A renewable future: focusing energy solutions at a local level

The Energy Trilemma

The UK’s energy agenda has historically played out a triplicate tension between these key issues:

1. Cost – there is a clear aim to keep costs down and ensure that tax/billpayer money is used in the most effective way.
2. Security – the supply of energy must be uninterrupted to ensure a secure market in the UK.
3. Renewables – in order to reach the UK’s Net Zero ambitions and respond to the climate emergency, renewable sources must be established to provide the majority of the UK’s energy over the coming years.

At the start of this year, it seemed that renewables had come out on top of the energy trilemma to the extent that cost and security considerations had (perhaps) become slightly secondary. The focus of policy up to the turn of the year had been primarily on renewables (though of course cost and security remained considerations). However the success of the first wind farm in the UK with no assistance from subsidies shows that renewable energy is a commercially viable venture and the rise in renewable wind and solar farms providing stable energy generation allows us to see a future where gas is merely used as a back-up.

However, the turn of the year has seen the resurgence of the remaining duo of the energy trilemma. The Russian invasion of Ukraine resulted in the publication of the government’s Energy Security Strategy published on 7 April 2022. It stressed the importance of reducing the UK’s reliance on imported energy sources. Further, the cost of living crisis (and the increase in Energy Consumer Price Caps) has resulted in cost efficiency coming to the fore.

The trilemma is back, albeit in reality it never truly went away.

However, what rarely gets discussed is that all over the country the energy trilemma is actually playing out at a local level.

Localising Energy

In particular local authorities have the ability to influence the energy trilemma in their own administrative areas by:

• Creating affordable alternatives.
• Creating green alternatives.
• Creating local and reliable renewables.

All of these steps can isolate a local community from national trends.

Supplying energy at a local level provides opportunities for local authorities to reduce costs and ensure security of supply (for itself and residents) through, for example, district heating networks and corporate power purchase agreements (PPAs). We expect to see more regulation requiring concrete steps towards reducing carbon emissions, such as the proposal to ban the installation of gas boilers after 2025. The shift towards green energy seems inevitable and the more local authorities invest in innovation at this early stage, the higher the demand will be and the greater the return.

District heating networks require significant capital investment and while they are becoming increasingly popular, customers are often reluctant to consider a ‘new’ solution (read more about the challenges facing heating networks and possible solutions here). However, with the large rise in gas and electric prices people are searching for secure money-saving answers beyond the status quo. District heating networks and PPAs both allow fixed prices to be secured for a much longer period than purchasing from grid.

The private sector has already embraced PPAs to buy and sell renewable energy in a way that benefits both parties by guaranteeing a secure supply and fixed costs over a long term. This removes exposure to price fluctuations and at times like this provides greater energy security. In 2020, 23.7 GW of renewable energy was provided through PPAs globally, so this is a tried and tested method.

As well as the direct cost, security and environmental benefits, developing such schemes at a local level can provide jobs and growth in the community as well as furthering local authorities’ social value commitments. In the face of the economic and climate disasters on our doorstep, it is important that local authorities appreciate that both they and their residents are not necessarily in the hands of the national and international energy markets. Local solutions can protect local communities from shifts in price, insecure supply and carbon emissions.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk

Natasha Barlow is a Trainee Solicitor and Steve Gummer is a Partner at Sharpe Pritchard LLP.

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This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any issue raised in this article, please contact us by telephone or email enquiries@sharpepritchard.co.uk