30 November 2021
Peter Aldous calls for regulatory reform to support community energy projects

Peter Aldous highlights the clear groundswell of support for community energy schemes across the country and calls on the Government to work with Ofgem to remove the regulatory barriers currently preventing local communities from playing their part in getting to net zero.

Peter Aldous (Waveney) (Con)

It is a pleasure to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate. It appears that debates on community energy are synchronised in the parliamentary timetable to take place every six months. On the one hand, that illustrates the groundswell of support from communities all around the UK to come forward with their own bespoke schemes. On the other hand, the fact that we are turning up every six months would suggest that we are not getting anywhere.

The rationale for empowering community energy schemes is compelling. To decarbonise our energy supply, our transport system and our heating networks we need a shedload of electricity. We need to be firing on all cylinders. Communities around the UK want to do their bit, to play their role in getting to net zero. Imposing a wind farm, solar farm or hydro scheme on a community might well run into resistance, but a community working up its own plans is more likely to get somewhere. Community energy schemes can also play a key role in revitalising local economies, creating sustainable, long-term jobs and promoting a truly circular economy.

To enable community energy to play that full role, regulatory barriers need to come down. Work on doing that needs to start straightaway. Last year, deployment was at a record low. At a local level, local authorities are developing their own climate action plans, and they want to get on with putting them into practice. The one-size-fits-all supply licensing regime—even if there can be regional demarcation—the complexity of the electricity market and the costs of entry are stifling community development. Local price signals are also heavily dampened, and are thereby out of sync with the Government’s stated desire to encourage flexibility at all levels.

There is a need for regulatory reform. I suggest that the following issues need to be addressed. First, it should be made possible to grant derogations from standard licence conditions and to grant supply licences for specific geographical areas or premises types. Secondly, the Department for Business, Energy and Industrial Strategy should ask Ofgem to provide guidance on the steps needed to support community energy and to establish a right to supply. Thirdly, Ofgem itself should give full consideration to the provision of a local supply licence. Fourthly, the reform of the supplier-hub model should be fully investigated. Finally, careful thought should be given to the effectiveness of the smart export guarantee scheme. That should include looking at the range, nature and uptake of SEG tariffs and considering what steps must be taken to improve the route to market for community energy projects.

Although having such consensual debates provides pleasant respite, we need to get on with making meaningful and significant progress on the road to net zero. Local communities have a significant role to play and, to ensure that they can do so, we need to remove those regulatory barriers. I acknowledge that in many respects that is complicated, and there is perhaps a tendency to put it in the “too difficult to do” column. However, there is very limited, if any, political resistance and, in fact, as we are hearing, a groundswell of grassroots support from all around the four nations. I thus request that the Minister ask his team to work with Ofgem to produce a strategy for removing those hurdles, so that, when we next debate community energy, perhaps in six months’ time, it will be when he is making a statement in the main Chamber setting out the steps that he is taking to unleash a wave of community energy projects.


Intervention on Minister’s Reply

Peter Aldous 

I am most grateful to the Minister for setting out so clearly the obstacles that need to be overcome to mobilise community energy schemes. Can he confirm that he and the Government are committed to overcoming those obstacles and removing those barriers so that, when we come back in a few months’ time, we can say that we have achieved tangible progress?

Greg Hands (The Minister of State, Department for Business, Energy and Industrial Strategy)

I am certainly committed to examining the obstacles and speaking to my hon. Friend; I know his long-standing interest in this, as indeed in all energy questions—he is the Mr Energy of East Anglia. I am very happy to continue to engage with hon. Members, to look at the obstacles and to see what can be overcome, ameliorated or worked around. I am very keen to meet and continue the engagement with hon. Members. It is a little difficult for me to agree to remove the obstacles until we have scoped them out. The Department is well aware of the obstacles, but if my hon. Friend has suggestions for how to overcome some of them, I am interested in working with him and like-minded hon. Members.