1 July 2021
Peter Aldous calls for regulatory reform to support community energy projects

Peter Aldous calls on the Government to remove regulatory barriers preventing community energy projects from playing their full role and supplying local communities with clean energy.

Peter Aldous (Waveney) (Con)

It is a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing and leading this debate and the hon. Member for Ceredigion (Ben Lake) on his supporting and campaigning work.

On 10 June last year, I introduced the Local Electricity Bill. Unfortunately, due to the pressures on the Parliamentary timetable, the Bill made no further progress. What it did do was vividly illustrate that there is an enormous appetite from all corners of our four nations for an upsurge in community energy projects.

While credit should go to the campaigning work of Power for People, it is abundantly clear that local councils, cities, towns and villages want to play their part in the transition to net zero. This is not a straightforward journey, and we need to use all the tools in the box to ensure that we reach our destination on time and, hopefully, after a smooth ride. This means removing those regulatory barriers that currently prevent community energy from playing its full role.

The main obstacle prohibiting local communities from getting involved is that the current supply licensing regime is highly complicated, national in scope and has onerous credit requirements. It is a one-size-fits-all approach, heavily skewed in favour of the status quo. There is an exemptions regime for supply of less of 5 MW and a Licence Lite supplier licence, but these are not fit for modern purpose.

There have been recent reviews by both Ofgem and the Department for Business, Energy and Industrial Strategy into the current energy supply licensing arrangements, and there is an acknowledgment that the current regime is opaque and difficult to interpret. However, as yet there is no route map setting out the path to reform. The Government now need to commit to that regulatory reform, reaffirm support for community energy and remove those values. They should start by answering a number of questions, which I will list.

First, what has happened to follow up on Ofgem’s derogation policy review and other calls for evidence on aspects of the energy supply market? Does Ofgem intend to progress its consideration of a local licence?

Secondly, as indicated in the energy White Paper, does BEIS intend to ask Ofgem to provide latitude in the supply licensing regime for local suppliers?

Thirdly, as part of its ongoing review of the licensing derogation review, will BEIS consider widening the exemptions regime to enable local supply?

Fourthly, when is Ofgem planning to issue its review of the smart export guarantee and come to a conclusion on potential enhancements to provide a more certain route to market for community providers?

Fifthly and finally, are the Government proposing to consult more generally on community energy and local supply in advance of the net zero strategy?

This is a highly technical and complicated subject. I shall be writing to the Government and asking those questions. It would be easy to put this whole matter into the “too difficult to do” tray, but that would be a dereliction of duty. We would be letting down those thousands of communities who want to play their part and get involved. The Government, parliamentarians and Ofgem need to work together to get over those barriers. I hope that the Minister will indicate a willingness to do so.