Is it time for Councils to save the world (again)?
Dr Chris Jardine discusses why local government should take the lead on renewable energy.
One of the features of energy policy is that it can be designed and implemented at a range of different scales. We see policy led from the EU level, by national governments, and by local governments. You could even argue that families implement their own energy policy within the home when deciding internal temperatures, and deciding which appliances to purchase. This multi-level approach means we see a whole host of initiatives and decisions being made.
One other interesting aspect of this approach is the way the different levels of policy decision interact and compensate for one another. At a time when the UK Government is cutting support for energy efficiency and renewables, we see local governments in particular stepping into the breach.
Here at Joju we have seen this leadership at a council level first hand and it’s a story worth telling. So let’s begin with a little history lesson.
Back in 2003, National Government support for solar PV and other micro-renewables was virtually non-existent. The Low Carbon Building Programme had not yet started, and the feed-in tariff support scheme was still some seven years away. At this time Merton Council developed what became known as the Merton rule – a prescriptive planning policy that required new commercial buildings of over 1000m2 to generate at least 10% of their predicted energy requirements from on-site generation. The Merton rule was copied by nearly 400 councils across the UK, with targets reaching as high as a 50% requirement for onsite generation. Whilst this mainly had the effect of driving the use of combined heat and power boilers (CHP) it was also instrumental in driving the early stages of the PV market in the UK, by creating a steady stream of projects for the pioneering PV installers to implement. With the Low Carbon Building Programme (2006-2010) being drastically underfunded compared to demand for these technologies, the Merton rule was arguably the key driver for low carbon generation.
Fast forward to 2016, and it can be argued we are in a similar situation. Green building standards have been removed, and support for wind and solar heavily reduced. However, our modelling shows that solar PV still remains an attractive proposition at the commercial scale, offering double digit returns on investment, especially for sites with good roofs and high levels of on-site consumption. Now whilst a 12% return may not be sufficient to encourage a business to invest, due to their desire for very rapid (<5 year) paybacks, some other institutions can take a longer term view.
Sound familiar? Step- up councils who want to lead again. Councils own a large volume of property, including their own offices, schools, and social housing. They exist for the long term, and can, therefore, take a long term view on their investments. Indeed many councils will have funds set aside for long term infrastructure; funds that can’t be spent, but can be invested until they are needed. Nottingham Council for example needs to hold funds for maintaining their tram network in 30 years’ time, but those funds can cycle profitably through a low-risk solar investment in the interim.
So for us, it was no surprise to see Merton Council once more showing their sustainability leadership and pioneering solar PV under the new feed-in tariff regime. Working with Joju they have now installed over 200kWp across seven schools, with a further portfolio to follow this summer, delivered through the Fusion 21 Retrofit Framework. Merton Council are proving that Solar PV remains an attractive thing to do; lower carbon, lower energy bills, as well as educational benefits for the schoolchildren. Returns are estimated at 12% per annum, turning a portfolio investment of £500k into an income of £2m over 25 years. At a time when council budgets are under severe strain, that’s hugely valuable.
Is it time for other councils to follow Merton’s example? We think the financial, environmental and social case is there for all to see. And of course, it happened before – way back in 2003.
If you work for a council and are interested invested in solar PV then please don’t hesitate to get in touch.