Communities that build solar panels and wind farms should get cheaper bills, says Labour minister

Communities that build solar panels and wind farms should benefit from lower energy bills, Labour’s energy minister has said. But Michael Shanks signalled the government is yet to remove barriers which community energy groups say are holding them back from generating energy in towns and cities across the country.

Shanks made the comments to Big Issue as the government announced £180m in funding for 200 schools and 200 hospitals to put solar panels on their roofs, saving them tens of thousands in energy bills.

But those involved in community energy have warned that barriers – including difficulties in selling energy generated to locals, and certainty over prices – are holding back their efforts.

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Bristol City Council found itself unable to buy power produced locally due to a lack of so-called “sleeving”. It means many community energy projects do not end up using the energy they generate, instead selling it to the national grid.

Shanks said the government is exploring how it can allow sleeving – but warned separate energy systems could be abused.

“We want communities to benefit from this. So the community ownership point is important, but the direct benefit should also be lower bills as much as possible in their own local area if they’re hosting this infrastructure. So there’s nothing off the table with all of this,” Shanks told Big Issue.

“The complexity of it is, we want to make sure that it’s genuine community projects that are always actually benefiting from this, and there is a risk, of course, if you create separate systems, that that could be abused.”

The investment is accompanied by £21m in support for local authorities and devolved administrations to fund community energy projects, and marks the start of government’s moves in community energy. 

Its Local Power Plan promises £1bn of investment each year, but funding for this tranche comes partly from the departments for education and health. Energy secretary Ed Miliband said it showed the government’s “clean energy superpower mission in action”.

The NHS has seen its energy bill more than double since 2019 to £1.4bn, but currently under 10% of hospitals have solar panels installed.

Nick Plumb, director of policy and insight at Power to Change, said of Shanks’ comments:“Community benefit and community ownership are both important, so measures which enable either are very welcome. Moves to ensure communities can actually use the power they generate, in particular, are a really positive step.”

Shanks said the investment was part of giving communities ownership in the power network. “We actually think who owns assets in this country does matter. We think communities should be owning things as much as possible,” he told Big Issue. “Community benefits have got a place but actually owning something and holding the profits from that in your community has a really transformative impact.

He added: “I represent an urban constituency. We’re not going to be building a wind farm anywhere in the middle of our constituency, but I’d like to see if there’s a way my constituents could have a share of an offshore wind farm for example, and reap the benefits of that.”

Shanks said the country’s energy system was moving towards having hundreds of thousands of individual local generators, rather than big power generators next to population centres.

Community energy providers have also complained that lack of price certainty makes investment hard, in part due to the disappearance of the “feed in” tariff, which provided a subsidised price. Shanks ruled out a return to this and to lowering the current five megawatts threshold for projects to access the Contracts for Difference scheme, which supports low-carbon energy with protection from volatile costs.

“The feed in tariff was useful for a period of time when that technology was more nascent and expensive. I think it’s not any more and it is some of the cheapest forms of technology, so we wouldn’t be going down that kind of route at all,” he said.

“But if there are funding mechanisms we can look at that gives that sort of income guarantee, then we’ll look at them.”

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