Brighton & Hove Energy Services Co-Op (Bhesco)
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Brighton & Hove Energy Services Co-op (BHESCo) CEN0006 Written evidence from Brighton & Hove Energy Services Co- operative (BHESCo) Introduction: I am the founder and CEO of BHESCo, a community energy services co-operative that facilitates the transition from fossil fuels in the energy supply by removing the economic and technical barriers to the uptake of local, renewable energy and energy efficiency systems by consumers. Our organisation has suffered greatly from changing government policy on clean energy and energy efficiency. I greatly appreciate this opportunity to contribute to this consultation. Summary of arguments: Community Energy (CE) provides the means to achieving a fair and equitable transition to net zero, by working with people in their communities to deliver efficient and cost effective carbon reduction, harnessing local resources to develop projects that may otherwise not happen because of the many barriers that presently exist in the market. The UK has a track record of leading policy therefore, must include community (local) energy in its Nationally Determined Contributions (NDC)s for COP26 CE needs more, targeted support from government to become more effective. The investment in CE more than pays off in terms of job creation, economic stimulus and energy security. Just retrofitting existing housing stock, representing 80% of the housing market, to a level of EPC C by 2030 will create more than 250,000 jobs1 Because CE is not for profit, there is not a level playing field in the market for CE groups to bid for larger infrastructural projects, although in many cases, the group may have the expertise in house to deliver a more economically advantageous outcome for the consumer. For example, where local authorities issue a tender for heat networks, the cost of preparing the tender will be included in the quote for most commercial companies. CE would prepare a lower quote, to pass on the benefit to the consumer, whereas the consumer/taxpayer will be made to bear the capital costs that are quoted by most large consultancies/ contractors. CE is a good investment for government yielding high social and economic returns in meeting policy aims: achieving Net Zero and 68% carbon reductions by 2030; providing green skills and jobs as part of the Green Recovery by acting as a referral intermediary for local contractors; levelling up people and places by sharing skills and knowledge transfers, as well as high social returns on investment resulting in physical and mental health and social cost savings, local multiplier returns, increased economic activity as money is saved on energy bills, reduced energy system reinforcement costs as more local generation and flexibility is created, lowing the cost of grid reinforcement. Call for evidence questions 1. What contribution could community energy (through renewable power and/or energy efficiency) make to achieving net-zero by 2050 in the energy sector and its potential role in decarbonising the heat and transport sectors? 1 RetrofitWorks Industry support document December 2019 Brighton & Hove Energy Services Co-op (BHESCo) CEN0006 1.1.CE is essential to achieving net zero. Please refer to bit.ly/CEEbriefing 1.2.CE is about involving people and communities as the CCC states essential to achieving net zero. A 2050 target is too late to avert catastrophic climate change. The Journal Nature Climate Change concluded in January 2021 that 2.3 degree warming may already be inevitable2. 1.3.CE solves many problems that originate from inequality by delivering multiple social and community benefits. At BHESCo, we’ve supported thousands of vulnerable people to stay warmer in winter by installing simple draught proofing measures and providing independent energy supplier switching advice. Where our local authority provides little or no support, we have become to go to place for people who need help, including debt relief by working with local partner organisations in the voluntary sector. By outsourcing this service to BHESCo, the LA achieves a high social investment return, average about £4.50 of value generation for each £1 invested. 1.4.BHESCo delivers both carbon savings and economic savings to our customers by helping them install, for no upfront cost, energy efficiency and renewable energy systems in their homes and businesses. In the 6 years that we have been trading, we’ve developed over 50 projects, installed 750kW of generation capacity, of which 128kW is renewable heat. Our energy efficiency projects save customers 92,340kWh/year and £18,000/year for their businesses. This is funded by local investors, who become members of our co-operative, earning a 5% annual return by investing in local, clean energy projects. It is a virtuous, socially oriented business model that we are working very hard to scale up and to replicate. We have 8 paid members of staff, 6 of whom started out as volunteers wanting to make a difference. 1.5. BHESCo has been severely impacted by the inconsistency and short term policies of national government. The end of the Feed in Tariff stopped the development of 500kW of new solar generation plant in our region each year, most of which was for the benefit of schools and community centres. The southeast experiences excellent solar irradiation, therefore, the cost of solar arrays has levelized to the cost of fossil fuel based energy generation equipment. The termination of the Non Domestic RHI will destroy our ‘heat as a service’ business model for decarbonisation of heat in rural communities. We expected to work with 10 rural communities in the next five years, with the average capital investment in each community estimated at £3million. Carbon emission reductions were projected to be about 1,000 tonnes/year. BHESCo started in 2013, when the Green Deal was in full swing. Because of the novelty of our social enterprise business model, we needed to build a track record of successful deployment quickly, to gain the trust of people in communities. As with all new business concepts, it has taken us five years to establish financial sustainability and brand recognition. Policy changes create uncertainty in the consumer. Consumers decisions will make or break the uptake of heat pumps, because the renewable heat is delivered at lower temperatures, which confuses the consumer and because the cost of heat pumps is 4x higher than a gas boiler. Although heat pump efficiencies allow its operating costs to approximate the operating costs of a gas boiler, it is extremely challenging to overcome these barriers for the consumer without a tax on all fossil fuels used for heating. If the government would impose a tax on gas and heating oil, it would levelise the playing field, bring in more revenue to the Treasury to support the subsidy on the transition to heat pumps. 1.6. Now that government is supporting onshore wind, because, according to Bloomberg energy, it is the cheapest form of power generation, there must be corresponding support for community energy. Many communities want wind power to generate electricity locally, as they understand that 2 Paying for emissions we've already released (phys.org) Brighton & Hove Energy Services Co-op (BHESCo) CEN0006 local energy is cheaper and more accessible, however, without support from government, these projects will never get developed because of the excessive cost. One cannot underestimate the cost of onshore windfarm development, the challenges of local planning, wind monitoring, technological and economic development. Community energy groups are good at sharing resources for mutual benefit, developing projects at lower cost, which creates more funding available for community benefit when the project is made operational. Compare this to a commercial windfarm by Eon or Scottish Power, where the profits generated for free by the wind are transferred to shareholders in Germany or Spain. Community energy keeps profits for the benefit of the local community, investing instead in improving the fabric of society, combatting issues of isolation, poverty and mental health. 1.7.To deliver on the sector’s vision of 12-20 fold growth, we will need a consistent, reliable and long term subsidy regime to help us to scale up the number of heat networks that we will manage using our ‘heat as a service’ model. We will need a clear commitment to level up the cost of renewable heat compared to heating from fossil fuels. 2. How well are the financial and technical needs of setting up and running community energy projects met by existing Government support mechanisms? What changes would be needed to the access or nature of support to develop community energy further? 2.1. In fairness, CE should be treated the same way as any commercial business. When an entrepreneur starts a business, they must have a bankable business plan to demonstrate that their idea is viable. The difference is that CE adds social value, so should be supported by government, much like an angel investor would support a commercial business. Local Authorities are delivering less social care, CE provides an opportunity to provide social care through a social enterprise business model. 2.2. Government policy supports big business at the expense of social enterprise. The consistent, damaging policies of government over the past 7 years have dealt blow after blow to our business, making it more difficult for us to succeed. For example, terminating the Urban Community Energy Fund eliminated our ability to work with the local authority to roll out heat networks that were identified as viable in the city’s energy study.3 Our UCEF project was to develop an Anaerobic Digestion plant for the region as there is a gaping hole in the southeast. We still, despite noises around support, have not received any support from our LA to identify land for this project, despite overwhelming support from the local community and the inclusion of our project in the local food waste strategy.4 2.3.BHESCo was established to minimise dependency on government grants to provide a clean, affordable energy service to communities.