A reliable, affordable and sustainable energy supply is key to the long-term success and prosperity of any area. Energy is a vital part of everything a city does, from providing transportation to lighting streets to keeping homes warm.

In the early part of the 20th century there were hundreds of municipal companies in the UK, generating and supplying energy locally. But after the Second World War, the government created a centralised system, to bring energy under the authority of the state. This has left cities with little control over this important resource.

But cheaper renewable energy and government support – through schemes like the Renewables Obligation (RO) or Feed in Tariffs (FiTs) introduced in 2010 – has meant cities, local authorities, communities and individuals can once again generate their own energy. And many are.

This local approach to green energy is not limited to its generation; local authority and community projects across the country are insulating homes, building district heating networks and developing new, innovative ways to save people money on their energy bills. The benefits are wide ranging.

Stockton-on-Tees council’s “GoWarm” external wall insulation project has reduced fuel poverty rates from 20 per cent in 2009 to 15 per cent in 2012. It’s also highlighted the positive health implications for residents at a time when many councils are contending with a dramatically ageing population. Each of the 2000 private rental homes retrofitted in the area are now saving on average £700 every year. The scheme has also led to the creation of 300 jobs.  

As central government’s green energy policies, such as the Green Deal and FiTs swiftly disappear in favour of support for natural gas and nuclear power, it is now up to cities to drive the UK’s green agenda. Nesta’s recent report Local Energy in an Age of Austerity covered this, as part of our wider work exploring how local and national government can deliver services in new ways for social good.

More than 50 councils have already committed to run completely on green power by 2050, and there is a real appetite among local authorities to use local energy as a way of tackling fuel poverty and create new sources of income. But as councils face deeper budget cuts – up to 40 per cent by 2020 – and renewable subsidies are lost, the lights could be fading for local energy. Leaner looking councils, eager to maintain the benefits local energy brings, will need to work more closely with external organisations to do things that do not form part of core frontline services.

This cooperative approach has already been successful in Plymouth where the city council and Plymouth Energy Community (PEC) – a community benefit society – work hand-in-hand to deliver fuel poverty schemes, local generation and energy advice. Employees hold positions that sit across the council and energy group, helping to cut staff costs, and PEC were able to get solar panel installation discounts by working closely with suppliers.

Sharing costs and responsibility like this could also help local authorities to make better use of their assets that might otherwise be sold off in the name of austerity.

Bristol city council has run a pilot project to map roof space on council-owned buildings that could be used for solar panels. These sites were then developed with local communities, and the power generated used to keep energy bills down for residents and the council. The money saved and generated from the solar panels have given these sites long-term value – more so than if they were sold for a one off payment – so future residents stand to benefit too.

A question of ownership

While partnerships with private companies and with other cities will also be important and offer ways of scaling projects, community involvement is essential. Local authorities and communities have similar social, economic and environmental motivations for starting local energy projects which will not necessarily be shared by private companies or Local Enterprise Partnerships (LEPs).

Community ownership and responsibility for projects has two important benefits. Firstly, it helps to galvanise volunteers, as Nesta’s Cities of Service project has shown in Plymouth. Secondly, it can lead to improved social cohesion and other social benefits not reported by council-run schemes. Many community groups say residents are, as a result, more inclined to support their area in other ways such as investing in local businesses or providing young people with new skills and support. A Greenpeace survey of 80 community energy groups found 88 per cent of people are now actively involved in other community initiatives.

In a time of austerity, the loss of local energy could mean councils miss out on a valuable opportunity to promote economic growth, improve health, cut carbon emissions and build resilience in their communities. As service providers, employer, social landlord and regulator, cities are well placed to make the most of the opportunities local and community energy presents.

But they cannot do it alone. As resources dwindle, they will have to work with each other, local business, LEPs – and communities.

Harry Armstrong is senior technology futures researcher at the innovation charity Nesta.

A report on this topic, “Local Energy in an Age of Austerity: Preserving the value of local and community energy” is available to read here.