Cities 'should generate green energy', says think tank
- 17 July 2014
- From the section Business
Cities should invest in green energy production to compete with the main UK energy suppliers, a centre-left think tank has recommended.
Local authorities and customers could reap the benefits of renewable energy subsidies, a report by IPPR suggested.
Regulators are currently probing whether the "big six" UK energy suppliers prevent effective competition in the UK energy market.
The report comes ahead of a CBI energy conference on Thursday.
Energy UK, which represents energy suppliers, said customers would welcome more competition.
The IPPR report cites figures showing that cities account for two-thirds of the world's energy consumption and 70% of global C02 emissions.
Energy policies focusing on cities, therefore, could make a huge difference to both consumption and emissions, as well as bills, it argues.
The report cites the German city of Munich, which has a target to supply the entire municipality of one million people with renewable electricity by 2025. The city has already invested 900m euros (£710m) and it has plans to invest a total of 9bn euros to deliver its 2025 target.
"Around the world, cities are spearheading the transformation that must occur in the energy sector," said IPPR director Nick Pearce.
"Local generation technologies like solar and medium-scale wind are radically transforming how energy systems operate, bringing to an end the dominance of centralised generation and distribution.
"This will create a system which is more diverse and competitive."
In the UK, Bristol has plans to install one gigawatt of solar electricity panels by 2020, while Aberdeen wants to run buses on hydrogen produced by using spare energy from wind farms, the report says.
Lancashire County Pension Fund has also committed about £200m to low-carbon projects, including a £12m investment in Westmill Solar, a UK solar co-operative.
"Britain's cities could transform efforts to create a cleaner, smarter and more affordable energy system," the report says.
Energy UK acknowledged that local authorities had "already played a part in numerous district heating schemes and are also actively involved in community power generation.
"More competition in energy supply from other providers would also be positive news for customers."
The move towards more diversified generation would provide a much-needed alternative to the big six power suppliers, the IPPR argues.
"This report highlights something we have known for a long time - that the energy market needs to be shaken up and city regions can provide a serious alternative to the big six," said Sir Richard Lease, leader of Manchester City Council.
This added competition could ultimately see bills fall, the report says.
"Turning our cities into energy suppliers could help bring bills under control, slash fuel poverty by systematically insulating thousands of homes and start to fill the gap in clean energy investment left by the big six," said John Sauven, head of Greenpeace UK.
"People would get their energy from a trusted source and profits would be reinvested locally."
The report comes against a backdrop of a slow but steady move towards more community-based power generation, facilitated by advances in solar and wind-power generating technologies.
National grids were designed to take advantage of economies of scale and to avoid over-building expensive generating capacity. But the advent of small-scale renewables with lower generating costs means that it can make more sense for power to be generated and stored at a more localised level.
This can be done by individual households, by local communities and, as the IPPR report advocates, at city level.
"The scale of investment needed in low-carbon electricity generation means we need to attract new investment from sources, such as pensions funds. Local authorities have already played a part in numerous district heating schemes and are also actively involved in the community power generation. More competition in energy supply from other providers would also be positive news for customers."