Creating new patterns of ownership (ESCOs and MUSCOs)

National renewable energy targets for 2020 provide significant opportunities for new patterns of ownership of energy generation and delivery systems.

Westmill wind farm is entirely community owned. Photo by Martin Phelps.

 Distributed energy generation (energy that is distributed close to the point of production) can deliver carbon reductions with greater security of supply of fuel at competitive cost. These benefits increase with scale, with benefits maximised at the community level (of 500 homes and above). There are also benefits to linking different types of users to distribute the demand load more efficiently. That means that any opportunities to maximise community benefit from new energy supplies and schemes must be considered.

Distributed energy generation encompasses a range of technologies including wind turbines, photovoltaic cells, solar heating, biomass/waste heating or more efficient CHP and heat pump technologies. The type of technology chosen will be dependent on the location of the site. Wind farms are most suited to rural, windy areas whereas CHP technologies are most effective in dense urban areas.

A very important distributed energy fuel is waste. In the UK, significant amounts of biomass are in the waste stream and are therefore owned by local authorities. This gives local authorities leverage in discussions with potential commercial energy partners.

This characterisation of an area in terms of suitability for particular technologies should inform the evidence base for Local Development Frameworks and city-scale energy strategies.

A variety of different community-owned or public-private partnership delivery structures have been developed. These include wind farms established to generate income for communities and Combined Heat and Power (CHP) to deliver cheaper, low carbon energy. These structures are generically termed Energy Service Companies (ESCOs) and usually install, finance and manage community energy systems to deliver improved efficiency and cheaper fuel.

No standard organisational structure for ESCOs has been developed in the UK, but guidance produced by the London Energy Partnership provides information on successful schemes. The projects below illustrate how these framework and structures could be applied to urban schemes. In the Budenberg Haus Project in Altrincham, Urban Splash and EcoCentreGen have successfully established an ESCO linked to the development of 290 homes.

A step further than ESCOs are multi-utility service companies or MUSCOs. These companies provide a variety of utility services and can ensure strongly joined-up service infrastructure and a highly efficient customer interface. Low carbon municipal MUSCOs are an excellent opportunity for local authorities to grasp the full opportunity for sustainable service infrastructure in cities and towns, while ensuring the benefit for the community is fully realised. The same team that established the Altrincham ESCO above has ambitions for the creation of a MUSCO linked to the New Islington Millennium Village development in Manchester.

In Southwark, the Elephant and Castle scheme is developing detailed plans for a significant MUSCO. The Elephant and Castle scheme has been selected as part of a programme supported by the Clinton Climate Initiative.

Successful community energy projects will require high-level support from Local Authorities to help promote the project with planners, developers, communities and utilities. Practical support can also be provided through training planning staff on distributed energy, assisting communities through the planning requirements and acting as either a partner or a key customer (by utilising public sector buildings to provide guaranteed custom) for ESCOs.

There is a need to take responsibility for local land values to make sure that the future development needs of the town or city can be met and this is all linked to new innovative forms of ownership of energy generation and supply to serve cities. A key role of regional spatial strategies is to return fair value to a community given pressures placed on it by the need for development and this applies as much to energy infrastructure as other development. New forms of renewable energy supply are pressures placed on new urban development and the value must be returned to the community. High levels of community ownership are now possible given potential levels of income through incentivisation measures put in place and promised by the government.

Photo by Martin Phelps

Westmill wind farm

Westmill Co-operative developed this site in Oxfordshire as entirely community owned through the support of the landowner, WOW (Windpower over Westmill) which consists of local stakeholders and other rural and cooperative organisations.

The wind farm meets the energy needs of 2,500 homes. The co-operative society established voting rights that are distributed equally among the members, regardless of the number of shares held. Westmill has a minimum share holding of £250 and a maximum (by law) of £20,000. The objectives are:

a) the development, management, generation, transmission and supply of electricity from renewable energy sources

b) the conservation of energy through advice on energy efficiency including energy efficient products and the supply of energy efficient products

c) the promotion of awareness of environmental and related issues and support for educational initiatives related to renewable energy.

Read more about Westmill wind farm.

Photo by Woking Borough Council

Woking Borough Council

Woking Borough Council shows how local authorities can provide the leadership in community ownership.

Its wholly owned energy and environmental service company, Thamesway, developed its own public/private joint venture energy services company known as Thamesway Energy Ltd (TEL). TEL aims to build, finance and operate small-scale combined heat and power stations (energy stations), of up to five megawatts electricity output, to provide energy services to institutional, business and residential customers.

The council raised capital to fund the initial energy infrastructure development through energy efficiency savings. A fund mechanism was established in a benchmark year for energy expenditure, against which savings accruing from energy efficiency measures were recycled, year on year, into further energy-saving initiatives.

Through this set-up, Woking has pioneered the development of a network of over 60 local generators, including photovoltaic arrays and a hydrogen fuel cell station, to power, heat and cool municipal buildings and social housing. Decentralising energy production in this way has enabled the council to reduce its CO2 emissions by 77 per cent since 1990.

Read more about Woking Borough Council.

Priority: develop a low carbon and renewable energy portfolio
Tags: energy, cities and towns, neighbourhoods