The Plan
The two core goals of the initiative are to help the community as a whole and individuals; Reduce energy costs and Reduce CO2 emissions, ultimately achieving NetZero.
At its heart we’d create a community energy social enterprise/cooperative, which is a form of charity, that can raise funds, own assets, generate an income and provide help and assistance to the community. Although this would likely only be formed further down the road, with the initial work done as a group of individuals working together.
This naturally covers many different things, in rough order of scale:
1. Community Energy Generation
2. Community Energy Heating
3. Home insulation and efficiency
4. EV Charging
5. Waste management
Community Energy Generation
Generating electricity in and near the community using solar power and potentially hydro and wind, plus battery storage. The solar would probably be a combination of rooftop solar on homes and community buildings and solar farm(s). This would reduce electrical energy costs and reduce CO2 from electricity use.
The battery stores excess energy generated in the day for use and export at peak times. This allows more of the community energy to be used locally and increases income since exporting electricity at peak times is at a higher rate.
Community Energy Heating
Transitioning homes and community facilities from high CO2 gas and oil heating to zero CO2 heating, either as a large group through a community heating project or helping individuals with their own transition. It links with community energy generation as this can help drive down the energy costs for heating and its CO2.
Broadly two options:
- Individual Heat Pumps: Air, ground or water source heat pumps either independently installed per home, with potential for economies of scale bulk purchase, or with some community sharing of ground/waterworks for ground or water source heat pumps, which are more efficient than air sourced heat pumps
- 5th Generation Community Heat network: This is a recent development that distributes relatively low-temperature water around the community, drawing heat from sources such as lakes, rivers, sewage, and communal heat pumps, and transfers this into the buildings using small water source heat pumps. It can also provide cooling in the summer. At scale, it can be more efficient and cost-effective than independent heating. It could potentially be combined with installing other utilities such as fibre broadband. What is District Heating? The complete guide by Kensa Heat Pumps provides a good overview.
Note: Traditionally heat pumps, mainly air sourced, generate water at a lower temperature than oil and gas boilers and can require upgrades to a building’s insulation and/or radiators. However, there are now options such as high-temperature heat pumps or electric booster heating that can avoid this issue.
For homes already using electrical heating, the community energy helps reduce running costs and potentially provides advice to improve efficiency.
It’s likely we will need to arrange for surveys of individual homes at the detailed planning stage of community heating. However, there should be some reduction in this where there are several houses of the same type within the community.
Home Insulation and Efficiency
This can have a big impact on the cost of heating and CO2. The community involvement would mainly be providing advice and potentially bulk purchase negotiation.
Once the community energy organisation is set up and operating it could potentially use some of the profits it generates to help insulate homes suffering from energy poverty.
EV Charging
Homes with off-street parking can install their own EV chargers and will benefit from energy costs savings from the community energy.
For homes, without off-street parking the initiative can include two ways to reduce the cost, improve the provision and avoid messy repeated digging. This will fit particularly well if we implement a community heat network as there is potential to combine some of the groundworks.
For homes with allocated parking away from the house, it may be possible to install ducts in the ground that can have cables run through them initially, or in future, from homes to their parking spaces.
For shared parking, such as car parks or shared street parking we can take a similar approach to install ducting to avoid future re-digging and use this to build out public chargers. For the public highway, there may be funding available from the county council, otherwise, this will need to be community/community investment funded. Chargers would be part of a public charging network operator, chosen by the community, landlord, or local council, allowing users to pay for the power they use.
Potentially the EV charging could be a mix of fast chargers and rapid chargers. Fast chargers are cheaper and slower and best for places where an EV owner would leave their car for several hours, for example overnight. Rapid chargers can charge an EV from around 20 to 90 minutes depending on the model. They are much more expensive and are best suited for EV owners who need a quick charge on a journey.
Note: Where possible using home power is better since this only attracts 5% VAT, while public charging attracts the full 20% VAT.
Waste Management
Biological waste such as sewage and food waste are both parts of the problem and parts of the solution.
Sewage is relatively warm as it contains a lot of wastewater from baths, showers, dishwashers and washing machines. It could be used as a source of heat for a community heat network.
Sewage and food waste emit methane, a powerful greenhouse gas, as they rot. This can be captured using Anaerobic Digestion and the resulting biogas is burnt as part of a community heat network.
Community Energy Social Enterprise
Depending on how the community decides to set up the social enterprise, membership by the community can be at little or no cost.
The community enterprise normally raises funds to cover the capital costs using one or more community fundraising rounds. Investors can put in anything from £100 to £100,000 and are typically a combination of some members of the local community and commercial investors, such as pension funds, who are increasingly looking for ethical investments that meet their Environmental, Social and Governance (ESG) policies. The standard terms of such investments are:
- Repayment over 20 years, 5% per year
- Interest on the outstanding investment of around 4%
There may also be government grants available, mainly for heating, such as the £5,000 per home heat pump grant.
The business plan for the community energy project must demonstrate a safe investment where the income generated will equal or exceed the money required to repay the investment and cover operating costs.
The two main sources of income are normally:
- Selling electricity to the grid, through a Power Purchase Agreement (PPA)
- Selling electricity to the community, normally at a rate significantly less than market prices, is partially how the community energy initiative saves the community energy costs. This is the Welcome to Energy Local | Energy Local model
The main costs outside of the capital investment to build the infrastructure typically include:
- Technical consultant fees to undertake the technical and commercial feasibility planning from concept through to planning permission
- Commercial consultancy fees to undertake the social enterprise setup and fund-raising round(s). This is typically done as a service from one of the big national community network organisations, such as Welcome to Energy4All – Energy4All
Some or all of these costs may be covered by local government grants, with the difference paid for by community fundraising. They are normally paid in rounds, for example paying a smaller amount for the initial technical and commercial validation.
The main ongoing costs typically include:
- Management of the community energy organisation and associated costs such as insurance. This is often done by one of the big national community network organisations, such as Energy4All.
- Infrastructure maintenance contracts
- Land rental, for example, a solar farm on farmland typically costs around £1,000 per acre per year
Note: Equipment replacement costs are normally covered by a future investment round since the equipment should last longer than the 20-year initial investor repayment period.
Any profit made each year can be used however the community decides, typically based on proposals and voting. This might include:
- Returning money to the community to offset energy costs
- Directing money to those in energy poverty to specifically offset their energy costs directly or indirectly by funding improved insulation
- Community projects and facilities
Community energy initiatives typically follow a similar, proven, path. They are constituted as social enterprises/co-ops, which are a special form of charity. Like a limited company, they protect their owners, and the community, so for example the community aren’t risking their homes and assets.
Normally they are one member, one vote, with each member of the community and investors having a vote. While investors have a vote it’s just one, irrespective of the size of the investment. Voting drives decisions for the organisation, for example how to direct profits, such as returning money to the community to offset their energy costs and/or community projects and/or helping those in the community in energy poverty.