By Daniel Hunter

Businesses, cooperatives, local authorities, schools and housing associations should be given financial support to install medium-sized renewable energy generating systems - such as solar arrays, wind turbines and district heating systems - because of the benefits these projects can bring to communities and the country as a whole, MPs on the Energy and Climate Change Committee have said.

"Encouraging schools, businesses and local authorities to generate some of their electricity locally can bring big benefits to communities and the UK as a whole," Dr Alan Whitehead said.

"Businesses can reduce their energy overheads, locals can potentially benefit from cheaper electricity or heat, and councils can use projects to tackle fuel poverty, cut costs and reduce carbon emissions.

"Medium-scale power plants could also help to boost energy security. Local heating schemes in particular could be helpful in balancing out peaks and troughs in electricity supply and demand by storing energy as hot water when there is a surplus of electricity being generated. If small-scale power plants fail it would cause less of an impact than if a large power plant fails."

Government provides support to households who install small-scale renewable energy systems through Feed-in Tariffs (FiT), while large scale projects like off-shore wind farms will soon be supported through new fixed-price Contracts for Difference (CfDs). Medium sized energy projects of between 10 - 50 Megawatts (MW) currently fall in the gap and do not receive support, being too big to receive FiTs yet too small to take advantage of CfDs.

Giving communities a stake in local energy projects has the potential to broaden public understanding of energy issues by encouraging energy-conscious behaviour and greater public engagement in carbon reduction initiatives, according to the report. Greater use of local energy could also enhance the security and efficiency of the energy system as a whole.

The report identifies a number of barriers that can prevent local energy projects getting off the ground. Securing funding and Power Purchase Agreements, connecting to the grid and overcoming public opposition can all prove difficult. Obtaining planning permission can be costly and time-consuming, and the risk of losing tens of thousands of pounds if permission is not granted is a huge obstacle for community groups or small cooperatives. Larger companies and utilities can shoulder these costs as they may be applying for a number of projects simultaneously, but smaller bodies must take considerable risks with no guarantee of recovering expenditure.

The MPs conclude that some form of support mechanism is needed alongside a comprehensive package of measures addressing finance, planning, grid access and advice. The Government must bring forward a proposal to support schemes within the 10-50MW range to incentivise the development of medium-sized projects which are not served by either FiTs or CfDs. The Green Investment Bank could provide seed funding and project development funding for feasibility studies, grid permits, etc to reduce some of the risk in getting projects through the planning process.

"We support the Government's ambition to return decision-making powers to local authorities, but carbon reduction is a national priority," Dr Alan Whitehead MP said.

"Although it is unlikely that local energy projects will eliminate the need for larger, centralised power stations completely, with some Government support they could provide a significant proportion of the UK's energy capacity while reducing carbon emissions and increasing efficiency."

Government needs to do more to encourage local authorities to identify suitable areas for renewable energy development as recommended in the National Planning Policy Framework. Ministers should also encourage local authorities to develop clear guidance about what is expected from local energy projects, to reduce uncertainty and risk in the planning process.

This approach would also help to prevent bad projects from coming forward. National level planning guidance should be provided on technical issues that hold up planning consent for wind turbines and other low-carbon technologies. This would help to improve consistency between different local authorities and ensure that only genuinely local issues were addressed through the local consenting process.

There are strong indications that some level of local ownership can help to boost support and reduce opposition to energy infrastructure projects. The MPs say that the Government should encourage industry to offer a stake to local residents for all new developments or consider the option of making a community ownership offer mandatory for all new developments.

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