The coalition is right to let councils sell green electricity —but they’ll need some helpby Stephen Tindale / July 21, 2010 / Leave a comment
Published in August 2010 issue of Prospect Magazine
Sacramento’s local solar power generation plant and the decommissioned nuclear facility On becoming prime minister, David Cameron said: “I don’t want to hear warm words about the environment. I want to see real action. I want this to be the greenest government ever.” But if he is serious about this, the coalition will have to revolutionise the way Britain buys and sells low-carbon energy services. The most recent figures from the International Energy Agency show that only about 4 per cent of our energy comes from low-carbon sources—compared with 18 per cent in Germany and 12 per cent in the US. What can be done? In keeping with Tory promises to devolve power, energy secretary Chris Huhne has announced that local government will sell low-carbon electricity to households—for the first time since 1976. The coalition also promises to allow low-carbon energy projects to keep additional business rates they generate, rather than paying that money to central government as they have done since Margaret Thatcher’s time. Localism has often been a drag on the move towards clean energy. Under pressure from their constituents, local councils often reject wind farm applications. Yet allowing local government to sell electricity from wind farms would offer a much stronger incentive for permitting them to be built, and the evidence suggests it would be good for consumers, too: about a third of Americans get energy from municipal or co-operative companies, and their average tariff is about 20 per cent lower than those charged by private companies. In California, for example, power production by municipal government is thriving, despite the efforts of private companies to kill it off. In a June referendum voters rejected a private utility-sponsored campaign to stop local government choosing where they source their power from. The private utilities have cause to be fearful of municipal competitors. Take the Sacramento Municipal Utility District. Without shareholders and high corporate salaries to feed, and with cheap capital due to its good credit rating, its tariffs are well below neighbouring private utilities. It consistently provides the best customer service and among the most reliable power in California. It also lends customers money to install energy efficiency measures, and accredits reliable local installers. Similarly, in Vermont the state government—dissatisfied with the traditional utilities—handed over energy efficiency responsibility to a local not-for-profit in 2000. This has mobilised near-universal participation in localised efficiency projects—because they work. In a single year (2008) Efficiency Vermont managed to make the homes of over 10 per cent of Vermont’s residents more energy efficient. Europe has also shown some ways forward. In 1992 Berlin set up its own energy agency—a partnership between the council, the KfW bank (which offers low-interest loans for development and renovation) and energy companies. This has financed a modernisation programme for old buildings and flats, and also promoted modern district heating (a network of pipes to transport heat from a large source to buildings and homes, replacing individual boilers). This type of heating can use low and zero carbon heat from wood, combined heat and power, or waste heat from large power stations—electricity which is presently wasted. The biggest redevelopment project, in Gesobau, has involved improvements to more than 13,000 flats since 2008, at almost no cost to tenants; all are now connected to district heating. In the past, Britain has seen some success for such measures: as Huhne noted in his July speech, the Liberal mayor of Birmingham, Joseph Chamberlain, oversaw the development of the city’s gas infrastructure in the 1870s. More recently, a handful of local authorities have supported voluntary actions of residents with advice, grants or loans. Yorkshire’s Kirklees Council has devised schemes to lend money to residents for domestic renewables and provide free home energy audits. Meanwhile Woking Council has been progressive in installing renewables and low-carbon heating systems. But the large metropolitan areas are yet to get there. They are held back by three factors: lack of money, lack of ways to co-ordinate with neighbouring authorities and lack of national leadership. Birmingham has ambitious plans to improve the energy efficiency of its social housing stock—the largest in Europe—but the price tag runs into tens of millions. Councillors in the Greater Manchester authority recognise that renovating buildings would deliver gains in employment, economic activity and energy efficiency. But how will the ten boroughs the authority comprises come together to deliver the changes? Sheffield cannot expand its district heating network because it cannot guarantee that residents will connect to the network if it is built. Copenhagen, meanwhile, offers a good example of what does work. The expansion of the city’s district heating system was made economically possible by a law which requires home-owners to connect to the local district heating networks, creating a captive market for hot water. Now citizens across Denmark are asking for the networks to be extended to their communities, so they can also enjoy the cheaper prices. If Cameron is serious about delivering affordable, low-carbon energy, he must provide access to money. He has promised a Green Investment Bank, to give low-interest loans for energy efficiency and low-carbon energy sources. This has potential, as long as it has enough funding and is not just another institution. Meanwhile Conservative, Lib Dem and Labour councils must work together with their neighbouring authorities, regardless of their political hue. And the prime minister is right: we don’t need warm words, we need action and delivery. The coalition must force local government, communities and individuals to work together for the greater good.