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Policies to support local energy systems: do they go far enough?

Policies to support local energy systems: do they go far enough?. Jim Watson, Researc h Director UK Energy R e search Centre. EG&S KTN Annual Conference, London, 27 th March 2014. Local energy: back to the future?. 3. Innovation systems & development.

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Policies to support local energy systems: do they go far enough?

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  1. Policies to support local energy systems: do they go far enough? Jim Watson, Research Director UK Energy Research Centre EG&S KTN Annual Conference, London, 27th March 2014

  2. Local energy: back to the future? 3. Innovation systems & development

  3. Current / future role of local energy 3. Innovation systems & development • More attention to local energy in recent years, but still plays a minor role in energy policy • Community Energy Strategy: ’Putting communities at the heart of energy policy’ • Modest ambitions, e.g. community renewables could supply 1.4% of electricity by 2020 • Also important for public engagement and legitimacy?

  4. Local investors less important than in some other EU countries 3. Innovation systems & development 14-15% in 2013? • 11.3% of electricity in 2012 (41TWh) • EU target implies ~30% by 2020 Source:DECC

  5. Policies to support local energy:some considerations 3. Innovation systems & development Governance not government • Key role for government, but many other actors are also involved • The UK is a centralised state: how can government enable diverse, bottom up action? • Community benefits debate: benefits for which members of communities? Not just an energy policy agenda • Community development (CLG) • Financing and incentives (Treasury) • Transport (DoT)

  6. Policies to support local energy:some considerations 3. Innovation systems & development Government at several levels • National government (UK), including devolved administrations with significant differences • EU legislation is part of national policy framework • Local authorities: capacity varies; some already leading developers and/or supporters of community schemes Scaling up and replication • Can community energy become more ‘professionalised’? Is this appropriate for this type of local energy? • Importance of local context for many initiatives: some limits to learning and knowledge transfer

  7. Electricity market reform 3. Innovation systems & development Electricity Market Reform • Mainly focused on large scale, low carbon electricity generation and the provision of large-scale capacity • But it highlights the risk of a ‘missing middle’ in energy policy; local energy could fall between the cracks • Larger community / local projects are eligible for long term contracts, but the mechanism is complex • Fairer power purchase agreements for smaller players has been discussed extensively, but not fully resolved • Links to broader issues of competition in energy markets: see today’s Ofgem announcement!

  8. Electricity market reform ‘To complement EMR, we should unleash a completely new model of competition and commercial opportunity … we will need companies, communities, public sector and third sector organisations to grab the opportunity to generate their own energy at real scale and start to export their excess energy on a competitive, commercial basis. Not just a few exemplars, but tens of thousands of them.’ Minister of State Greg Barker MP, Sep 2013

  9. Other economic incentives 3. Innovation systems & development Demand-side incentives • Opportunities for more ‘collective’ local action through ECO and the Green Deal • Dedicated incentives for communities & Green Deal • Both policies struggling due to politics and slow uptake Energy supply incentives • Grant schemes and FITs have both been essential for community energy; frequent policy changes problematic • Proposal to raise FIT threshold to 10MW welcome • More support for local heat network development from central government

  10. A key role for Local Authorities? 3. Innovation systems & development • Many Local Authorities are already developing and implementing projects and/or have energy strategies • But many less active, and do not have significant capacity to act • Key barriers include attitude to risk, lack of competencies • Multiple targets and restrictions from central government • Prudential borrowing is possible, but risk aversion reinforced by pressure for them to reduce debt levels

  11. Innovation and learning 3. Innovation systems & development • Many local energy schemes are not innovative from a technical perspective: they use familiar technologies • But institutional / financial arrangements and business models are often less well known (at least in the UK) • Important to support demonstrations see ‘what works’ • Some notable examples: • Ofgem Low Carbon Network Fund • ETI Smart Systems and Heat programme • Not enough emphasis on learning from experience, both for future implementation and future policy development

  12. Thankshttp://www.ukerc.ac.ukhttps://twitter.com/watsonjim2

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