From power stations to solar panels, the future is local.
With over 50% of our power last year coming from low carbon sources such as offshore wind farms, a clean growth revolution is well underway, cutting carbon emissions and replacing dirty coal with clean energy.
This revolution has also taken root at a smaller scale up and down the country as more homes, schools and businesses choose to generate their own electricity from solar panels, small wind turbines and hydro power.
But the UK’s success in deploying low carbon generation is just the start of the transformation of our energy system with community energy a key cornerstone of government’s ambition for transition to a low-carbon, smart energy system. I have been impressed with the community energy groups I have met across the UK who are working to ensure that communities take practical steps to take control of how they generate and use energy.
We are delivering a smart energy system fit for the 21st Century, that will benefit every home and business. It will allow suppliers to better understand you as a user and offer you products to help you save money; working with smart appliances in the home to hand back control of energy use, and ultimately control of your bills. Smart meters, better data, smarter networks and the right rules and incentives are necessary for this to take place.
Small scale generation and battery storage can play a crucial role in cutting carbon emissions as part of this smarter energy system by reducing local demand and providing clean power into the grid when it is needed. This will help avoid costly future connection costs for communities as power consumption grows with electric vehicle uptake and a growth in electric heating.
Rather than a new cable costing tens of millions of pounds, using solar, batteries and smarter management of the local network can deliver resilience much more cost effectively. That’s why we are investing £170 million in smart systems innovation to ensure energy use is more flexible and efficient, and £246 million in the Faraday Battery Challenge to help the UK become a world leader in the research, design, development and manufacture of batteries.
Innovative local energy projects such as £6.3 million energy project in the Trent Basin are also showcasing how innovative energy efficient solutions for building new sustainable homes and communities could work in the future. This government funded energy scheme for 400 homes has installed a community scale battery storage facility which will work in conjunction with on-site solar panels to save energy and cut bills for those living on the site.
The Feed-In Tariffs (FIT) scheme launched in 2010 has supported investment in small-scale low carbon electricity generation across the UK. Our support has driven down the cost of renewable energy significantly and led to even more solar panels being installed than once predicted. We are aware that some developers are now delivering solar without subsidy, and with more than 800,000 installations in place the scheme is now coming to an end.
All bill payers share the costs for the FiT scheme and now the costs of solar panels and other technologies has plummeted we need to ensure that future growth in on site generation is directed to where it’s needed on the system, and is delivered without subsidy from other billpayers.
As this successful scheme ends, we need to ensure we are developing a market which sends the right signals to incentivise investment in local generation and storage, in a way that makes sense for a smarter system. There is a huge potential for further solar projects in the UK to be developed without subsidy, with recent projects developed in West Sussex and Bedfordshire. We are seeing increasingly that business investment either directly, or through private purchase agreements for renewable projects will unlock growth in the UK solar industry, in October for example Amazon announced a 20MW installation of solar panels on ten of its fulfilment centres in the UK.
However I believe that until that market is mature, we need to make sure that consumers don’t give away the power the they have generated for free simply because this system is not ready to offer them payment for their power.
We are committed to ensuring that millions of small-scale generators receive a payment for the energy they export to the grid, and we want to see innovation and competition from suppliers to ensure that all consumers and businesses that generate their own electricity save money on their bills.
We are continuing to support communities who want to generate energy locally, by providing £15 million of funding for feasibility studies with community schemes already powering the equivalent of 67,000 homes in England and Wales. Alongside this, we have funded the establishment of five new regional centres of excellence, driving the development, ambition, and scale of local energy projects through local government and are exploring further measures to support this important sector.
We are also working with a range of community groups to develop new business models and partnerships with private and public partners. This will enable communities to have a stake in energy projects, providing benefits to not just the community but investors as well.
The government sees the sustainable growth of the small-scale low carbon sector as an important part of the evolution of the grid, delivering on resilience, carbon and value, and we believe that with the right enabling regulation, market led solutions can build on the successes of the FIT Scheme. We will also continue to offer our full support to communities who want to take action to save energy and tackle climate change through developing their own local energy schemes.
We have today launched a consultation on this new approach and are keen to hear from consumers and industry on our plans. We are confident that the innovation we’ve seen from the sector and ongoing cost reductions, will enable the sector to continue to thrive.