CIC Start Online Conference 2011 – Edinburgh Napier University

Just another WordPress site

CIC Start Online Conference 2011 – Edinburgh Napier University

Good morning. Iím Sarah Borthwick, and Iím a PhD student at Edinburgh Napier University Today, Iím going to talk to you about energy sustainability in the housing sector, some of the modern technologies available to us, and the use of energy co-operatives as a means to help further the application of such technologies Energy drives our existence and is crucial for the development of the human race. It is a requirement for the production of all goods and the provision of all services. We use it in every day processes: from switching on a light, to heating our home, to cooking our meals. Energy use has steadily increased over the past twenty years. When better means of producing ordered energy are developed, new uses are found and consequently, the demand goes up One factor which correlates to this is the growth of the population. As the human race evolves, we find more and more uses for energy in which to advance our way of living and quality of life. Along with forecasted population growth, energy consumption is also expected to grow All this energy use does however come at a price ñ we are utilising limited supplies of fossil fuels, which make up around 70% of world primary energy demands. At our current rate of consumption, proven world coal reserves should last about 200 years, oil for approximately 40 years and natural gas for around 60 years ñ although different countries are at various stages in their stock depletion. Nevertheless, recent shale gas discoveries, including those witnessed early 2011 in India, may alter this scenario Whatís more, we are emitting a harmful combination of greenhouse gases into our atmosphere. CO2 emissions have been increasing over the past few decades, and are forecast for further growth if no action is taken. In respect of climate change and global warming, the build up of such gases has detrimental effects upon temperature, and a resulting influence upon health, wildlife, agriculture and the economy The maps on the right hand side demonstrate how the world is expected to warm as a result of climate change over the coming century There is a growing consensus that past observations of temperature increase can be attributed to human activity. In 2007, the Intergovernmental Panel on Climate Change concluded that it was ìvery likelyî that most of the warming observed over the past fifty years could be attributed to human activities Various government targets and agreements are in place, which aim to manage this growing problem, both nationally and internationally The Kyoto protocol was agreed in 1997 for industrial nations to reduce greenhouse gas emissions to 5.2% lower than 1990 levels The target date for this ranged between 2008 and 2012. Weíre currently in 2011 and very few nations have managed to meet their target ñ although the UK appears to be very much on track The Climate Change Scotland Act, receiving royal assent in 2009, has a target of an 80% reduction in greenhouse gas emissions by 2050, and an interim target of 42% by 2020. This very ambitious target signifies the commitment of Scotland in mitigating the serious threat of climate change The actions we take over the next 20 to 30 years will influence the outcome of future generations to come. The Stern Report concluded that there is still time to avoid the worst impacts of climate change ñ but only if action is taken now. The Report advocates the costs of mitigation to be around 1% of global gross domestic product ñ a significant but manageable amount ñ whereas the costs of mitigation are up to 20 times greater if we delay taking action In an effort to work towards these targets, we look to alternative sources of energy The need for this arises from two realities: increasing pollution; and dwindling supplies of fossil fuels Alternative forms of energy are those that don’t include fossil fuels or carbon-combustion products such as gasoline, coal, natural gas and so on. Some of these alternatives can also be renewable: that is, being able to replenish themselves without any human effort, and thus relieving our dependency upon declining supplies of fossil fuels. The issue of sustainability should also be considered, which are not only renewable but also have the ability to keep the planetís ecosystems up and running for the indefinite future In relation to annual world energy consumption, the diagram reveals the potential for solar power to be huge, as shown by the larger blue square around the outside. And although other renewable sources such as wind are not quite as large, the capability still exists Targets are also in place for the uptake of renewables. For instance, in 2009, the renewable energy directive set a target for the UK that 15% of energy consumption should come from renewable sources by the year 2020 ñ the wider picture for the European Union is for a target of 20% The Scottish Governmentís own target, initially set at 50%, has now been raised ñ so that 80% of Scottish electricity consumption is

to come from renewable sources by 2020. Scotland is also on course to both meet and exceed its interim target of 31% for renewables by the year 2011 There is no shortage of energy itself ñ only that of ordered and usable energy. The key is to find greater efficiency in our every day processes so that we can maintain our current lifestyles whilst reducing the impact of our actions The good news is that there is still time to avoid the worst impacts of climate change if action is taken now. Various technologies are available for harbouring these alternative sources of energy, including that of solar and wind The sun radiates a vast amount of energy onto the earthís surface ñ people use less energy in 27 years than the solar energy reaching the earth in one day! The annual solar radiation received by the earth is almost 9 times greater than the total reserves of non-renewable energy resources It is the cleanest source of energy in the world, it is of infinite supply, and is also renewable The level of irradiation varies by time, location and season. The quality of the sunlight is also crucial, taking into account issues such as the degree of cloud cover and shading from nearby trees, buildings and so on Even in Scotland and the rest of the UK, which is perhaps not the sunniest of climates, the potential still exists for solar power, even when diffused through cloud. Research in Edinburgh suggests the daily availability of around 12 hours of sunlight There are two basic uses of solar energy: to generate electricity and to heat water For the direct conversion of radiation, the necessary technology comprises photovoltaic panels and thermal water heaters respectively Taking photovoltaic panels first ñ Semiconductors in the PV cells convert the solar radiation received into a raw electrical signal upon contact. This is made from purified silicon, of which there are several types with varying levels of quality, efficiency and cost. Average efficiencies in the UK range from 12 to 18%, and researchers expect this to reach up to 30% in the future. To maximise the power and surface area, PV cells are grouped together to form rectangular modules Once the electrical signal has been produced, it is then transferred to an inverter which converts this into a usable alternating, or AC current. From that point, the power can then be used in the home or business. Excess electricity can also be sold back to the utility company via the grid for use by other customers (known as net-metering) Access to the grid can also be advantageous for coping with fluctuations in demand and changes in weather conditions. Alternatively, systems can operate remotely when it would be inconvenient or expensive for grid access The capital costs of PV include not only the cost of the PV modules themselves, but also the cost of forming arrays and the necessary support infrastructure including land, cabling, invertors etc, plus the cost of either storage batteries or connection to the grid Although the initial capital costs will be high (an average system can cost around £12,000) the running costs will be extremely low. It does not require fuel, solar energy is free to collect, and it has no moving parts which is reflected in low maintenance costs. A reduction in energy bills will also become apparent In terms of the uptake of PV, Europe is leading the way with almost 70% of the worldís cumulative PV power. Over the last decade, the growth in PV in Europe has been exceptional ñ in 2000, only 189 megawatts were installed; the figure since then has risen by over 8000%, bordering almost 16 gigawatts in 2009. In relation to other countries in Europe, the UK has the lowest amount of solar radiation available for collection, and a relatively low level of adoption Nevertheless, estimates suggest a more favourable positioning of solar in the UK. For instance, solar energy from buildings is reported to exceed that of peak oil production; and in relation to electricity consumption, solar electrical generation can contribute around two-thirds of UK demand Furthermore, the UK market for solar PV has experienced significant growth in the number of installations in recent years ñ and forecasts anticipate this trend to continue. Estimates suggest an increase in the range of 50% for each year through to 2014 The second use of solar power relates to thermal water heaters. This basically captures energy from solar irradiation, passes the heat onto a transfer fluid, which then heats the water There are two main types of solar thermal collectors: the glazed flat plate, and evacuated tube collectors The glazed flat plate is made up of a tray or frame, with a layer of insulation to prevent heat loss. Copper pipes are positioned in a serpentine arrangement to carry the heat transfer liquid through the collector. The evacuated tube collector, on the other hand, has a manifold with a series of glass tubes which are parallel in assembly. A vacuum is created within the tube which effectively

acts as an insulator for the absorber The two types of system offer similar efficiencies in both transmission and absorption ñ but thermal efficiency is greater in the evacuated tube collector owing to the presence of a vacuum The solar energy received in the UK for thermal water heaters is comparable to that in Europe, with Birmingham shown in red. Even in Scotland, the Energy Saving Trust estimates that thermal water heaters are capable of displacing 50% of hot water needs in households. In the winter months, this figure will be reduced by 10 to 20% due to changes in weather and temperature This could, in turn, save up to £38 million a year if thermal water heaters were fitted to every house in Scotland. The saving in CO2 is equivalent to the removal of a small car from the road per system installed Although the UK has the lowest amount of daily solar radiation in Europe, it does not, however, have the lowest uptake of solar water heaters with 175.6 megawatt thermal. And in terms of both Scotland and the UKís energy needs, the use of thermal water heaters can help to meet demand and forecasters expect a growth in uptake over the coming years Solar water heaters can be used in almost every climate and help meet some of our energy needs. Like the PV technology, thermal water heaters require little maintenance, solar energy is free to collect, and a reduction in energy bills will become apparent Although Scotland is a suitable climate for thermal water heaters, the effectiveness of the technology is dependent upon the quality of sunlight. The risk of freezing in lower temperatures is also a possible problem. The upfront capital cost is, however, likely to be the biggest drawback and thus hinder the widespread uptake of the technology, typically costing around £5,000 However, the relative costs per kilowatt of installed thermal and PV power have fallen over the past twenty five years or so. This can be attributed to technological improvements, greater efficiency and reduced material costs ñ all of which will help make the market for both PV and thermal water heaters more attractive to the consumer The second source of alternative energy that weíll look at today is wind power. Global air currents arise when the sun heats and cools various parts of the world at different rates ñ essentially, it follows on from solar power The UK has a natural geographic advantage for wind power, particularly Scotland as shown by the dark blue. It is, in fact, the best wind resource in Europe! The potential therefore exists for both Scotland and the UK to become a world leader in wind energy technologies The potential to harness wind power is immense, and this sector has one of the fastest growing renewable electricity technologies with an average of 40% growth per annum. Wind energy is clean, efficient and renewable, and emits no harmful greenhouse gas emissions or other pollutants into the atmosphere when in use The level of support for the use of wind power has remained consistent with between 70 and 80% support as shown from various studies conducted over the past decade ñ and similarly, the level of disagreement has also remained below the 10% mark As was demonstrated earlier, the capability in the UK for wind energy is substantial ñ however, the level of wind power installed does not match this potential The UK is one of the top 5 countries in Europe ñ but the two biggest players, Germany and Spain, have a capacity at least five times greater. Nevertheless, since 2002, the UK has witnessed a growth of over 500% by the year 2009. Forecasts for the future anticipate more than 100,000 megawatts of wind power in Europe by the year 2030 ñ and worldwide, the figure is expected to reach between 180 and 474 gigawatts by 2020 Wind turbines can be used to capture kinetic energy and turn it into electricity. Wind turbines use large blades to catch the wind, which turns the propellers, forcing the alternator to turn and thus generate usable AC power In terms of smaller scale or micro wind turbines, there are two main types: those mounted on the roof of a building and set up in a position of great wind exposure; and those free standing, again situated where there is a suitable degree of wind. Mast mounted turbines are often larger in size than those hosted on rooftop locations, and thus have a larger price tag attached Small scale micro wind turbines have been found to have a low efficiency level, and research suggests they tend to underachieve and fail to contribute substantially towards annual energy needs of a typical dwelling The capacity factor is a measure of how effectively the wind turbine can harness the available energy ñ micro wind turbines offer a capacity factor of only 4% on average ñ and less than

1% in some cases Midi-turbines, on the other hand, look more promising, with a capacity factor between 13 and 33%. They have been shown to perform adequately ñ although, rural farms offer the greatest potential for this Macro wind turbines, however, seem to offer the best solution for the bulk supply of electricity ñ with the greatest power and energy production potential. Research suggests that large scale wind turbines can deliver 50% of the UK electricity demand with only a very small proportion of land being used. However, this also has a high price tag attached Connection to the grid is also possible, where excess electricity can be sold back to the utility company (as can be done with solar PV electricity) ñ or systems can operate remotely with batteries to store the unused electricity for a time when there is no wind Further aspects for consideration include the design of the turbine (whether a horizontal or vertical axis design; and whether up-wind or down-wind); the number of blades; cut-in and cut-out limits; the need for stabilisation, and the exact location for the turbine, taking into account the wind speed and nearby obstacles ñ this perhaps being one of the very first points to consider when evaluating the options In a means to support the uptake of these renewable technologies, various policies have been implemented which offer financial incentives to the user As was shown earlier, technologies such as solar PV, thermal water heaters and wind turbines generally require a high capital cost at the outset which can, in many cases, deter the initial purchase ñ although financial savings will be made in due course. Policies can be in place to further accentuate the future benefits from producing your own electricity and hot water In respect of electricity from solar PV and wind turbines, the feed-in-tariff scheme provides clean energy cash-back as a further financial reward from April 2010. This guarantees a minimum payment for both the electricity generated and also the excess exported back to the grid A fixed rate is offered for every kilowatt hour generated ñ including the electricity actually used in the property. Furthermore, electricity exported back to the grid is worthy of an additional supplement as an extra benefit The payment received is made in addition to the bill savings from using the electricity generated on site. Payments are also exempt from income tax if the electricity is used within a household, although businesses and organisations in the public sector are still taxable Different rates are offered depending upon the technology, its size or capacity, and whether included on a new building or fitted retrospectively. Upon joining the scheme, the same tariff is used over either 20 or 25 years for wind and solar PV respectively, and the tariff is also linked to the retail price index, in that it varies in line with inflation. The electricity exported back to the grid is awarded an extra 3 pence per kilowatt hour (the figure being constant for all technologies) as a further incentive The more established system of Renewable Obligation Certificates, or ROCs is still partly in existence, and the rules surrounding its use today depend upon the exact date of installation and previous entitlements to financial help. And a standard rate of 9 pence per kilowatt hour is payable for all technologies, plus 3 pence extra for exports back to the grid In respect of thermal water heaters, there exists a new policy measure to help encourage uptake, known as the Renewable Heat Incentive, or RHI. Expected to be launched mid 2011, the RHI is designed to provide financial support for individuals, communities and businesses who switch from using fossil fuels for heating to that of renewables Research has shown that the use of long term national policy measures, such as this, can better saturate and strengthen the market for thermal water heaters, as demonstrated in other European countries The tariffs are calculated to help bridge the financial gap between the cost of conventional and renewable heat systems, plus an investment rate of return of 6% for solar thermal. A fixed amount of either 17 or 18 pence per kilowatt hour of renewable heat delivered, depending upon the size of the system, would be paid annually for the duration of 20 years Eligibility is also dependent upon a cut-off installation date of 15 July 2009 Payments can be made either on the exact amount of heat produced (accurately derived by a meter), or upon an estimation of what the technology installed is likely to produce Tariff payments are also exempt from income tax when the energy is used in the home Further fiscal instruments can be used, as suggested by the research on screen, to help increase the uptake of both solar PV and thermal water heaters. These include a suggested reduction in council tax, proportionate to the renewable

energy generated, or perhaps the level exported back to the grid. A lessening of planning restrictions for the installation of renewable technologies is also suggested Nonetheless, it is still feasible for these incentives to apply to the installation of wind turbines to help encourage their uptake So, weíve covered three renewable technologies which can be used to provide us with electricity and hot water in our buildings, neighbourhoods and cities. There is now a growing interest in co-operative approaches to renewable energy, which can be used to achieve scale, manage risk and raise capital, whilst maintaining the benefits locally The idea of co-operation can be observed historically when tribes were organised for mutual benefit, allocating jobs and resources amongst each other, and trading with external communities The first formal society founded upon co-operation took place in 1761 with the Fenwick Weavers Society in East Ayrshire, which sought to promote and maintain high standards in the weaving craft and provide benefits to its members From then, various associations have been established based on co-operation in cotton mills in 1810, newspapers and banks in the 1870s, and colleges in the early 1990s. Today, co-operatives have grown into a global force with over 800 million members, supporting the livelihood of almost 3 billion people around the world. In Scotland alone, co-operatives make a significant contribution to the economy, employing 28,600 people and producing over £4 billion in turnover. Co-operatives operate in almost every sector of the economy ñ from education to consultancy, to manufacturing and engineering In spite of the large number of co-operative enterprises present globally, initial perceptions of what a co-operative actually is appear to be somewhat naive. In many cases, knowledge hardly stretches beyond awareness of the Co-operative Group, the UKís largest co-operative, whose portfolio includes food, travel, pharmacies, funeral care, and both legal and financial services. Beyond the high street name, research shows that people are aware of the co-operative difference, but are not sure why nor what it actually involves A co-operative business is owned and controlled by its members, who can be employees, businesses or consumers. They are set up to meet a common need, whether economic, social or cultural, and are run on a democratic basis. Co-operatives are typically run for the mutual benefit of the members, and have a strong sense of ethics and social responsibility Profits can be distributed amongst members or invested in local projects. In the current economic climate, co-operation with others helps to reduce risk and enables economic, environmental and community benefits to be realised All co-operatives are run according to the seven key principles, as agreed by the International Co-operative Alliance, which are central to the running of the enterprise and will help ensure its success The principles are: One, that co-operatives are voluntary organisation, open to all persons Two, they should be democratic and control should be exerted by the members who actively participate in setting policies and making decisions Three, that members contribute equitably to the capital of their co-operative Four, co-operatives should be independent and self-help organisations Five, education and training should be provided for members, elected representatives, managers and employees so they can contribute effectively towards the development of the co-operative Six, that co-operatives help strengthen the co-operative movement by working together through local, national, regional, and international structures And finally, seven, that co-operatives work for the sustainable development of their communities A set-up such as this delivers superior business performance and sustainability, with a long term survival rate of co-operative enterprises almost twice that of investor owned firms Co-operative ownership of renewable energy projects is common in many countries in Europe It has been observed by Energy4All that countries adopting the co-operative approach, with individuals and societies getting involved and working together, have had the greatest success with renewable energy. Evidence from both Scotland and other countries lead to a suggestion that co-operatives play an increasing and significant role in the renewable energy sector There are three main proven business models in the renewable energy sector, which can be adapted to suit any business: the co-operative consortium, the employee-owned business, and the community co-operative. Letís review these in turn First, a co-operative consortium is a collaboration of businesses who want to buy, produce and sell more effectively, whilst still retaining original brands, independence and control The benefits of doing so can help to share risks and reduce costs through economies of scale; whilst gaining access to new opportunities and new processes

In terms of the renewable energy sector, engineering businesses could choose to come together to win substantial contracts as major suppliers to the energy industry. Specialist skills relating to energy infrastructure (in which to build, develop and maintain the technologies) can also be accumulated. The sharing of costs such as promotion and advertising is also possible, along with the centralisation of resources and administration. Increased buying power in terms of discounts and the conditions surrounding new contracts may also arise due to the consortium As a simple example in the renewable energy sector, a Swedish co-operative was created, comprising of forest owners, private sawmills and a Swedish wood products company in which to collect forest chips and sawmill by-products and supply around 3.5 billion kilowatts of wood fuel In terms of the future of wind power, the strict financial and operational requirements may prove challenging for smaller suppliers in the tendering process. The consortium business model is a potential solution, with smaller suppliers teaming up as a larger entity, who may find themselves able to better compete for major contracts Next, we have employee owned businesses where, as the name suggests, employees rather than external shareholders hold the majority of the shares and control in a business. This may arise as a result of an employee buyout, which can help secure the future of the business and its employees, and help keep jobs and wealth creation in the local economy. The employees themselves will have a greater say in decision making, with more control over issues such as company strategy and working conditions. This, in turn, can lead to a greater sense of individual well-being and fulfilment in their employment An interest in the environment and that of sustainable development within their local area is also common As an example, Eaga is a Newcastle based renewable energy supplier which is 37% owned by its 4,500 employees and partners. Created in 1990, Eaga works with public bodies, schools, hospitals and businesses to help drive the carbon agenda and deliver improvements in energy efficiency across residential and commercial sectors Following the co-operative way, Eaga advocate the strength of their company to come from their ownership structure, which helps ensure a commitment to the values and objectives of the company. The model of employee ownership has been shown to drive engagement and deliver increased profitability within the company Eaga also focuses upon local communities, particularly the more vulnerable ones, which also ties into the co-operative theme. Eaga have multiple area programmes to help support disadvantaged communities and create low carbon neighbourhoods There is also a further avenue which can be explored by such companies, which involves forming an alliance with home owners for the exploitation of solar energy Eaga have signed agreements with local authorities, housing associations and management organisations to install PV modules at low or zero cost to the consumers ñ who then recoup the cost of installation by collection of the feed-in-tariff revenue, as outlined earlier. Consumers benefit from free electricity from the sun, which will thus lower electricity bills (estimates suggest by up to one third). Eaga also maintain the system for a period of 25 years, which reduces the worry for customers Essentially, this can be thought of as a ìrent my roof spaceî scheme, where the solar panel owner is, in effect, renting the roof space from the customer. A similar such scheme could also apply to thermal water heaters, where the collection of the renewable heat incentive could be used to recoup the costs of initial installation And finally, community co-operatives are owned by their customers, or members, in which to provide the goods and services which are required A community can include those within a certain geographical area; and those who share common values. Such co-operatives are owned, controlled and run for the benefit of those living in an area and/or having a common interest Community ownership has many benefits including a direct stake in a local project, an individual commitment to low carbon initiatives, and an attractive rate of return to the members This can also lead to individual empowerment and fulfilment, and increased loyalty towards the project. Subsequently, both the economic and environmental benefits are maintained in the local area, including the financial return, and renewable energy generated for the community. Education and training support can also be provided on environmental issues And finally, co-operatives are also positioned as part of the nationwide network of other

ëgreení co-operatives, which can offer support and aid the development process of newer co-operatives In respect of the technologies outlined earlier, community co-operatives can allow collective investment in and ownership of renewable energy assets such as wind farms, photovoltaic panels and thermal water heaters ñ spread over a community level. Shared ownership allows the members of the co-operative to spread the risk and maximise the return on their investment Taking wind turbines first, it is possible for a community co-operative to be set up amongst individuals and/or households. Funds are raised from a public share offer in which to purchase a share in a wind farm. Electricity is then received to the local community, and the excess can of course be exported back to the national grid. Every year, members will receive an annual dividend from their shares, which is the profit from the sale of green electricity. Share capital is also given back at the end of the project lifetime The minimum cost to become a member is £250, so almost everyone can join a green energy co-operative, whilst the maximum is £20,000 ñ where one member equals one vote in the strategic decisions made by the co-operative Preference for membership is given to those people living in areas where the wind farms are developed, in which to keep the benefits as local as possible As a case study, the Boyndie Wind Farm Co-operative was set up in 2005, allowing the community of Banffshire in Aberdeenshire to own a share in the first Scottish wind farm co-operative Based at a former World War 2 airfield, the farm has a total of seven turbines (and planning permission has recently been acquired for an eighth turbine). At present, the turbines generate enough electricity to meet the demands of 8,500 homes when operating at full capacity There are 716 members, who raised a total of £730,000 at the initial share launch, who all receive annual interest on their shares Similar schemes around Scotland include the Wind Farm near Dunvegan on the Isle of Skye The site has ten 2.3 mega watt Enercon wind turbines, having raised over £800,000 from 570 members in which to purchase a stake in the project. The ten turbines are capable of generating enough clean, ëgreení energy to supply around 14,000 homes. There are also plans for an extension to take place, with two further turbines The Great Glen Energy Co-operative has sixteen 2.5 megawatt turbines located in the hills north of Invergarry and southwest of Fort Augustus The wind farm can meet the electrical needs of over 22,000 households, which could displace up to 84,000 tonnes of carbon dioxide each year which would otherwise have been produced by a power station using fossil fuels Finally, the Kilbraur Wind Energy Co-operative has the largest scale of those in Scotland, with nineteen turbines and a proposed extension of a further eight turbines located in the Strath Brora area of the Highlands Up to 27,000 homes could be catered for with the electricity generated, equivalent to 107,000 tonnes of CO2 from traditional fuel sources which could be saved The Edinburgh Community Energy Co-operative Ltd is a more local example, which was set up in 2007. This not-for-profit, member owned organisation was created to give the residents of Edinburgh a way to promote and develop renewable and low carbon energy in the city So Iím now joined by Douglas Prentice who is the deputy chief executive of Geocapita Douglas is involved in developing, financing, and risk managing clean-tech projects So Douglas could you first of all give us an overview of the Edinburgh community energy cooperative? The North Edinburgh energy cooperative was set up by Mark Lazarvich, the local MP for north Edinburgh Leith, to increase public engagement in renewable energy projects. Iíve had a number of meetings with him and the objective of the cooperative is to widen engagement from people within the constituency and more broadly around Edinburgh in renewable energy projects So what type of low carbon energy initiatives does the cooperative undertake? My discussions with them were pertaining to the Lothian waste project, which is the project to repossess Edinburgh and Mid-lothianís waste, they had a facility in miller hill in east Edinburgh so rather than land filling municipal waste, which is what happens at the moment down at Dunbar, the old blue circle cement factory site ñ The idea is to reprocess

it to combined heat and power in east Edinburgh So thatís been my discussions with them, but I am aware that they have also bought plans to develop wind and solar photovoltaic electricity generation projects in the Edinburgh area So although the scheme is geographically constrained to north Edinburgh and the Leith area ñ is this the type of model that can be replicated in other locations throughout Scotland or even the UK? Indeed, and beyond Scotland and the UK ñ there are no real geographic boundaries as to the implacability of a cooperative or mutual- it could be anywhere. In fact I know regions of the world where the greatest growth in new cooperatives is actually in Asia, and India, and China. But speaking specifically about Scotland, thereís no reason why the north Edinburgh energy cooperative would be restricted to North Edinburgh ñ it could be operating anywhere So Iím aware that the city of Edinburgh Council have agreed a target of a 25% reduction in Carbon by 2015, a 35% reduction by 2025, and to be carbon free by 2050. Do you think that renewable energy cooperatives such as this one have an important role to play in helping to meet this target? I think potentially a very important role ñ because public engagement to decarbonise various economic activities really requires extensive involvement of the local community ñ so I think the idea of community energy cooperative or similar type of structure is ideally suited to increasing local engagement Utilisation of renewable energy and sustainable transport and waste reduction ñ general strategies designed to carbon emissions. So I think yeah, a cooperative model or a hybrid cooperative commercial model is in fact a highly desirable in terms of achieving that local public engagement Co-operatives can also be used on a more individual level within the community. For instance, a co-operative could be created which, as an entity, can approach suppliers of photovoltaic panels, thermal water heaters, and even small scale micro-wind turbines. A substantial order, sufficient for the whole community and individual households and buildings, can receive very generous discounts from suppliers, as opposed to separate orders by single members of the community. Energy co-operatives can therefore play an important role in purchasing large quantities of renewable technologies at a price that would perhaps not be feasible at individual levels. For instance, Eaga operates a group sharing scheme for a minimum of 5 homes. Whether it be a few homes on a street or a formal member organisation such as a co-operative, cost savings can be achieved and passed onto consumers As an example of its application, Newcastle based Community Energy Solutions is a non-profit distributing community interest company set up in 2006 which aims to assist local authorities and housing associations in making their homes more energy efficient, with a target of 2000 PV systems across the North East, Yorkshire and Humberside in a two year period Community Energy Solutions aims to introduce the technology which enhances energy and carbon efficiency, operating through the GoSolar and GoWarm brands, thus reducing the burden of energy costs, particularly upon more disadvantaged members of the community Resources are pulled together between funding organisations, solution partners (including suppliers) and those installing and maintaining the equipment for the most cost effective package for consumers. Knowledge transfer also takes place with households, to help understand the associated benefits of energy efficiency in the home, and identify possible sources of funding or grants to help with the financial side of the development. Contributions are also made to local projects in the community in terms of regional regeneration Renew Energy Solutions Limited is another good example of an energy co-operative formed to develop, fund and manage sustainable energy solutions for the benefit of the communities to whom they are accountable. Renew Energy Solutions works with new builds and existing properties, public and private sectors, housing and other energy users. A five stage project generation process has been derived: 1, registration of interest; 2, initial appraisal; 3, project development; 4, contract and financial close; and 5, the actual implementation Following the co-operative model, this provides consumer protection, a high level of trust, and a co-operative dividend. Training is also provided to local communities ñ for instance,

roofers and electricians are trained to gain MCS accredited installer status. Links with training partners are also being established, as new courses are being created with colleges and training centres in respect of the building industry and micro-generation Additional employment opportunities are also available in the community, such as surveying properties, assembling the PV kits, repairs and maintenance, and managing the warehouse with PV modules Renew Energy Solutions is also advocating the idea of ìfree PVî to consumers upon the collection of the feed-in-tariff, like Eaga as outlined earlier In the long term, it is also possible for community co-operatives to actively engage in the manufacturing of their own renewable technologies. Setting up a fabrication plant in which to produce thermal water heaters, wind turbine components and PV panels will reduce the cost of these technologies as all activities would be undertaken on a not-for-profit basis. However, this would involve a much greater commitment, further finance and training ñ a process likely to take at least 10 to 15 years to be fully established. Nevertheless, it would result in further employment opportunities for the community and a further source of income if selling the products outwith the local domain By and large, communities can become increasingly self-sufficient in terms of energy use A model community for renewable energy can be seen in the Isle of Eigg in the Outer Hebrides Following a community buyout for £1.5 million in 1997 when ownership of the island was passed to the residents, a series of projects have been embarked upon for the wider benefit of the members, including property renovations and forestry improvements. The idea of renewable energy for electricity was also identified, and as of 1st February 2008, a new electrical grid went live with three hydro generators, four wind turbines and several solar panels ñ a project costing around £1.6 million The independent electricity grid now supplies power to all 86 residents and small businesses ñ meeting up to 95% of the Islandís energy requirements A limit of 5 kilowatts for domestic and small business, and 10 kilowatts for larger business has been set, with installed energy monitors to allow for prudence. Surplus power is conserved in batteries which can provide power for up to 24 hours; and two 80 kilowatt diesel generators are available as an emergency backup The introduction of renewal energy has reduced CO2 emissions by 32% during a 12 month period The Island is now much more self-sufficient, with greater electrical energy security. Living standards and quality of life have improved, plus the acquiring of new skills and employment opportunities in terms of the maintenance of the technologies The model for development and the type of system used on the Island have much potential for replication in other communities ñ not just those in rural areas. Communities have realised that they can make a difference in terms of energy use, where the benefits can be felt both locally and internationally with less dependence upon limited and dwindling sources of energy To help encourage the uptake of co-operatives, there are specialist organisations which help with the set-up and successful launch of such entities ñ Energy4All is one of them, including its Scottish subordinate, Energy4All Scotland So could you first of all tell us about Energy 4 all? Yes, energy 4 all are a wind farm cooperative, they assist other cooperatives or people who would like to establish cooperatives to set up cooperatives, develop sites, wind farm sites around the UK, and theyíve been doing that for quite a number of years now. And they have in fact pioneered the concept of the hybrid commercial cooperative structure for wind farms So what does the structure of energy4all in terms of the cooperative models? Energy4all I believe is comprised of 7 other local energy cooperatives, and they have 5 models of engagement between the cooperative, each individual cooperative and the private sector wind farm developer and operator. The two which are most relevant to what weíre doing are: the co-ownership model where the cooperative and the private sector developer jointly own and operate the asset ñ and the second model is the revenue sharing agreement where they derive revenue and share from the electricity from the generation from the wind farm, and they apportion that between the private sector operator and the local cooperative on pre agreed terms So what type of services do energy 4all offer?

Basically they assist local groups, local communities, land owners, farmers, people such as that who set up cooperative structures for wind farms in their location. Help them with planning permission and site acquisition, finding private sector wind farm developers that can partner with them in the hybrid model and generally assisting and promoting the development of hybrid commercial cooperative wind farm operations around the UK I believe thereís a quite an attractive rate of return to investors, could you tell us about that? My understanding is that theyíve been running for quite a number of years now, originally coming out of bay wind as I mentioned, and I understand theyíve been able to pay to their investors ñ local citizens who have invested in their own individual cooperatives around 7 or 8% per annum, which as Iím sure youíll understand is really quite an attractive rate of return in the current financial situation And what happens to the share capital at the end of the project? At the end of the term of the project, 25 years, it would be returned to he investors So thereís some added financial benefit? Yes So what type of projects have energy4all been interested in up to now? Hitherto their work has really been in wind farms but I believe that they are exploring other areas of renewable energy generation And is it feasible that the focus of energy4all could shift towards that of solar technologies, including solar photovoltaic panels or thermal water heaters? Yes, absolutely. The validity of the model is quite widespread it doesnít just have to be restricted to wind cooperatives, it could be for solar PV, solar thermal, it could be for energy from waste projects, a variety of local community energy generation projects would be appropriate for their type of model Another key player for Scotland is Co-operative Development Scotland, which seeks to flourish the market for co-operative enterprises So Iím now joined by Sarah Deas, Sarah is the chief executive of cooperative development Scotland which is a subsidiary of Scottish enterprise. So Sarah, first of all could you tell us in your own words what a cooperative is, what it actually means? Itís a business thatís owned and controlled by its members, who have a shared interest and it is run in a democratic manner So how would a cooperative differ in terms of for instance day to day running or decision making with that of a traditional business model? Well itís principally that decision making element whereby each member may have one vote, for example, or the voting power may relate to the level of benefit the members get from the cooperative, whichever way itís about a fair, democratic approach to decision making So Iím aware that thereís several different types of cooperative models, would you be able to run though the main types? Yes, well thereís principally three ñ thereís the consortia of businesses, thereís the employee ownership model, and thirdly thereís the community cooperative So taking the first one, a business consortia That allows businesses to come together to get scale in buying, producing or selling It may also reduce the risk to any one of those business by working in this collaborative manner. An employee ownership is more of an internal form of collaboration where a business is owned by employees or possibly by an employee ownership trust. So, the advantage here is that it helps root a business in its locality and also through the engagement of the employees, will ultimately lead to greater productivity and growth And then the community cooperative is owned by individuals ñ so thereís maybe individuals in a physical location or a community of interest, and they would invest in that community venture and have a shared influence in terms of how it is run So is a cooperative an effective way of running a business in terms of performance and sustainability? Yes! The advantage a cooperative has is that youíre involving the members who have a direct interest in the business in the decision making process, so that brings that level of ownership and interest that will usually result in a higher performing venture So how can cooperative models apply to the renewable energy sector for instance? So taking wind technology first Well the community form of ownership would work well within wind ñ so thatís where individuals within a community would personally

invest in that cooperative venture. There are restrictions on the level of investment one can make through the legislation, that at this moment in time, 20,000 pounds is the upper limit. Clearly not everybody would want to invest that level, so a cooperative would set a band and it may be for a lower limit of 250 pounds up to that higher limit. But what that allows is those individuals to get the benefits of renewable energy personally and there would also be a requirement for the community to benefit, the community on the whole – from that venture So, same kind of question but applying this to solar technologies ñ would cooperative models be feasible They would indeed, most likely with solar where you would be putting the panels on a building that the members would be the residents or the owners of that building. So they will come together to pool their investment capability and to have agreed how the decision making processes will operate in a fair manner So suppose for instance I had an idea and I got together with a few other people, a few other groups and decided that a cooperative model was what we wanted to pursue ñ so what would happen after we approached Cooperative Development Scotland? Well weíd obviously sit down and get to understand the idea that you have ñ understand how far youíve advanced your thinking, has a feasibility study been undertaken? Have you got to the business planning stage? Clearly there may be planning restrictions that you need to take on board, all these types of things would be part of that due diligence process. We wouldnít actually provide that form of support but weíd be able to guide you the mainstream advisory resources Where our role would come it would be looking at how best to structure the cooperative, looking at the alternative routes to finance it, and also looking at how to engage the members in their decision making capacity So do you provide finance at all? Or is it more directing people to possible sources of finance? Yes, we donít provide finance ourselves, so it is more of identifying what source would be more appropriate for the particular venture Do you have many partners that you can call upon to help with finance for instance and other others? There are providers in the market place, mainstream banks and other specialist forms of finance, clearly for a cooperative, if itís a community cooperative ñ one form of finance is from its own members. A very important aspect to the cooperative venture And would cooperative development Scotland be able to support existing cooperatives or is the focus more towards setting up a new one and getting it established? Well our remit most definitely includes existing cooperatives but what we do find is that at that stage in their development, theyíre particular needs are more likely to be those that relate to the mainstream support available for business gateway, Scottish enterprise or highlands and islands enterprise rather than unique aspects about being a cooperative Co-operatives are of interest to the Government in respect of economic development in the community. Co-operatives keep both the business, or entity, and the wealth it creates locally, which also supports the local economy. Survival rates are higher for co-operatives, which make them a more sustainable choice for businesses and have a positive impact upon employment opportunities. The nature of co-operative projects is likely to lead to personal development on an individual level, with greater entrepreneurial and business skills, together with a greater sense of empowerment and fulfilment in their job Indeed, the new Conservative-Liberal Democrat Coalition Government has shown support for co-operatives, arguing the ìinnovation and enthusiasm of civil society is essential in tackling the social, economic and political challenges the UK facesî. Backing exists for the creation and expansion of mutual, co-operatives and social enterprises, including that of employee-owned co-operatives and community organisations And in Scotland, the Scottish Government has recently tripled the funding for community renewables and micro generation. The Climate Challenge Fund is inspiring community-based action all over Scotland, with over £25 million being made available to communities to pursue their own ideas This fund can be used to support community engagement and feasibility stages of a proposed energy generation projects. The Communities and Renewable Energy Scheme, or ìCARESî as it is often referred, offers both grant support and an information toolkit to further compliment the Climate Challenge fund and other such programmes. Ministers are very keen to see the benefits from renewables accrue

in communities Today, we have reviewed the use of several renewable technologies and the various co-operative approaches which can be adopted. Letís now summarise the key points and identify what we can take away from this This video has focused upon the use of renewable technologies for the generation of electricity and hot water in our buildings. In the context of increasing levels of pollution and dwindling supplies of fossil fuels, the use of alternative sources of energy is something we must all seriously consider. The technology does exist and is becoming increasingly available We have also outlined the various co-operative approaches to renewable energy, which are attracting increasing levels of interest Co-operation brings many advantages to society – not just those relating to the environment, but also the financial, economic and social benefits. Co-operatives can be adapted to suit all types of situations, and there are also various advisory bodies who can offer information and guidance Having watched this video, start thinking about the areas in your work and community where co-operatives could apply. What collaborations could be achieved, and to what mutual benefit? Which of the three business models for co-operation would be best suited: whether a co-operative consortium, an employee owned business or a community co-operative? Co-operation puts something back into society It makes a difference and helps give people opportunities to better themselves. Itís a different way of running a business ñ perhaps, itís a better way of running a business It doesnít matter whether there are 2 people involved, or 2,000 The co-operative movement can happen anywhere, and people can transform their lives and those in the community. Itís a model for the future, with 800 million people involved worldwide at present There is an alternative ñ consider being part of it Thank you very much for watching