Community energy support measure axed

The government has blocked a proposed rule change which would have provided community renewable schemes with a guaranteed level of financial support, heeding Energy UK calls that the proposal needs to be better thought through.

The committee of MPs currently scrutinising the government’s Energy Bill voted to remove an amendment introduced by the House of Lords, which would have enabled community energy projects to benefit from a minimum export guarantee scheme.

The amendment would have made it mandatory for suppliers with more than 150,000 customers to provide a minimum guaranteed sum for surplus electricity exported by community projects to the grid.

In evidence submitted to the bill committee, published last week, Energy UK called for the amendment to be axed in order to give the government, Ofgem and the industry “time to fully consider the best approach to integrating community energy effectively, protecting consumers and preventing additional costs being added to all consumers’ energy bills on behalf of a currently small portion of the population.”

Alan Whitehead, shadow energy minister, said the minimum guarantee would provide additional incentives to set up community energy projects, which would in turn ease strains on the grid by generating more electricity at the grassroots level.

“People would have a reasonably permanent level of cheap electricity that was produced and consumed locally, rather than going up and down wires across the country. The electricity would be consumed around the corner from where it had been produced, which would be good for grid capacity nationally,” Whitehead said.

Under “most circumstances”, he added, communities with projects would not need to draw “much on the grid” at local level.

But under existing arrangements, Whitehead said that community energy projects are only able to access the relatively low-level support on offer to individual households owning solar panels through the smart export guarantee (SEG) scheme.

Justifying the government’s opposition to the amendment, junior energy minister Andrew Bowie said that introducing a fixed price for community power would be a “step backwards” because it would require all energy consumers to pay more than the market price for electricity to subsidise communities, which were already benefiting from cheaper power.

He added that the proposed electricity export guarantee is “inconsistent” with the government’s aim to decouple renewable generation from the wholesale price through its review of electricity market arrangements.

Bowie also argued that a minimum level of support would have a “minimal impact” on encouraging uptake of community energy based on the “very low” levels of deployment during the last five years of the feed-in tariff subsidy scheme, which had been “more generous” than the SEG.

The debate also saw the House of Commons formally approve moves to impose a net zero duty on Ofgem.