When will we be able to sell our energy to you?
The aim of every community owned renewable energy project is to make sufficient profits to pay investors a decent return, and to generate an income stream to invest in new Carbon saving projects while also giving a benefit to the local community. Over and above the revenues earned from the installed generation capacity, why can we not also keep the margin made by retailing to you, the consumer?
The Background
In the UK, all Energy Suppliers, the companies that sell the energy and gas to domestic and commercial consumers, have to subscribe to what is called the “Balancing and Settlements Code (BSC)” [1] . This is the process by which a supplier tells the grid in half hour chunks how much energy they will require (Balancing) and then paying for it and accounting for any extra or lack of consumption (Settlements).
This process is a big undertaking and so presents an effective barrier to market for a small company or community cooperative. In 2009 OFGEM proposed an ‘Energy Supplier Lite’ license that would allow a new supplier to trade with the BSC service being performed by another accredited company. This specifically is exemption from BSC11.2. Initially they proposed that existing licensed traders be mandated to provide this service and so throw open the market to new entrants. After a single objection this was not enacted and so the status-quo in the market was maintained.
The greatly missed ex-coalition Energy and Climate Change minister Greg Barker was famously quoted as having wanted the UK energy market to move from the Big Six to the big 60,000 [2]. So how is this to happen?
Hope for the future
Our view on this has been that we need to either find a licensed supply company who is willing to offer this service to the community or set up a community owned agency to perform this function for us.
Things are however moving in the right direction; a start-up company called Open Utility has a peer to peer energy selling platform in development called Piclo which will allow consumers to sign up and select where they buy their energy from. Be it buying cheap electricity from a local solar farm or by paying a premium to support a local school’s PV offering, you choose. OVO Energy Ltd. have a Communities offering which sounds very exciting and in their prospectus offer a full path from referring customers to a custom pricing plan for a percentage fee through to ‘Energy Supplier Lite’ status. However OVO are only dealing with entities with access to a target potential customer base of 100,000 or more.
As part of the Mayor’s move to decarbonise the Capital “Energy for London” [3] has been created with a view to operate under an ‘Energy Supplier Lite’ license.
One of the vanguard community energy cooperative OVESCO (Ouse Valley Energy Services Company) are working with Good Energy Ltd. at present and they are a company who are looking to work seriously with community energy groups up and down the country. They are also looking to Germany as the leading edge location for community energy development, there’s so much going on there in this area!
The Scottish have a progressive government who have invested £2.5 million along with £1 million from Social Investment Scotland into a new supply company. In a recent announcement they revealed “Our Power”. A new independent energy supply company, the first in the UK operating on a non-profit distributing basis, plans to be selling heat and power to tenants in 200,000 homes across Scotland by 2020. We have been in contact and look forward to hearing more on how they have achieved this later this year.
We wish all of the above the greatest of luck in their efforts to break into the UK energy supply market and rest assured that the future is bright for the UK energy supply market. We may not be where we want to be yet, but who knows, in a year’s time the good people of Harborough might be able to buy their electricity and gas from us knowing that we will invest any profits made into local projects.
We hope you share our excitement at this prospect.
[1] https://www.ofgem.gov.uk/licences-codes-and-standards/codes/electricity-codes/balancing-and-settlement-code-bsc
[2] https://www.ukpower.co.uk/gas_electricity_news/7586-energy-and-climate-change-minister-greg-barker-calls-for-a-big-60000
[3] http://www.energyforlondon.org/tag/ofgem/