Local authority energy initiatives operate in a challenging political-economic context

Our mapping demonstrates that the UK political-economic context for local authority action on energy remains uncertain, due to austerity in public finances, lack of statutory local powers over energy, and weaknesses in clean energy policies and incentives. These uncertainties have a negative impact, resulting in scaling back of plans to opportunistic, small projects, rather than strategic investment and long term capacity building. An increasing focus on short-term financial performance and cost savings are also leading some local authorities to question the legitimacy of their energy plans.

Despite this challenging context, local authorities continue to pursue energy initiatives, which are viewed as a source of revenue and an agent of transformation for local prosperity. Some cities and regions are making energy infrastructure and services central to capital investment, and creating municipal energy companies to manage new business; others are asking how they can get started.

The local projects in our case studies mainly tackled heat, and energy efficiency (Figure 2), as well as generating renewable electricity. LAs used a variety of business structures (Figure 3) and engaged with partners from all sectors, including commercial energy utilities and community enterprises. Contrasting business structures served similar purposes, indicating the adaptability of structures to local requirements, circumstances and expertise. 

Figure 2. The different energy initiatives included in the case studies

Public ownership of energy has featured in the news with announcements of Scottish and Welsh proposals for national energy companies, and is already being tested in municipal businesses, including the not-for-profits Robin Hood Energy (Nottingham City Council); Aberdeen Heat and Power (Aberdeen City Council) and Bristol Energy (Bristol City Council) Perhaps UK and devolved government can learn from their experiences.

Figure 3. Types of projects according to business structures

What needs to change?

Local authority action on clean energy is at an early stage, with issues to be resolved over structures, powers and resources. Where local authorities are succeeding, entrepreneurial officers, committed local politicians, and fortuitous financial circumstances have been critical. Those circumstances have often depended on European funding which will need to be replaced when the UK leaves the EU.

Existing local authority initiatives help to exemplify the potential for a more mixed economy of energy, and a more distributed system, with private, public and civil society contributors, and a significant role for municipalities. Further opportunities could leveraged, and problems eased, with a clear energy policy agenda for local authorities, and a consensus across government on the local contribution to future energy systems.

Five key areas for consideration

Research findings suggest five areas for consideration by UK and devolved national governments:

1. Use the UK Clean Growth Strategy to clarify the responsibilities of local authorities in energy saving and clean energy, and to establish policy and support measures with clear trajectories against a timetable
2. Consider what additional powers local authorities need to deliver these responsibilities
3. Consider further the need for national or regional energy agencies and shared services for local authority developments
4. Support local authority access to low cost, long term clean energy infrastructure finance
5. Amend energy market regulation to support local energy developers and operators, when this represents social, environmental and economic value to the public

These recommendations, as well as suggested actions for local authorities, are explained in the report.

Cleaner energy for all

Local authorities are one of the very few organisations committed to an area for the long term. Their democratic status is a route to engaging everyone in decision-making about the necessary shift to clean energy, giving them a stake in benefits as well as costs.

There is unlikely to be a single model for localised energy planning, development and management which works everywhere, but we know from European practice that coordination between local and national governments, as well as specific powers and procedures for energy planning, supportive regulation, and access to low cost, long term finance are all critical to energy systems with a strong municipal component.

The research team are very grateful to the 49 local authority officers and intermediary agency representative who participated in the case study component of the research and kindly completed questionnaires, accepted requests for interviews and provided documents.

Download a copy of the report:

UKERC_ETI_Report_Local_Authority_engagement_in UK_energy_systems.pdf1