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Energy co-operatives urgently needed in London

Londoners like the rest of the country are going to be hit this autumn with record rises of up to almost 20 per cent in energy costs to keep themselves and their families warm. While the Tory Mayor of London has been complacent with the delivery of his home energy programme, as its targets for homes retro-fitted have been cut by three-quarters, the Co-operative Party has come up with an innovative way that households can mutually come together in energy co-operatives - Collective Power.

So while the Tory Mayor comes up with hot air on environmental issues, the Co-operative Party has come up with a practical way that shows how collective power can change the way we consume energy. Effectively tackling fuel poverty & cutting carbon emissions remain huge challenges – especially fuel poverty. Between 1997-2004, the previous Labour Government and the Labour Mayor of London seemed to be making progress – but since then, there have been 3 disasters – fuel prices have gone through the roof, Ken lost to Boris, & Labour nationally was replaced by a hard right Tory-led coalition with a LibDem fig leaf just covering its worst excesses. Support for ordinary people is now being rapidly dismantled – and in the background, energy prices continue to rise massively, with double-figure increases being announced by almost every energy company. An average household (3 bed house, 2 adults, 2 children) now has energy bills well over £1k per annum, & experts predict this will soon reach £2k, or almost £40pw.

So support for hard-pressed families, with their squeezed incomes, is essential – and especially so in London, where the cost of living is so much higher. The Co-operative Party has looked at how low-income families can benefit from the Feed-In Tariff. Some social landlords are starting to put together packages of works where they will put up photovoltaic panels for the benefit of their tenants in terms of reduced bills, but there are not many families who can currently afford £6-10k, the cost of a small system that can massively reduce their electricity bills & their carbon output – as well as bringing in some income from the Feed-In Tariff.

So what’s the alternative if you don’t have a landlord willing to install low carbon technologies, & you can’t afford it as an individual or family? The answer is collective energy, or an energy co-operative. Through collectively pooling purchasing power, residents, local businesses and public sector organisations can all come together to save money and help tackle the threat of climate change. Banding together in this way, energy co-operatives are able to purchase their own energy on the wholesale markets and negotiate affordable deals for the latest ‘state of the art’ smart metering technology. This should allow households to realise savings of 10% – 20% on average.  Once established, the energy co-operative forms a framework through which ordinary people can build and own an infrastructure that will reduce their long-term energy costs, and manage the reduction of their carbon emissions.

Is this so much pie in the sky? Not a bit of it. There are already examples up & running in the UK, and abroad. Evidence from pioneering energy markets, such as California, Denmark or Sweden, suggests that these technologies are best deployed where policies and measures are directed at bringing together communities of households and businesses. In the UK there are also a growing number of instances where co-operative energy schemes have provided the scope for engagement, genuine community benefit and economic participation.

Organised by local councils, fuel poverty groups or community activists, these projects have demonstrated the benefits that can be achieved from collective action on energy efficiency and renewable When it comes to energy, these groups have proved that by working together, their collective purchasing power enables them to negotiate better customer service while securing additional benefits in terms of local employment, training and regeneration. This chimes with the fundamental ethos of co-operative business; to combine strong financial structures and professional business practice with the ethics of social enterprise. Most importantly they are able to apportion costs and select the most appropriate energy and efficiency technologies – helping to ensure that every household has access to sustainable and affordable long-term energy solutions. In some of these cases where the partnership includes the local authority, they have leveraged their planning powers to bring down costs for the schemes (for example the district heating projects in Aberdeen and in Sheffield).  One example that has really worked is Energy4All.

Energy4All Ltd is a not-for-profit organisation dedicated to helping communities around the UK to own a stake in renewable energy schemes.  Despite significant barriers, it has been instrumental in the development of six co-operatives modelled on the successful Baywind Energy Co-op in Cumbria, helping them to gain ownership of complete sites, or to buy a stake in a site from a commercial developer. Through their unique agreements with selected developers, they have been able to offer communities a share in major commercial projects, as well as working with local groups and landowners to develop small to medium-sized projects that will be entirely owned by the community. They have, to date, successfully managed to help the co-operatives raise over £12 million of capital through public share offers. Co-operative members then receive an annual share of the profits from the wind farms. All the schemes also support local energy conservation funds.

The minimum cost of becoming a member is £250, with a maximum legal investment of £20,000. The co-operative then purchases a share of the wind farm and profits from the sale of green electricity are distributed to members through an annual dividend. Priority in joining the scheme is given to people living in areas where the wind farms are developed, to maximise the economic benefits to the local community. Investors receive their capital back at the end of the project lifetime and the co-operative structure ensures that money does not buy power in running the organisation. As a co-operative, Energy4All is able to ensure that its projects combine business efficiency with honesty and fairness due to the fact it is run on a one-member-one-vote basis.

Projects suitable for ownership by the community are rare in the UK for a range of reasons. As a result, Energy4All has pioneered a unique deal with a developer in Scotland (Falck Renewables) to engage local communities near to major commercial wind farms by buying a stake in the project. This initiative has now created three successful co-operatives in the North of Scotland, with a fourth currently being launched. At a recent seminar for local authority planners in Edinburgh, Falck was cited as an example of best practice in the sector.

Energy4All is owned by the co-operatives it creates and has always sought to be independent of public funding. The range of benefits are particularly impressive: Baywind alone, for example, has been operating as a commercial wind farm since 1996 and has generated enough green electricity to power 1,300 homes a year, whilst also managing to pay out attractive returns in the form of regular share interest payments to its 1,350 members. It also supports local initiatives and environmental schemes such as the Baywind Energy Conservation Trust.

That’s just one example of what has already been achieved – see the publication “Collective Power – Changing the Way we consume Energy” for details of other successful co-operative energy schemes – contact the Co-op Party or SERA for further details.

Cllr Leonie Cooper is Labour’s London Assembly candidate for Merton & Wandsworth, Co-Chair of SERA and Chair of Wandsworth Co-operative Party

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