News & Current Affairs
04 December 2013
U.K Councils generate own power to take on the big six energy firms
Prompted by fuel poverty, local authorities in Britain and Ireland are generating their own cheaper power
Councils once powered much of Britain, literally. After bringing clean water, sanitation and public health to households, they saw energy as an extension of a social obligation to liberate the masses.
When the City of Carlisle opened a new power station in 1927, it even invoked Emile Zola in the foreword to a fancy commemorative brochure: "The time must come when electricity will be for everyone, like the waters of the earth and the winds of heaven. It must be provided, liberally, enabling the people to use it as they wish, like the air which they breathe."
Now that same enthusiasm for community wellbeing is fuelling a counter-revolution in locally generated energy, in both Britain and Ireland, partly to address rising levels of fuel poverty (when more than 10% of take-home pay is spent on heating bills) affecting an estimated 3.5m UK families.
With energy companies this week unveiling a variety of modest price "revisions" to assuage public anger over profiteering in advance of George Osborne's autumn statement on Thursday, the case for a return to local electricity generation to challenge the "big six" is gaining momentum. Some talk boldly of "re-municipalising energy", with an eye on Hamburg, Germany's second city. Recently, in a referendum there, voters backed a council plan to take control of the local power grid.
Here, authorities from Labour-controlled Southampton to Conservative-run Woking, in Surrey, are finding it cheaper to provide heat and light for their own buildings. A string of others are considering local power schemes.
Currently, mainly council houses and public buildings are powered locally, along with some shops and offices, rather than entire cities, although Southampton's municipal plant, run with a private company, provides electricity for the city's huge port, as well as for council buildings. Hot water was originally tapped from a deep geothermal well for a district heating scheme 25 years ago, and this was followed by a combined heat and power plant. But the city hopes soon to provide heat and light for 1,500 council houses as part of a $30m district heating and insulation scheme triggered by authorities once again being allowed to take direct control of council house funding. More than 5,000 houses could follow.
Like many, the city has wider ambitions. "The business case speaks for itself," says Warwick Payne, Southampton city council's cabinet member for housing and sustainability. "As plugging into the national grid becomes increasingly expensive, local energy schemes will become the way to go." But while piped heating directly to homes and businesses is unregulated, alternative suppliers seeking to expand electricity supply currently face a "cap" beyond which they have to enter an expensive national pool.
Similarly in Woking, council buildings, offices and flats are powered by energy from a company owned by the local council. The company, Thameswey, also generates power from a much larger local plant for much of central Milton Keynes, in Buckinghamshire.
Thameswey opened its first combined heat and power scheme in 2001 to supply electricity and heating to civic offices, and surrounding business, in Woking town centre. The initial $7m funding was borrowed on Thameswey's behalf by Woking council, which then lent it back to the company at 2% above the going interest rate. Currently it has 1.3 miles of heating pipes and electricity wires in the town (with a further 2.5 miles in central Milton Keynes). The scheme will soon expand to serve a new, $150m shopping and leisure centre, with 300 flats.
John Thorp, Thameswey's managing director, sees potential for a big expansion in local energy schemes, driven by enterprising councils. "Look at the average local authority, the buildings they have and control, their assets, you can see this approach taking off in other areas," he says.
Price stability, rather than profit, is the main draw for the new wave of local generators, with the attraction of guaranteed supplies of cheaper energy.
With some consumers facing price rises of over 10% in today's privatised market, though Osborne may persuade companies to hold fire, it is worth remembering that in the early-to mid-20th century the profit motive related to energy was anathema. Almost 370 municipal electricity schemes supplied relatively cheap power to the urban population, using surpluses for investment rather than dividends to shareholders.
Carlisle, motto: "Be just and fear not", was then a small border city with big ambitions. Like larger cities around the country, it first began generating from a small station in the late 19th century. When demand outstripped supply, the council opted for a modern power station, beside a river (essential for cooling) with a rail siding for the delivery of coal. In the commemorative brochure, it emphasised the need, "to ensure a reliable and sufficient supply to meet all demands".
The council undertaking stayed in municipal hands for 20 years until the postwar Labour government nationalised electricity and created 14 area electricity boards. These were privatised by a Conservative government in the 1980s, which, arguably, sold them, like the recent Royal Mail sale, well below their market value.
Adversity is now proving the mother of municipal enterprise. "For the moment our priority is to help low-income families paying for antiquated heating systems because, as a nation, we did not invest enough during the last century," says Southampton's Payne. "But if you plan this properly you can create local jobs, cut your carbon footprint and reduce the energy bills, so everybody wins."
That enterprising spirit was underlined at a recent Dublin conference, when delegates from councils in seven European nations met to conclude a three-year EU project addressing local energy, organised by the Town and Country Planning Association. While Southampton held out the vision of authorities generating power on a larger scale, Cornwall raised the prospect of tapping geothermal energy from the county's granite base. The council insists its slogan, "A localised energy future for Cornwall", is no pipe dream, with many communities showing interest in small-scale generating schemes.
Delegates were particularly impressed by the ambitions of Kerry county council, in south-west Ireland. Under the mantra "Turning green into gold", it is championing a "wood energy", or biomass, small pellets from local timber, project, which has already created hundreds of jobs. The aim is to make the county's two largest towns, Tralee, and Killarney, self-sufficient in heating by 2016.
Already in Tralee, a large wood-fuelled boiler plant provides piped heating to scores of new houses and renewed properties, older houses that are "retro-fitted" with external insulation panels, a large school, a community centre and a government building. The aim is to extend the network to the local hospital and a college, then to the town's 6,000 houses through a seven-mile local grid. A similar project is planned for Killarney.
In the local "pay-as-you-use" energy scheme, householders use a small bar-coded card to build up fuel credits during the summer. A tiny smart meter, in each house, monitors energy use. In her 1930s semi, Angela Welsh, 61, says she used to pay the equivalent of $500 annually for oil for central heating. Now she pays half that amount. On a wall, a smart meter reveals she is around $60 in credit. "One of my sisters, who lives in Norwich, can't believe how low bills are now compared to Britain," she says. "We used to be freezing in the winter, and only heated one room. Now it's too warm."
The same cannot be said for millions of others, on both sides of the Irish Sea, facing the coming winter. But with energy security and price now burning issues, locally generated power could become a practical alternative, provided the "cap" on local generation is lifted? Back to the future, perhaps?
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