Presented by Ian Walker, this explains what a Community Energy Fund is and how it can be used by local authorities.

1. Community Energy Fund
Renewable Infrastructure Framework
20th June 2012
Ian Walker
Element Energy Limited
ian.walker@element-energy.co.uk

2. Government is implementing policies to ensure that
new homes are increasingly resource efficient
Government is seeking to address the resource efficiency and CO2 emissions of new
buildings.
The Building Regulations, the principle tool for controlling energy use in new
developments, are being progressively tightened on a pathway to introduction of Zero
Carbon Policy.
Pathway to Zero Carbon Homes
CO2 emissions from
new developments
25% reduction Regulated
44% reduction emissions –
heating, hot-
water, lighting&
ventilation
100% reduction
Unregulated
emissions –
appliances & cooking
2009 2010 2013 2016
Zero Carbon
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3. The zero carbon policy will introduce the concept of Allowable
Solutions – this creates the role for community energy funds
Allowable Solutions – A range of on-
, near- or off-site measures to
mitigate the remaining regulated
emissions.
Carbon Compliance – the
level of CO2 reduction that
must be delivered through
on-site measures
The Community Energy Fund has a role as a kind of Allowable Solution – this
increases the potential role of local planning authorities in delivering low carbon
development.
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4. A Community Energy Fund is a means of channelling developer
investment in carbon reduction into the local area
Developer CO2
reduction obligation
On-site CO2 reduction Payment to Fund
% of target met through on- % of target met by payment
site measures into an Energy Fund
The Community Energy Fund
Developer Fund invests in
Fund invests in local
investments are localreduction
CO2 low carbon
pooled in the Fund projects
projects
Potential
revenue into
the Fund
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5. The development of a Community Energy Fund as an Allowable
Solution could play a leading role in low carbon development
Establishing a Community Energy Fund as a kind of Allowable Solution promises a
number of benefits for local authorities:
• Ensures that Allowable Solution investments are retained within the local economy
• Gives local authorities control over the projects that Allowable Solutions
investments are used to support.
• Provides a mechanism for neighbouring local authorities to work in partnership,
pooling Allowable Solutions investments to finance larger, strategic low carbon
projects.
• Provides a means to unlock projects that would not otherwise be brought forward
by the private sector alone – the Fund investments can act to de-risk projects and
leverage further investment.
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6. The proposed Allowable Solutions framework offers
local authorities a choice on their level of engagement
Government tasked the Zero Carbon Hub with
developing a potential framework for Allowable
Solutions.
The framework sets out choices for Local
Authorities and developers.
• Local Authorities can set out local policies for
allowable solutions or default to national policy.
• Developers can choose the allowable
solution that they invest in.
• A national fund-holding – a ‘bank’ for
Allowable Solutions – and a national
monitoring and verification scheme.
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7. The framework envisages a mix of Community Energy Funds and private
initiatives delivering Allowable Solutions projects
Developer requires Allowable
Solutions to comply with zero
carbon policy
Submits plans to
local authority
LA with a prescribed set of Allowable LA without a prescribed set
Solutions of Allowable Solutions
Route A
Route B
Either Or
Pay into Contract a Third- Private Energy Fund is
Community party to deliver contracted to manage
Energy Fund Allowable Solutions delivery
In both cases, Allowable Solutions projects The Private Energy Fund can
will be delivered in the local area deliver projects anywhere in the
country
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8. For local authorities to maintain control over how developer payments
are invested, the local plan must include Allowable Solution policies
Local
control
Community Energy
Fund – control over
project selection and
development
Framework to identify
projects in place – control
over project list
No policy – no control over
investment Local
engagement
As a minimum Local Authorities require a mechanism for approving Allowable
Solutions within the Local Plan and an evidence base to support the selection.
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9. The framework includes a national ‘bank’ to hold Allowable Solutions
investment and a nationally operated certification scheme
LA with a prescribed
set of Allowable Either Developer Or
Solutions
Route A1 – contracts a
Certificates
third-party to deliver of
carbon saving through compliance Route A2 – pays LA to
LA compliant Allowable deliver carbon savings
Solutions options
Third-party provider LA Community Energy Fund
Credit notes Credit notes
& Funds & Funds Developer
Developer
investment
investment Verification &
Certification scheme
National Allowable Solutions
Fund Holding
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10. Conclusions on the need for a Community Energy Fund
• Under Zero Carbon Policy, developers will be required to make a financial
contribution toward mitigating the carbon emissions resulting from their
developments.
• The Community Energy Fund is a means of ensuring that this investment is
retained in the local economy and that local authorities can exercise control over
how the money is spent.
• The Community Energy Fund does not increase the cost of development
• Government proposals on the framework for Allowable Solutions potentially limit
the role of local community energy funds by introduction of a national fund-holding
bank.
• It will be important for local authorities to present views to government through the
consultation on how community energy funds can operate most effectively
• Local authorities should develop appropriate policies in their Local Plans to enable
a fund and to develop a project list, to ensure the Allowable Solutions investment is
retained locally.
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11. Local authorities need to start putting their policies in place now, in
order to be ready to benefit from Allowable Solution investments
2011 2016 2019
Local authorities progress their growth plans
Zero Carbon Zero Carbon
Homes Non-domestic
introduced buildings
Developers require Allowable
Solutions projects
Preparation of evidence Allowable Solutions investment
base and Allowable supports local projects identified in
Solutions policies the Local Plan
Community Energy Fund operates to
maximise local authority control
over Allowable Solutions investment
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12. Thank you
Ian Walker
Element Energy
78 Margaret Street
London
W1W 8SZ
T: 0330 119 0981
E: ian.walker@element-energy.co.uk
W: www.element-energy.co.uk
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