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Community Energy Fund
Renewable Infrastructure Framework
20th June 2012
Ian Walker
Element Energy [email protected]
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Government is seeking to address the resource efficiency and CO2 emissions of new buildings.
The Building Regulations, the principle tool for controlling energy use in new developments, are being progressively tightened on a pathway to introduction of Zero Carbon Policy.
100% reduction
25% reduction44% reduction
Regulated emissions – heating, hot-water, lighting& ventilation
Unregulated emissions – appliances & cooking
2009 2010 2013 2016
CO
2 em
issi
on
s fr
om
n
ew d
evel
op
men
ts
Zero Carbon
Pathway to Zero Carbon Homes
Government is implementing policies to ensure that new homes are increasingly resource efficient
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The zero carbon policy will introduce the concept of Allowable Solutions – this creates the role for community energy funds
Carbon Compliance – the level of CO2 reduction that must be delivered through on-site measures
Allowable Solutions – A range of on-, near- or off-site measures to mitigate the remaining regulated emissions.
The Community Energy Fund has a role as a kind of Allowable Solution – this increases the potential role of local planning authorities in delivering low carbon development.
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A Community Energy Fund is a means of channelling developer investment in carbon reduction into the local area
Developer CO2 reduction obligation
On-site CO2 reduction% of target met through on-
site measures
Payment to Fund% of target met by payment
into an Energy Fund
Fund invests in local CO2 reduction
projects
The Community Energy Fund
Developer investments are
pooled in the Fund
Fund invests in local low carbon
projects
Potential revenue into
the Fund
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The development of a Community Energy Fund as an Allowable Solution could play a leading role in low carbon development
Establishing a Community Energy Fund as a kind of Allowable Solution promises a number of benefits for local authorities:
• Ensures that Allowable Solution investments are retained within the local economy
• Gives local authorities control over the projects that Allowable Solutions investments are used to support.
• Provides a mechanism for neighbouring local authorities to work in partnership, pooling Allowable Solutions investments to finance larger, strategic low carbon projects.
• Provides a means to unlock projects that would not otherwise be brought forward
by the private sector alone – the Fund investments can act to de-risk projects and leverage further investment.
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Government tasked the Zero Carbon Hub with developing a potential framework for Allowable Solutions.
The framework sets out choices for Local Authorities and developers.
• Local Authorities can set out local policies for allowable solutions or default to national policy.
• Developers can choose the allowable solution that they invest in.
• A national fund-holding – a ‘bank’ for Allowable Solutions – and a national monitoring and verification scheme.
The proposed Allowable Solutions framework offers local authorities a choice on their level of engagement
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The framework envisages a mix of Community Energy Funds and private initiatives delivering Allowable Solutions projects
Developer requires Allowable Solutions to comply with zero
carbon policy
Submits plans to local authority
LA with a prescribed set of Allowable Solutions
LA without a prescribed set of Allowable Solutions
Pay into Community
Energy Fund
Contract a Third-party to deliver
Allowable Solutions
Private Energy Fund is contracted to manage
delivery
Either Or
Route ARoute B
In both cases, Allowable Solutions projects will be delivered in the local area
The Private Energy Fund can deliver projects anywhere in the
country
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Local engagement
Local control
No policy – no control over investment
Framework to identify projects in place – control over project list
Community Energy Fund – control over project selection and development
For local authorities to maintain control over how developer payments are invested, the local plan must include Allowable Solution policies
As a minimum Local Authorities require a mechanism for approving Allowable Solutions within the Local Plan and an evidence base to support the selection.
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Route A1 – contracts a third-party to deliver carbon saving through LA compliant Allowable Solutions options
Route A2 – pays LA to deliver carbon savings
Third-party provider LA Community Energy Fund
National Allowable Solutions Fund Holding
Verification & Certification scheme
Developer
Certificates of
compliance
Either Or
Developer investment
Developer investment
Credit notes & Funds
Credit notes & Funds
LA with a prescribed set of Allowable Solutions
The framework includes a national ‘bank’ to hold Allowable Solutions investment and a nationally operated certification scheme
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Conclusions on the need for a Community Energy Fund
• Under Zero Carbon Policy, developers will be required to make a financial contribution toward mitigating the carbon emissions resulting from their developments.
• The Community Energy Fund is a means of ensuring that this investment is retained in the local economy and that local authorities can exercise control over how the money is spent.
• The Community Energy Fund does not increase the cost of development
• Government proposals on the framework for Allowable Solutions potentially limit the role of local community energy funds by introduction of a national fund-holding bank.
• It will be important for local authorities to present views to government through the consultation on how community energy funds can operate most effectively
• Local authorities should develop appropriate policies in their Local Plans to enable a fund and to develop a project list, to ensure the Allowable Solutions investment is retained locally.
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Local authorities need to start putting their policies in place now, in order to be ready to benefit from Allowable Solution investments
2011 2019
Zero Carbon Homes
introduced
Zero Carbon Non-domestic
buildings
Developers require Allowable Solutions projects
Local authorities progress their growth plans
Preparation of evidence base and Allowable Solutions policies
Allowable Solutions investment supports local projects identified
in the Local Plan
Community Energy Fund operates to maximise local authority control
over Allowable Solutions investment
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Ian Walker
Element Energy78 Margaret Street
LondonW1W 8SZ
T: 0330 119 0981E: [email protected]
W: www.element-energy.co.uk
Thank you
