We’re excited you’re here, and would love you to register with us as a community energy group so that you can start searching for assets with potential to host your renewable energy or energy saving project. Once you’ve found a site that interests you, you can make an expression of interest to the owners to begin discussions.
But we know you may have some questions before you do, so we have answered the most common ones below.
If you’re a community energy group (CEG) looking to develop a new project, Power Paired is
gathering and promoting opportunities in the following areas:
Renewable electricity
There are a number of technologies that generate renewable electricity including: solar photovoltaic (roof or ground mounted), wind and hydro.
Two primary models for community energy groups working in partnership with an asset owner to consider are:
Typically, these arrangements are for 20 – 25 years with the CEG responsible for the
operation and maintenance of the system during this time.
Renewable heat
The most common technologies involved in renewable heat projects are biomass and heat pumps (air, ground and water source).
Unlike for electricity, renewable heat projects are still eligible for government subsidies in the form of the Renewable Heat Incentive. Community Energy Groups can work with suitable asset owners to develop renewable heat projects that involve either:
Similar to renewable electricity projects, with heat projects there is usually a lease or licence in place which includes a PPA whereby the resulting heat is sold to the building user(s) at an agreed price. Generally speaking, renewable heat projects work best in properties / communities that aren’t connected to the gas grid as the savings will be comparatively greater.
Energy Efficiency
With the demise of the Feed-In-Tariff, more community energy groups are developing energy efficiency projects which lower the energy demand of participating buildings, meaning a reduction in energy costs for the users.
The community energy group will work closely with the asset owner to identify the most suitable energy efficiency measure(s) based on the building’s features, consumption and the needs of the users. They could decide to install a single measure e.g. LED lighting or insulation, or take a whole-building approach and install a suite of measures.
The community energy group will finance, install and maintain the energy efficiency measures, with the asset owner or building user repaying them over a fixed period based on the assumed savings achieved by the project. Usually the rate of repayment will not exceed the annual energy savings, meaning that the building user realises the benefits of the project immediately. Such arrangements are similar to those of Energy Service Company (ESCo) or Energy Performance Contracting (EPC), whereby the community energy group guarantees a certain level of energy saving.
Electric vehicle charging points
There has been a surge in sales of electric vehicles in the past few years which has led to an associated increased demand in electric vehicle charging points (EVCP) which the community energy sector is well placed to help deliver.
A community energy group can develop EVCPs in a variety of locations such as public spaces e.g. street side or car parks, community buildings e.g. leisure centres or at private businesses e.g. for employee use.
The community energy group will finance, install and maintain the EVCPs and charge customers for their usage. Community owned EVCPs can be developed alongside a community-owned solar PV scheme to maximise their efficiency and sustainability.
Demand Response
Demand side response (DSR) is concerned with balancing electricity demand to help reduce peaks which can put pressure on the national grid. Electricity supply in the UK is built to meet the needs of these peak periods when demand is at its highest and consequently electricity is most expensive.
Through DSR technology, a customer can take advantage of periods when demand is low and electricity is cheaper. This helps balance the grid and reduces peaks in demand. As a consequence, it reduces the maximum supply capacity needed by the grid.
DSR systems have mostly been used by high-energy customers who can benefit most from a reduction in their electricity costs e.g. industrial users that can switch their processes to take advantages of periods of lower demand and prices. Although in its infancy for the community energy sector, there are a small number of pilots whereby a community energy group have been working in partnership with local authorities to install DSR into domestic properties to help residents reduce their energy bills.
PowerPaired partners
Pure Leapfrog would like to partner with community groups and asset owners that are looking to develop a new approach to community energy. This may be because they are more complex that conventional community projects, or involve working in partnership with a new sector or landowner type. This could involve:
Wider Eco System
There are a number of organisations that can provide advice and support services to community energy groups. These include:
Local Energy Hubs
There are five Local Energy Hubs across England whose remit it is to help coordinate and drive forward local energy projects to help transition towards a low carbon infrastructure. Each Hub is a collaboration between a number of Local Enterprise Partnerships. They are able to offer advice and support to the broad range of stakeholders involved in developing local energy projects
There are a number of grants that can fund feasibility assessment and project development costs. Availability of funding varies according to what area of the country you’re in. Take a look at the below bodies for more information:
A number of local authorities across the country also offer grants or loans to fund feasibility and development for community energy projects in their areas e.g. Bristol City Council and Lewisham Council.
Once you’ve made an expression of interest to an asset owner, there are a number of key stages in the project development process.
Developing a project proposal
The first step is to identify what technology is most suitable for the site. To do this you’ll need to speak with the asset owner and users to understand:
You may find it useful to visit the site to undertake a brief energy survey and view the existing fixtures and fittings within the building. Alternatively photographs or images from Google Earth may be sufficient. Once you’ve identified a suitable project you can present this to the asset owner. If you’re in agreement then you can proceed to the next stage.
At this point, you should consider developing a Non-Disclosure Agreement and a Memorandum of Understanding between your parties to ensure that the project proceeds in good faith and in the spirit of cooperation.
Project feasibility
This covers a number of areas and is intended to investigate whether a project is viable. Broadly speaking it can include: technical feasibility (to understand whether the proposed technology will be suitable for the user’s needs); financial assessment and modelling; planning and permitting requirements (e.g. from the local authority and National Grid); project planning etc.
As the community energy group you will usually be responsible for developing the project feasibility and business case but you will need a certain level of input from the asset owner at this stage. For example, they will need to provide as much energy consumption data as possible to model any potential project, or allow access for site visits for structural or electrical surveys.
Depending on where you are in the country, there are a number of grants available to support project feasibility.
Any financial or technical analysis conducted should be reviewed by a third party (i.e. not the person who prepared it) to double check that the assumptions, calculations and rationale is in fact, correct.
Community impact assessment
It’s worth considering at an early stage of project development an assessment of the social and environmental outcomes of this project. Will the project help address any specific issues in your community? How can the wider community be involved in your community?
Financial model
Following on from the feasibility stage, you can start to develop a financial model for your project. At this point you’ll need to identify a range of scenarios and pricing options that may be offered in the PPA. The financial model will help you to understand whether your project is financially viable and offers a rate of return to your investors, as well as a provision for the community benefit fund.
Negotiation of legal agreements
The vast majority of community energy projects will require some sort of formalised legal agreement between the community energy group and asset owner, for example a lease or licence, which details the obligations of the two parties and the length of the project.
If relevant, the lease will include the Power Purchase Agreement or Lighting Service Agreement, which details the pricing structure for the electricity or heat that will be sold to the user. It should also set arrangements regarding operation and maintenance, billing arrangements, insurance and detail what happens to the project at the end of the agreed period.
In addition, it may need to include details of any access requirements that you will need during project operation e.g. to inspect the system or read meters. Pure Leapfrog have developed a number of legal templates and guidance for community energy projects which can be found here. However, we strongly advise you to seek your own legal advice for your project. That said, do not be swayed by lawyers who try to tell you the templates can’t be used in the interests of justifying their own costs. They have been developed by legal experts.
Project financing
If the feasibility and financial assessments show that the project is viable and permissions and permits are granted, then the project can proceed to financing.
As the community energy group you will be responsibility for raising the project capital. This can be achieved in a number of ways including a community share offer or other equity finance, debt finance or grants.
You may wish to discuss with the asset owner the possibility of them investing in the project. For businesses, you may want to offer the opportunity for their employees to invest in the project. In addition, there are a number of community energy finance specialists such as Leapfrog Finance, which provides bridge finance for larger scale projects.
Where you are financing your own project through share raises or bond offers, make sure you fully understand what will happen if your counterparty (the asset owner) ceased to exist or you were required to remove the assets.
Installation
Once the finance is secured and legal agreements signed, the project will proceed to installation. The community energy group will be responsible for the tendering process and identifying a suitable supplier / installer but you will need input from the asset owner to accommodate any specific requirements they might have. The installation process itself will require a high level of input from the asset owner as both parties will need to agree a schedule that is mutually acceptable.
It is vital to consider any health and safety or specific access requirements e.g. whether it is necessary for contractors to be DBS checked. During this stage it is crucial that there is good communication between the parties to avoid or mitigate any unforeseen circumstances and ensure that installation proceeds as smoothly as possible. Ideally an installation plan should be developed in advance that addresses these issues.
Operation & Maintenance
Usually the community energy group will be responsible for the operation and maintenance of the project for the period as specified in the lease, licence or other legal agreement. This will define the scope of your obligations and responsibilities with regards to operation and set out an agreed maintenance schedule.
Ideally an asset management plan should be developed or an asset manager contracted to provide services with a regular review included in the contract.
Before making an expression of interest for a particular project there are a number of key initial considerations:
Even if you’re a group that is developing a project for the first time, an asset owner may want the reassurance that you are a legal entity, or are in the process of becoming one, before embarking on a project with you. Cooperatives UK offers support and advice to groups wishing to develop a legal coop structure.
Do you have people on the board with sufficient knowledge not just of the technology you are implementing but also financial analysis, legal compliance requirements etc?
Are you genuinely representative of your community? If not, you should actively seek out more diversity. Most asset owners will have diversity and inclusion policies and will be uncomfortable if you are not genuinely diverse.
Before embarking on a new project you need to consider whether there is capacity within your community energy group to develop a project through the initial stages and feasibility and onto project installation. It’s best to have a lead person within your organisation who can be responsible for liaising with the asset owner but make sure they have the time and resources to be able to deliver on this.
Be realistic about the location of any potential project. It is unlikely that you will want to travel long distances to a project, especially when regular site meetings and visits are an important part of developing and maintaining a community energy project.
When engaging with an asset owner and investigating their assets, it is worth keeping an open mind about the sort of project you can develop. It may be that you’re set on developing a solar PV project when an LED lighting project may be more suitable to that particular building. The actual project will depend on a whole range of factors that will influence the choice of technology including: energy consumption, building usage and tenure, building aspect and owner priorities.
Before starting on a new project it’s important to remember that it can all take longer than anticipated from project inception to project installation. Don’t get disheartened if your project doesn’t get off the ground as quickly as you hoped. Patience and tenacity are key to successful community energy projects!
To register, community energy groups will be required to provide the organisation’s name, contact details and website address, number of active renewable projects, as well as the legal structure of the organisation (e.g. cooperative society, community interest company).
This information will be submitted for review by the website administrator. Upon approval, notification and log-in details will be issued and a profile page for the organisation will be made available on the platform. Registered community energy groups will then be able to add any additional information they wish to their profile page and attribute log-in details for relevant staff members.
Registered community energy groups are able to search for assets on the database that might be able host renewables. Once an asset has been identified, a community energy user will be able to express an interest in having a more detailed conversation with the owner of the asset.
The owner will be notified and will be able to accept or reject that EOI. If it is accepted, the asset owner will be able to communicate directly with the community energy group, and / or may wish to issue further detailed information about the asset.
In some cases, the PowerPaired team may be in touch to see how a conversation is evolving and whether you would like access to any kind of other support to help move it along.
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