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The prospects for municipal energy in the UK

The prospects for municipal energy in the UK

On the surface it looks like a bleak time to attempt the move towards a decarbonised energy system. Central Government has made U-turns on everything from ending their zero carbon homes commitment to slashing financial incentives for wind and solar power. This has dealt a hammer blow to those in the public, private and community sectors who are endeavouring to move towards cleaner energy. The recent resetting of national energy policy, which is based on decommissioning coal fired power stations by 2025 and firing the starting pistol on a new ‘dash for gas’, shows a failure to appreciate the role of renewable technologies in the energy transition and in meeting the long-term energy needs of the UK. It also ignores huge opportunities for economic development and growth that a low carbon energy system can potentially provide.

This all seems disastrous for local renewable energy projects, however local authorities are more resilient than that; many have embraced the challenges that come with the transition to a low carbon economy and have simply redoubled their efforts to get there, despite the actions of the Government. Before the Climate Change Summit in Paris in December 2015, 50 of the largest local authorities, including Edinburgh, Glasgow, Newcastle, Manchester, Liverpool, Nottingham and Leeds, committed themselves to eradicating carbon emissions in their areas and running their cities on completely clean energy by 2050, despite the fact that most local councils are currently facing a £12.5bn funding shortfall by 2020. The scale of the ambition in the face of such odds is as bold as it is impressive.

So how can local authorities, who are trying to manage massive cuts to their funding and services, set such ambitious goals and do so with confidence and commitment? Well, there are really two answers to this question.

Firstly, in order for local government to survive such severe austerity it has to recognise that it needs do things differently. The devolution agenda in England, Scotland and Wales presents a significant opportunity alongside its challenges. Greg Clarke, the Secretary of State for Communities and local Government, speaking at the Local Government Association Conference in July 2015, stated that “Those who are prepared to organise to be more effective and more efficient should be able to reap substantially the rewards of that boldness, whether in costs saved, additional revenues generated, or powers that can be vested.” Councils have taken him at his word and many of the bids for Combined Authority status in England include as one of the key ‘asks’ a commitment to investing in the local energy infrastructure.

Secondly, many local authorities have been inspired by the German ‘Stadtwerke’ movement, which uses municipally-owned generation, distribution and supply networks. After the Second World
War, councils generated up to 50% of their revenues locally with a major contribution from the ownership and control of public utilities like gas, electric and water, and councils seem to be moving in that direction once again. Further, they have understood that there is a great opportunity to take advantage of the transition from a centralised energy system based on burning fossil fuels, to a decentralised, clean energy system in which the municipality plays the important leading role.

Last year saw the launch of Robin Hood Energy Ltd, the first municipal energy supply company in the UK since 1948. Robin Hood is owned by Nottingham City Council and where Nottingham has led the way, many other local authorities are likely to follow. Other councils like Peterborough and Cheshire East have launched their own local tariffs with the aim of tackling the blight of fuel poverty, but it is the wider ambition of these councils that stands out. In fact, local supply is just a means to an end; linking supply with local generation and distribution is the key to the future. Local authorities are ideally placed to exploit the opportunities that arise because of their community leadership role, but also because councils still have many assets (such as land and buildings) which can be utilised in developing heat networks, improving the energy efficiency of their estate, and for local renewable energy projects which can also reduce the dependency on central government funding.

There are many reasons to be optimistic for the future.  As Lord Nicholas Stern points out in his book, Why Are We Waiting? (2015), “With good policy and strong commitment the low carbon transformation can be the real, dynamic growth story of the future. It could have still greater potential than previous technological revolutions to improve (world) living standards and quality of life.”

Well, local government isn’t waiting. There are many hurdles to overcome, not least because of the short-termism in much of current Government policy thinking, and also due to a problematic regulatory environment. Yet councils are seizing their opportunities and the medium-term prospects for municipal energy are very bright indeed. ‘Necessity’ as they say ‘is the mother of invention’ and it is now acting as a catalyst for change in local authorities across the UK. Financial pressures, historically low costs of borrowing, devolution, social, economic and community needs, rapid technological change, and peer networks such as APSE Energy are all combining to push forward a radical reengineering of our current energy system. It will not happen overnight, as experts have pointed out it will be at least a three-decade transition, but we have already begun that journey. It is an exciting, amazingly optimistic journey that just might also make a huge contribution to tackling global warming and the perils of climate change.

Promoting excellence in public services

APSE (Association for Public Service Excellence) is a not for profit local government body working with over 300 councils throughout the UK. Promoting excellence in public services, APSE is the foremost specialist in local authority frontline services, hosting a network for frontline service providers in areas such as waste and refuse collection, parks and environmental services, cemeteries and crematorium, environmental health, leisure, school meals, cleaning, housing and building maintenance.

           

 

          

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