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The future of 'local energy'

As the UK and other world leaders discuss global efforts to tackle climate change, the lack of a clear, long-term green strategy back home is making a low carbon future more and more difficult to achieve. Even Amber Rudd, the Secretary of State for Energy and Climate Change, has expressed her concerns at the direction that policy has taken in meeting legally-binding EU targets. But it is not just green policies that are putting a low carbon future at risk - austerity, and the continued belief that a centralised, market-driven system will deliver answers, are also standing in the way of a greener future.

Renewable sources of energy will have to be an integral part of a low carbon future. They are increasingly cheaper than any other forms of power, and have received massive investment worldwide, though right now they still need subsidies and support. But then so do nuclear (Hinkley point C will receive subsidies that could cost more than 20bn) and natural gas power plants (which are struggling to get further investment despite subsidies). Both feature heavily in the government's plan to cover the shortfall from phasing out coal (which provides about a third of the UK’s electricity) by 2025.

This is not to say renewables don’t create problems. Intermittent generation needs to be balanced out, and the centralised grid was never designed with distributed generation in mind. Both of these issues can be overcome by a number of different approaches already in use, such as storage (heat or pumped hydro right now, and cost-efficient battery storage in the near future), or demand management (see cornwall’s sunshine tariff). But rather than just being an issue, their distributed nature has become an opportunity, opening up new roles in the energy system for cities, local authorities, communities and individuals.

This local approach to energy is not limited to renewable electricity generation either. Other local energy projects are insulating homes, building district heating networks or saving people money on energy bills. The benefits of local energy go far beyond just providing a sustainable, affordable source of power.

Local energy growth can promote economic growth, generate new income streams, create jobs, regenerate deprived areas, alleviate fuel poverty, improve health and provide innovative solutions to distributed generation. Where energy has been taken into local governance by a community group, many social benefits have been reported, such as improved social cohesion or a greater sense of pride in the local area. By promoting both social and economic growth, these projects can strengthen local resilience.

Cities and local energy 

Cities and local authorities are well placed to reduce carbon emissions and deliver local energy projects through the services they deliver, their role as social landlord and employer as well as the trust they have in the community. They also have a lot to gain. A reliable, affordable and sustainable energy supply is key to the long-term success and prosperity of a city. Cities and local authorities across the country have worked hard to push the limits of these new rules and provide real value to their constituents, but national policy and existing regulation still form a huge barrier.

Austerity is going to hit harder than ever. Councils need to make more financial savings over the next 5 years while still protecting essential services and delivering on their goals, but most have already made what efficiency saving they could in the last round of cuts. There is a real appetite to benefit from the opportunities of local energy, but budget constraints and the need to prioritize other agendas are increasingly standing in the way. In the face of these cuts and the loss of renewable support, the future of local energy doesn’t look too promising. Unfortunately we are not just losing more renewable generation. A chance to build local resilience, tackle fuel poverty, economic and energy sustainability and a vital source of innovation is also being lost.

How it can continue is an open question, and one the sector is currently having to struggle with. There are approaches out there that could provide some answers, such as the cooperative council model and the Plymouth Energy Community, or Germany’s collective cooperative Bürgerwerke (citizen utilities), which has allowed smaller generators to operate without any of the government subsidies.

A new Nesta report looks at this issue and how these models might help local energy to survive in an age of austerity, and still provide economic, social and environmental benefits. Nesta is interested in further exploring the role cities have in the energy system and how this might change in the future.



Harry Armstrong

Harry Armstrong

Harry Armstrong

Head of Technology Futures

Harry led Nesta’s futures and emerging technology work.

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