The Scottish Government’s Local Energy Challenge Fund (LECF) aims to demonstrate the potential economic and social benefits of establishing local low carbon energy economies. Projects funded through the LECF will provide valuable insights into the impacts that local energy projects can have on local economies; by attracting and distributing income, and by changing the way that energy is generated and consumed.
ClimateXChange has been asked by the Scottish Government and Local Energy Scotland to investigate the economic impacts associated with local energy projects. This study will be undertaken by the Fraser of AIlander Institute and the James Hutton Institute. It will use information gathered from LECF projects to better understand the local and regional economic and energy impacts associated with the development of local energy production and consumption systems.
The purpose of this study is to identify any differences in the costs faced by community and commercial renewable energy projects in Scotland.
The Scottish Government has expressed a commitment to support the development of community renewable energy, including a target to establish 500 megawatts of community and locally-owned renewable energy by 2020. Given this aspiration, it is important to understand any cost barriers faced by community projects that are not faced by equivalent commercial projects.
The study compares the costs and cost factors faced throughout the lifecycle of projects under three different ownership categories: commercial, community and commercial-community partnerships.
Key findings:
- Community and commercial renewable energy sectors have evolved separately to some extent and have therefore faced different cost factors.
- This has resulted in costs that are more variable, with some facing significantly higher costs than others.
- Costs have become less variable over time and have decreased over the last decade. The aggregate data showed that there is no statistical difference in the costs of more recently developed community owned projects.
- While communities spend more in the pre-planning stages, this is not generally reflected in overall costs, pre-planning costs typically make up a minor proportion of total development costs (e.g. 50% of capital costs incurred through technology acquisition.
- Pre-planning barriers represent both costs and risks that may be addressed through policy measures. It is important to note that communities face a much higher risk of failure during this time.
Community investment in commercial energy projects has the potential for far-reaching and positive impacts. This research has demonstrated that there is much interest in, and enthusiasm for, increasing community investment in commercial energy projects in Scotland.
The report presents an analysis of the factors which support and limit the ability of communities to invest in commercial renewable energy schemes, and makes recommendations for action based on domestic and international evidence. It concludes that there is significant potential for increased community investment in commercial energy schemes, given the appropriate support, funding and advice.
Useful links
Launch Event – Social Assets in Community Renewables – This report was launched by ClimateXChange on November 8th 2013.
The Scottish Government has a target of 500 megawatts of community and locally-owned renewable energy by 2020. This means that government policy needs to maximise the uptake of community renewable energy projects. This report looks at the factors that underpin successful community energy projects.
Scotland has a significant potential for community energy, with 360 projects currently initiated. Despite the potential, only 44% of the proposed projects have become operational.
Drawing on a database of 276 Scottish community projects, this report identifies the social factors which influence the success of community energy projects through the various stages of development, from idea to operation.
Knowing these success factors can help policy makers to improve the uptake and success rate of community energy projects by:
- Investigating the motivators and barriers to community energy projects
- Identifying the key prerequisites for success, especially community social capital
- Recommending potential policy interventions to enhance social capital
- Assessing the potential and limitations of the predominant business models for community energy