The UK’s track record on renewable energy is shocking – in a really, really bad way. Just this month it was announced that we had missed our indicative renewables target for 2011-12. A target that was already one of the lowest in Europe at a pathetic 3.93% - and this at a time when the UK ranks an embarrassing 25th of 27 EU Members when it comes to renewable energy.
One reason for this is that the UK’s energy markets have been dominated by just six businesses. These have accounted for 98% of energy supply and 70% of energy generation capacity.
However, this is now changing. Ofgem has this year proposed reforms that will go some way to combating this monopoly and allow smaller players to operate more fairly and effectively in the wholesale energy markets. It’s noteworthy that independents now operate 53% of the UK’s renewable energy generation. A combination of four hundred thousand feed-in tariff developments and two thousand commercial-scale 50kw plus independent business development projects.
But we need more – and Germany is one of the country’s showing the way in Europe. Already, almost 25% of their electricity is from renewables, and one reason for this is that 40-50% of Germany’s renewable energy capacity is owned by individuals, community groups and private developers.
Moreover, Germany’s energiewende revolution has seen individuals put their hands in their pockets in a big way (which in turn ensures that green policies enjoy electoral support amongst key groups). The Climate Policy Initiative has calculated that private households in Germany invested €14 billion in 2010 alone; another estimate suggests $100billion of private capital inflows. This an important development given Ernst & Young have estimated that there is an enormous £330-360 billion gap in the money that is needed to get UK renewables where they need to be in 2025, even if one assumes that utilities, banks and pension funds cough up an expected £75-120 billion.
Co-operatives have been around in the UK for nearly twenty years now, and are slowly expanding. And we are seeing crowd-sourced joint ventures start to take off. Projects like Great Dunkilns in the Forest of Dean. This 0.5MW turbine is privately owned, but with the £1.4million of debt finance raised by individuals and the local community directly benefits at levels far in excess of Government guidelines. New energy supplier, Co-operative Energy, takes the output and supplies it to its customers.
Projects such as Great Dunkilns are the focus of Abundance, the UK’s first regulated online crowdfunding platform for renewable energy. Abundance aims to offer as many people as possible the chance to invest in renewable energy projects across the UK (from as little as £5), and is looking to raise £10million this year and £1 billion over the next ten years.
If the Government’s forthcoming Community Energy Strategy and Social Enterprise Tax Relief proposals are up to scratch we could really see this sector take off, and the UK make some serious headway on its renewable energy targets.