this Call for Evidence (Community Energy in the UK: A review of the Evidence) has found that the evidence base for community energy is currently limited. We are interested in how community energy projects are evaluated and how better evidence could be collected. b. What kind of evidence would help potential investors and funders make more informed financial decisions about community energy projects? c. What support do community energy groups need to better evaluate their projects and collect evidence of different outcomes and benefits? Reducing energy costs is a key driver for community organisations although another important driver is around green energy and environmental objectives. Looking at how energy costs have increased in recent years and comparing

12 between those who have implemented projects and measures is important. Similarly it would be good to look at the wider social impact and operation of the organisations to see if lower energy costs has help the organisation do more. Accurate calculations of capital costs, energy savings and generation Understanding of seasonal variations and the implications on cashflow, particularly if loan finance is available.