Local energy provides enormous value to people, places and the national net zero mission. Yet key challenges remain to enabling this at scale. Our new thought leadership report for Innovate UK sets out this value and how the government can unlock this going forward.
The rapid acceleration of the government’s Clean Power 2030 ambitions, the establishment of Great British Energy and ongoing market reform debates have raised questions about the role of ‘local’ in the UK’s energy system.
Local energy provides immense value to people, places and the UK’s national net zero mission. This includes, but is not limited to:
- Reinvesting profits from locally owned generation projects to build community wealth and tackle fuel poverty
- Operating local supply and market models which can lower bills and encourage people to participate more actively in flexibility and demand-side response
- More directly engaging people in the energy transition through trusted local actors, partnerships and services more closely tailored to their circumstances
- Better reflecting the distinct needs of different geographies and groups, opening new opportunities for social and economic development.
Critically, local energy creates strong public buy-in for local infrastructure and the wider national net zero mission – enabling us to go further faster.
This value of ‘local’ is not widely enabled or recognised in the UK energy system, markets or regulation today.
Delivering local and community energy projects or services – whether local generation, supply, heat decarbonisation or integrated energy systems – is challenging currently. Compared to larger commercial operations, they can struggle with economies of scale, making them proportionately more expensive to deliver. And different actors in the energy system, including suppliers, are not consistently incentivised to support more ‘local’ projects or reflect distinct geographic circumstances.
Yet we argue that the value on offer is too good to pass up, and various changes are under way that can enable this on a wider scale. The formation of Great British Energy and the Local Power Plan, the Review of Electricity Market Arrangements (REMA) and retail market reform, Clean Power 2030 and updates to the connections process all present opportunities to unlock a thriving local energy landscape.
To help deliver this, our latest paper, Power of Places, draws on insights from systematic literature reviews and engagement with 15 local authority and community energy stakeholders involved in the Net Zero Living programme to spotlight the broad and significant opportunity of local energy. Based on extensive evidence, it sets out the value that local energy has delivered to people, communities and the energy system so far. It then sets a vision for an energy future which unlocks the diverse benefits that ‘local’ has to offer. 
Our vision is built on five key pillars for a thriving local energy future, all of which are underpinned by core just transition principles:
- Empowered communities: Citizens and communities with the capacity to participate directly in the ownership, design and governance of local energy projects and systems – supporting local wealth building and increasing support for national net zero ambitions.
- Locally minded markets: New models of local energy supply, tariffs, consumption and flexibility, alongside national energy markets and processes which recognise and enable the wider inherent value of local energy.
- Innovative solutions: Innovation towards new locally focused energy solutions, including regulation which supports integrated local projects and enables the different needs of places.
- Resilient systems: More local energy systems contributing to a more diverse mix of clean energy supply and services, supporting greater energy security and resilience to market, price or political shocks.
- Thriving partnerships: Local authorities, community energy, developers, businesses and other stakeholders enabled to work more collaboratively on mutually beneficial projects, supporting knowledge sharing and leveraging each other’s unique skills and capabilities towards shared ambitions.
We offer 15 recommendations for the UK government, Ofgem, Great British Energy and the National Energy System Operator to realise this vision going forward, leveraging changes and processes that are already under way today.
This follows our recent paper on shared ownership for a fast and fair clean power transition. To discuss this work further, please reach out to our just transition lead, Fraser Stewart.
This work was funded as part of the Innovate UK Net Zero Living programme. All perspectives and proposals are those of Regen and programme participants and are not endorsed by Innovate UK.