Ed Miliband and Anneliese Dodds have launched a green recovery consultation to develop Labour’s ambitious plans for the economy following the coronavirus crisis. The party acknowledges that local government will play a key role in developing a reliable low-cost green energy system. However, unlocking this potential will mean that community energy schemes must be more consistent, collaborative and innovative.
Council-owned energy companies have had a difficult time recently. In 2015, Bristol City Council set up Bristol Energy to compete with the dominant ‘Big Six’ energy companies by offering lower electricity prices and investing in local communities. But in June 2020 Bristol City Council decided to end its ownership of Bristol Energy due to the continued dominance of the traditional large energy suppliers and an enduringly volatile marketplace. Robin Hood Energy, a similar business owned by Nottingham City Council, posted a loss of £23m for 2018/19.
These developments follow a decade of severe Tory cuts and the growth of a multi-billion pound funding gap in council budgets following Covid-19. While it would be easy to suggest that local councils should therefore back away from energy markets, local government has a critical role in supplying reliable low-cost green energy to consumers and financing green energy projects.
Local authorities enjoy a strong bargaining position in energy markets. Local councils in England are estimated to have paid £863m to the Big Six energy suppliers in 2018. They also have close relationships with local businesses and residents, including ownership of around 1.6m dwellings in England. They have important statutory powers, such as being able to adopt energy efficiency standards above the requirements contained in building regulations.
Many councils have used their bargaining position to procure lower cost energy through partnerships, often by modernising their procurement processes and working together through Public Buying Organisations (PBOs). Other councils, such as Liverpool City Council, have created partnerships with existing energy suppliers to directly offer residents low-cost green energy. Portsmouth City Council has teamed up with uSwitch to allow residents to research and switch to lower cost energy deals.
Local government has also played a key role in directly funding renewable energy projects. Warrington Borough Council has developed a 34.7 megawatt solar farm and a 27 megawatt energy storage facility to sell energy to the National Grid and provide its own power. The project is thought to save the council around £2m per year.
Local councils can also be leaders and organisers of community energy projects. For example, Solar Together has shown that there can be significant cost savings if councils encourage potential buyers of rooftop solar panels to register on a central database to approach suppliers together.
However, a future Labour government will need to overcome three core challenges if local authorities are going to drive a green recovery. Firstly, national government must ensure that local authorities offer a consistent approach to energy markets as green energy schemes vary greatly by local authority. IGOV, a university research group, called for the formation of an Energy Transformation Commission to co-ordinate government action on critical energy system issues and for local authorities to publish Local Transformation Plans to show how they will meet carbon targets. Labour policy needs to acknowledge that local government energy schemes need central coordination, clear responsibilities and robust delivery plans.
Secondly, Labour must support collaboration by ensuring that councils share their knowledge and resources on green energy schemes. National government should encourage open communication between councils, local businesses and residents so that they can clearly understand and work together on energy schemes. Success stories in one local authority must then be communicated to other local authorities that may not have the resources to start from scratch. Labour needs to encourage a culture of transparency, communication and resource-sharing between local authorities and local stakeholders.
Thirdly, national governments often have a privileged view of market innovations, so Labour must ensure that these ideas filter into local authority energy strategies. For example, large companies such as Google, Facebook, Amazon, and Microsoft have developed renewable energy projects to benefit from reliable low-cost green energy. Small businesses and residents will be able to benefit from similar schemes if councils encourage them to pool their resources together to invest in green energy projects. National government should provide a framework for innovation, knowledge-sharing and best practices.
Local authorities have a unique position as powerful energy buyers and influential community organisers. Local councils are therefore well-placed to take a leadership position on developing and financing a reliable low-cost green energy system. The success of Labour’s green recovery will rest on aligning a national green energy programme with the capability of local authorities to deliver it.