The UK is reportedly set to miss key climate targets without an overhaul of its current decarbonisation policies, with just two of the government’s decarbonisation strategies being deemed adequate by the Climate Change Committee.
In response to climate crisis, the campaign group Power for People has been campaigning to enact a new Local Electricity Bill that would reform how energy is generated in the UK.
In our latest blog we explore what the Local Electricity Bill means for the UK and specifically Baileys and Partners home turf, North Wales.
Current electricity distribution regulations
In the UK, we currently distribute all our electricity through a district network operator, which here in North Wales is SP Manweb.
Under the current system, it costs millions of pounds to become a distributor of energy due to issues such as complex National Grid codes and brokering network agreements controlled by the ‘Big Six’ utility companies.
This means that if a community or a local energy project (a farmer) wanted to sell energy they generated to local people, they would not be able to do so directly.
It’s therefore arguably financially impossible to operate a local energy network due to astronomical fees, which means that local generators are forced to rely on selling their electricity to an intermediary before it can be purchased by the local community to power their homes.
How the Local Electricity Bill would work
The basic mission statement for the Local Electricity Bill campaign is to give community-based energy co-operatives or businesses the right to become direct local suppliers for a designated area.
This would be made possible by making costs proportionate to the size of the local energy generator and removing the need to sell their electricity through utility companies.
OFGEM would be responsible for awarding licenses to suppliers and ensuring that they incur costs and grid complexities that are proportionate to their size and scale, making the generation of renewable energy more accessible.
One of the key environmental stipulations within the draft legislation is that the supplier must not emit more than 350 grams of CO2 for every KWh of energy that is generated, so that sustainability can be guaranteed.
Many of our clients could become local energy suppliers if the Local Electricity Bill were to become law. These clients already provide the power equivalent of hundreds if not thousands of local homes but are at present unable to supply direct due to the current costs and complexity of being a licensed electricity supplier.
How would this benefit the local community?
In the first instance the Bill, if enacted, could unlock a significant additional tranche of renewable energy potential within the communities of which it would supply. This is because a local arrangement may enable a local electricity generator to charge the local community a price that was lower than they are paying when purchasing power from the existing pool of suppliers, but at a price that is likely to be higher than what they receive presently for selling their exported power to an electricity supplier.
Furthermore, if a local energy supply used smart technology, it might use pricing to encourage energy use in homes when renewable energy generation was high. Smart technology in the home encourages energy users to become more aware of their usage and generally more efficient with their energy use.
If communities become self-reliant by using renewable energy, then this would significantly improve the UK’s capability to meet its climate targets. Overall, this self-reliance would have a great deal of positive knock-on effects.
The mere fact that the electricity supply would come from within the local area means that funds raised could also be put into the community to fund projects such as youth centres or building repairs.
In addition, these schemes could provide jobs and training opportunities for those that are unemployed. By employing local people, such energy generation would be properly managed and professionally operated, as well as providing an income to those in the area which would provide a boost to the local economy.
The Local Electricity Bill currently enjoys support from over 300 cross-party MPs, including high-profile figures such as Caroline Lucas, Graham Brady, and Hilary Benn.
There are also supporters among the MPs of North Wales, with Vale of Clwyd MP Dr James Davies, MP for Arfon Hywel Williams, and Liz Saville-Roberts MP for Dwyfor Meirionnydd all endorsing this bill.
At local level, the Beddgelert, Llanrug and Llainfairfechan community councils have all voiced their support, while the Bethesda-based hydroelectric co-operative Ynni Ogwen is also a supporter. Similarly, the Llanberis renewable energy scheme, Ynni Padarn Peris has also championed the bill.
Baileys and Partners has supported community groups such as Ynni Padarn Peris and local energy businesses with the development of their hydro schemes, and we hope that the Local Electricity Bill will give further momentum and confidence to the renewable energy sector – particularly for the smaller organisations and farmers who have a contribution to make towards the UKs climate change targets but whose voices are often not heard.
Find out more about Baileys & Partners energy expertise here.