Last week was the second reading of the Great British Energy Bill in the House of Commons and it has now entered committee stage.
The Bill has a way to go yet, but the Department for Energy Security and net zero has published the founding statement for Great British Energy (GBE) which emphasises how it will work collaboratively with local authorities, communities and other public sector organisations to deploy energy solutions. This is a key part of the Government’s strategy to decarbonise the electricity grid by 2030 and reach its net zero targets.
Power to the ‘local’ people
One limb of GBE’s approach is the adoption of the Local Power Plan (LPP). This is not a plan in a traditional sense, but a commitment that the Government will make available up to:
- £400 million of low-interest loans available to community groups; and
- £600 million of funding for local and combined authorities to develop up to 20,000 small and medium-scale renewable energy projects.
It is unclear exactly how the funding/loans will be allocated, but presumably, it will be via the traditional rounds of funding and an application process. Applicants won’t be left on their own, as GBE has committed to providing commercial, technical and project planning assistance to enable access to funding and the development of successful schemes. This will help applicants navigate what can be a complex planning and regulatory landscape for schemes of this nature.
A proportion of the profits of the schemes funded under the LPP will be used to benefit the communities they are built in – for example, by lowering the energy bills in the area. This level of investment also undoubtedly has the potential to generate jobs in the community to construct, maintain and operate these renewable energy schemes.
Benefiting your area or regeneration project?
So what are the potential benefits for your development or regeneration scheme?
- Improving the viability of schemes by incorporating a funded, income-generating asset as part of the development. In a housing or mixed-use development, including a renewable power scheme could improve a home’s EPC rating, reduce energy bills and potentially generate income (for the developer, homeowner or both), all of which will increase the attractiveness of the buildings.
- The profits of community-owned energy generation can be used to benefit the local community. There are now many examples of profits from generation being used to carry out a major programme of insulation of homes in the area and to introduce energy-saving improvements in the local sports club and village hall. These improvements have a local multiplier effect resulting from lower energy bills and more money being available to be spent in the community.
- The reduction in energy bills from local renewable energy generation will reduce fuel poverty, leaving local residents with more money in their pockets each month.
- Operating renewable energy projects will contribute to housing associations and councils reaching their net zero targets, accelerating the changes necessary to do so, particularly for those that have set more challenging net zero targets than the national Government.
- Renewable energy projects can be structured to create jobs and skills opportunities for local communities, both in the initial development and then in operating and maintaining the asset going forward, creating lasting benefits for the area.
At the moment there is limited detail around how the LPP is going to be delivered, but if the Government intends to make real progress towards the decarbonisation of the electric grid by 2030, it is likely that this scheme will be crystallised soon.
Ready to power through the project
The traditional issue with government funding is the tight timescales for its spending (see in this connection our latest ebriefing on decarbonisation grants). Feasibility, design, commercialisation, governance and procurement take time; when funders are really looking to demonstrate delivery, so want to hold you to tight timescales. It is reassuring in this context that the founding statement also suggests that the Government will focus on the support that is desperately needed to foster a sustainable supply chain for the delivery of energy projects (whether or not you are seeking to generate local jobs and skills opportunities).
When you are planning your net zero, energy or regeneration journey, having a plan already in place for dealing with procurement, subsidy control and contract forms could take months off the delivery time. Being able to show you are ready to deliver at pace is likely to make any application for funding vastly more attractive.
For more information
If you would like a discussion about investment or funding readiness for any sort of central government or third-party funded programme, please contact Richard Brooks, Gayle Monk or Michael Clohessy.