Local small-scale energy projects face funding challenges, but can be a significant part of the future energy mix


The unfolding disaster at the Fukushima Daiichi nuclear power station in Japan is a stark reminder of the need to find alternative low-carbon energy options.


Microgeneration allows companies and individuals to work towards a low-carbon future but this, of course, requires funding. 


With this in mind, Forum for the Future, a UK charity, has launched a free guide showing local communities how to use smart finance to set up solar, wind and energy-efficiency schemes.


The guide – Funding Revolution, a Guide to Establishing and Running Community Revolving Funds – targets projects that are just starting out, as well as communities that are already running a fund or investing in low-carbon initiatives.


It explains how to set up carbon-saving projects, such as making buildings more energy efficient or installing solar panels on factory rooftops to generate renewable energy.


Peter Madden, Forum for the Future’s chief executive, believes it is essential that individuals take ownership of their own energy supply. He says: “When householders and communities feel ownership of something, they care more about it. It’s the same with people and self-generated energy – householders want to know how much they are using and enjoy using less.”


Madden argues that to completely decarbonise the energy system will require major works on virtually every home in the UK, and the construction of hundreds of wind farms. “People need to feel like they own those changes and will benefit from them. If they think this is something being imposed on them, they will oppose it,” he says.


Funding models


Forum’s guide explains the mechanics of running a low-carbon community group and gives practical advice on how to fund energy saving and generation projects, including making loans or leasing sites to benefit from feed-in tariffs. It also covers revolving funds, in which the initial investment in a carbon reduction scheme is repaid by profits, which frees up cash for future investments.


As well as user-friendly ways to raise money, communities need the skills and time to develop projects. Ovesco, a community-owned company in Lewes, southern England, has pledges of more than £100,000 from local people before it’s even started to sell shares, Madden points out. “That shows the interest people have in local energy.”


However, not every community has such financial resources and there are few places to go for funding.


“The banks don’t lend at affordable rates for most projects that cost less than £1m and they don’t fund the risky planning stages either,” Madden says.


Forum has been working on a new fund that Finance South East is launching, which will lend much smaller amounts, fund the planning stages in a “no progress, no payback” manner, and provide skills and support.


Barbara Hammond, chair of West Oxford Community Renewables, welcomes the guide. “It is very helpful to have something bringing together the experience of different pioneers,” she says.


Madden says there will always be large power stations and wind, wave and geothermal projects. “But ramping up microgeneration with smart grids will increase the diversity of scales and technologies, giving us greater energy security and flexibility to changing needs in the future.” Connecting people with their energy supply through microgeneration will make them more energy-conscious, Madden argues.


Hammond adds: “If we are to achieve a sustainable economy each individual needs to believe there are actions they can take that will make a difference. Local involvement in microgeneration is just the start.”

 



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