Claire Perry asked for help as government policies undermine local renewable energy company
Seventeen members of Transition Marlborough have written an open letter to Claire Perry MP asking her to intervene on government policy changes which have "effectively killed off" Kennet Community Energy Limited (KCEL - pronounced Kay-cell) - the Community Benefit Society developing renewable energy projects for communities in north and east Wiltshire.
Kennet Community Energy Limited was established in 2013 from an initiative by the Energy Group of Transition Marlborough. It was set up as a practical response to the challenges posed by future energy supplies and by climate change.
The full letter to Claire Perry MP can be read at the foot of this article.
The 65 per cent cut in the Feed in Tariff (FiT) for renewable energy sources like solar panels and the subsequent sudden exclusion of community energy groups from tax relief under enterprise investment schemes have, the letter states, made KCEL's business model "unviable".
KCEL is not accepting new members and at the moment the organisation is "on hold" until the situation becomes clearer.
The letter points out that Mrs Perry has been a great supporter of localism and local business opportunities for community groups in Wiltshire. In November 2014 she was 'delighted' to open KCEL's £60,000 rooftop solar system at Devizes School - entirely funded by local people.
Members' investments have been funding a growing portfolio of projects, initially focusing upon solar PV and biomass technologies. Their first project was an array of solar panels on the Wadworth brewery in Devizes.
When Transition Marlborough wrote to Mrs Perry in September about the cut to FiT payments, she said that as it was energy consumers who ultimately paid for FiT payments, the government had had protect their bills.
However Transition Marlborough now point out that recently released official documents show that at the time they made the decision on FiTs, the government knew that energy bills would fall anyway due to falling wholesale fuel prices.
KCEL has had to weave its way through a growing array of regulations and rules that seem to be targeting small energy producers.
They had to alter plans for a 77Kw solar arrray on Trowbridge Civic Centre when faced with a huge bill as a contribution for modifying the electricity delivery grid. The bill was larger than the total cost of the solar installation. They had to reduce the array to below 50Kw to avoid the charge.
The Chancellor has closed the Enterprise Investment Scheme - introduced by the Conservatives in 1994 - and replaced it with a scheme that specifically excludes community energy organisations. It is hard to believe, but these tax relief schemes involving renewable energy projects were dismissed by the government as being merely for 'wealthy young males in the south east of England'.
Re: The Future of Community-Owned Solar PV in Devizes
As your constituents, we are aware that you are a passionate believer in localism and strongly back the need to develop local business opportunities for people like us. We were very surprised and dismayed, therefore, that you added your support to the latest assault on the renewable industry, which was showing so much promise in the Devizes constituency and the South-West. This seems to be a contradiction and we are keen to know why.
The massive reduction to the Feed-in Tariff (FIT) and the sudden abolition of tax relief for small investors, has now effectively killed our community energy company, Kennet Community Energy Ltd (KCEL). Following the 65% cut in the FIT, it was hoped that new projects could be sought once the price of solar PV came down, but the unexpected changes to the EIS tax benefits for small investors has now made the KCEL business model unviable.
As you know, KCEL is a not-for-profit Social Enterprise that grew out of Transition Marlborough (TM) in order to cut carbon emissions through the installation of renewable energy systems. In the longer term, surplus funds would have been used to alleviate fuel poverty in our town. KCEL is staffed by volunteers who are committed to a cleaner environment and together with other community energy companies in Wiltshire, provided regular work for several local solar PV fitters. KCEL's installations are currently saving at least 62 tonnes of CO2 per annum.
We note that in November 2014, you were delighted to officially open the £60,000 KCEL project, entirely funded by local people, that had installed 200 solar panels on the roof of Devizes School and were impressed by the educational role that it was playing for the students.
We had, therefore, assumed that these small-scale, renewable energy projects had your full support. This was why so many of us wrote to you, as soon as the proposed cut to the FIT was announced, warning of the threat to community energy companies and subsequent job losses. Last October, TH White Ltd., along with 30 Community Energy Groups lobbied you and your colleagues who represent constituencies in the South-West, against cuts to renewable energy subsidies because they would lead to the loss of jobs and local investment. Alex Lockton, general manager at T H White Energy, said “With people like the governor of the Bank of England and the director general of the CBI calling for increased effort around climate change, it makes no sense for the Government to remove support from the solar industry which enjoys support from 80% of the public. Community energy schemes are a fantastic way for people to take action themselves to help secure a cleaner energy future for our country.”
When we wrote to you, in September 2015, expressing our concerns, you justified this action by saying that, “because the extra costs associated with providing the FIT are ultimately paid by customers through their energy bills, it was only right for the government to ensure that these costs are kept affordable”.
However, official emails from early in 2015, recently obtained by Carbon Brief, clearly show that the Government had known that future consumer bills would actually fall, regardless of a cut in the FIT: an average household energy bill would be £1,222 in 2020, some 7% (£97) lower than the £1,319 projection made the previous year. This reduction is largely down to falling fossil fuel prices. With fossil fuels responsible for about half of the UK’s power generation in 2015, the Department for Energy and Climate Change (DECC) now expects wholesale electricity to cost less than 5p per unit in 2020, around 10% lower than it was projecting a year earlier.
As a result of these revelations, Sir Ed Davey, the previous Minister at DECC, has said: “The scandalous lack of openness and transparency on that crucial calculation means the Conservatives are decimating a whole industry, with no convincing hard evidence to justify their decisions.”
In the light of this new information on falling energy costs, do you still standby your Government's decision to cut the FIT by 65% and abolish the EIS? Furthermore, is there any action that you could suggest, which would value the local engagement needed to revive our community energy company and enable it to fund the new installations required to meet the rising demand for clean electricity?
The Transition Marlborough Team:
Cllr Nick Fogg
Milly Carmichael and Gina Cooke