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Launch of the Local Community Renewable Generation Initiative

Malcolm Wicks MP,  Minister of State for Energy
House of Lords,  07 July 2008

Thank you for inviting me to the launch of the Local Community Renewable Generation Initiative.

This is an interesting project which clearly has the potential to ease some of the constraints we know exist for clean and green community energy projects.

There is a growing interest in generating renewable and low carbon energy in the community, and new small players are coming into the market.

This is met by increasing demand from businesses, citizens, schools who want to show their commitment to climate change by using clean energy, who want to show a commitment to the sustainability of their community, and increasingly want more certainty about the supply and the price of the energy they use.

We would like to see more of this local generation, or what we call decentralised or distributed energy. Last year we set out in the Energy White Paper our commitment to more distributed energy, and put in place a range of measures to encourage take-up.

We know that the technologies and infrastructure can be costly. We know that community energy brings new and sometimes inexpert players into what is a complex energy market, and we know that businesses want simple arrangements for their energy supply – not complex contracts.

This project is tackling those barriers and will help make community energy a realistic choice for consumers, a viable alternative alongside centralised energy.

We believe the local generation of electricity and heat can bring real environmental benefit, through more efficient use of our energy resources, by raising awareness of energy use, and getting businesses, communities, and individuals involved in tackling climate change – moving them from passive use of energy to active production.

We are making real progress in levelling the playing field for those who want to get involved and tackling the barriers that still exist for community energy.

We are easing planning barriers through our recent Planning Policy Statement on Climate Change which puts local generation at the forefront of local authority thinking on energy supply.

We have been working closely with Ofgem to make it easier for on-site distributed energy projects to connect to the grid and realise the full value of the electricity they generate. These will be implemented by the end of the year.

And we are looking again at financial support from energy generation at this scale considering incentives for renewable heat, what further reform we might make to The Renewables Obligation for renewable electricity, and consulting on whether a move to a feed-in tariff system would have advantages.

Let’s be clear about why are we doing all this. We all now recognise the crucial need for urgent action on climate change.
Secondly, we face an energy security challenge: making sure that the UK continues to have reliable sources of energy, in an era when we have to import more fuel, and in a way that is affordable despite the high prices on global energy markets.

In this era of uncomfortably high energy prices, we also need to aim for fairness. You might call it the ‘third pillar’ of our energy challenge. We must do our utmost to ensure that our policies do not have an adverse impact on the most vulnerable, at home here in the UK, and in the wider world.

To tackle these challenges, we have taken some tough decisions. We have backed new nuclear power stations – a low-carbon energy source that requires no taxpayer subsidy. We are leading the world in supporting carbon capture and storage for coal-fired plants: vital in the global battle against climate change given the massive growth of coal use in countries like China and India.

And we have set ourselves challenging targets to reduce carbon emissions and to increase the supply of energy from renewable sources.

Through the Climate Change Bill we will become the first Government in the world to impose a binding target for reducing CO2 emissions on ourselves - we’ve committed to a 60% reduction in CO2 by 2050. We will need a diverse energy mix in future if we are to achieve these reductions, and renewables will play a key part.

We have also signed up to an EU wide target of 20% of all energy – transport, heat and electricity – coming from renewable sources by 2020. Our share of this will be extremely challenging – likely to be around 15%.

The challenge that this target of 15% renewable energy represents should not be underestimated. It may require a 10 fold increase in renewable generation in the UK from 2006 levels.

We are now working towards a Renewable Energy Strategy to be published in the spring of 2009 that will set out how we will achieve our share of the target.

To inform the strategy we launched a consultation last week setting out policy options to meet the 15% target in the most cost-effective way. This might mean, for example, needing up to an extra 4000 onshore and 3000 offshore wind turbines, a major challenge for the supply chain and UK business.

In the short term, the impact of our measures on utility bills is likely to be almost zero; however, such rapid action will not come without some associated cost. The extent of these rises will depend on the cost of alternatives, particularly fossil fuels, and we can limit their effect, both on energy bills and fuel poverty by promoting an essential, ongoing role for energy efficiency.

We believe these costs are worth paying for. As the Stern Review concluded, the costs of tackling climate change could be far higher in the longer term than the costs of taking action now, with cost-effective policy options.

Regardless of our final approach, success will require action right across the economy, from industry and investors, but also from the Devolved Administrations, local and regional bodies, businesses and individuals.

Green energy projects will increasingly feature in and near our communities. Visible changes to our landscapes, town and cityscapes are inevitable. The attitudes and the involvement of communities to renewables will therefore be pivotal.

That’s why I would like to encourage businesses, landowners, developers and individuals to get involved in renewable community energy projects. Initiatives such as this will highlight the opportunities that are there in local communities and help projects get up and running.

Companies purchasing directly from smaller generators can both ensure a secure supply of renewable energy, and also support their local communities in developing renewable energy projects.

Above all, these projects help us achieve our challenging renewable energy generation targets, reduce carbon emissions and help us in combating climate change.