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Re-Energising Wales: thinking differently about the Welsh economy

Shea Jones outlines a new project from the Institute of Welsh Affairs (IWA) looking at the potential of renewable energy for Wales and links with housing and regeneration.

‘As a nation, we are rich in energy resources and this provides a tremendous opportunity to fuel our drive for a fairer and more prosperous Wales and to achieve a better quality of life for our own and future generations’.

The IWA used this quotation as an opening statement in the first official report published back in April under the Re-energising Wales’[1] project banner. It actually comes directly from the First Minister’s foreword to the Welsh Government’s Energy Wales: A Low Carbon Transition.

Having a London-born wife, I often get asked what makes Wales unique and what makes me proud to be Welsh. I’ve heard all kinds of answers to these questions in the past, ranging from pride in the Welsh language to pride derived from the fact there’s a Welsh guy in Lord of the Rings. For me, having grown up in Cwmaman surrounded by big lush green mountains, it’s Wales’ immense natural resources that excite me most and make me proud.

Of course, our natural resources can be used to draw in a whole range of benefits linked to tourism and other opportunities. When it comes to delivering on the potential of these for the purposes of renewable energy generation, Wales has not reached its potential and has at points lagged behind the other UK nations.

For the purposes of this article, I won’t dwell too much on the reasons why we haven’t reached our potential. Instead, I’ll focus on the opportunities that Wales has and how the Re-energising Wales project has clear links to housing and regeneration. A running theme throughout my article is the belief that the not-for-profit housing association sector, in particular, could be key to unlocking the true potential of community energy through energy generation and energy use to help deliver some of the sectors core purpose.

The first question I usually ask is what issue are we trying to fix? It is a lack of scale in the local and community sectors which is one of the main issues and the housing association sector bring with them the ability to move an entire sector to deliver for people and communities.

Firstly, a bit of background. Re-Energising Wales was formed as a result of the IWA’s An economic strategy for Wales? report, which highlighted how Wales’ natural resources could be used boost the Welsh economy. The project, via six separate work streams and further short papers, will provide a fully worked-out plan to enable Wales to meet its projected energy demands entirely from renewable sources by 2035, resulting in an 80 per cent reduction in energy-related greenhouse gas (GHG) emissions.

Funded by the Hodge Foundation, the Friends Provident Charitable Foundation and the Polden-Puckham Charitable Foundation, the project will show how this can be achieved by embracing a dispersed model, that recognises the need for large renewable generation projects but also changes the relationship between people and energy, and maximises the contribution from community and locally-based enterprises.

This contribution from community and locally-based enterprises is the focus of the fourth work package of Re-energising Wales (a list of work packages can be seen on the IWA website), but it runs through the core of the project in its focus on helping to build resilient economies and contribute to a sustainable and fairer economic system. This brings together a whole range of experts to come up with solutions to the question ‘What do we have to do to really enable community and local renewable energy projects to flourish and become mainstream in Wales?’. Due to be completed in May 2018, if you would like to feed into this work package then please contact me.

This work package is where I feel the housing and regeneration sectors can particularly play a role in driving down fossil fuel-related energy generation, promoting renewable energy generation and all the wider benefits that can be aligned to it. This includes realising the economic, environmental benefits, and social benefits such as tackling fuel poverty. Although these figures could be slightly different in 2017, the chart below shows how little of a contribution local and community schemes played in Wales’ total 2,300 MW of renewable electricity[2] generation around the 2014/15 period. You can see the contribution from housing associations as an example in the chart. With the right expertise, collaborations and know how, the housing association sector in particular can play a much bigger part in this transition to a renewable energy economy.

The Welsh Government has recently set renewable electricity targets. These include Wales generating 70 per cent of its electricity consumption from renewable energy by 2030, 1 GW of renewable electricity capacity in Wales to be locally owned by 2030 (with housing associations included within this local definition) and all new renewable energy projects will have at least an element of local ownership by 2020. This provides an even bigger opportunity for housing associations to play a bigger role in renewable energy generation in Wales.

Whether it’s through greening our electricity, heat or transport supplies, there is a role for community organisations and people in all of these areas. Here are some examples of how this has happened to date.

The role of Energy Local clubs

In a sector where subsidy levels are falling and a range of other challenges including increased business rates are putting projects to the test, innovation is key. Business as usual doesn’t really work at the moment. Pioneering Energy Local[3] pilots in North Wales have progressed, the first being in Bethesda, to trial a revolutionary local energy market model which allows renewable energy from a local 100kW hydro scheme on the Afon Berthen to receive a higher price for its generation when the local community use it. At the same time this has the potential to dramatically reduce energy bills for the community and provide households with locally produced clean energy which reduces carbon emissions. Profits are reinvested into community and environmental projects locally.

Cyd Ynni, a network of local community energy companies in North Wales, have just been awarded £250,000 from the Big Lottery Fund to employ two people who will further develop such renewable energy projects across Wales’ communities.

I would urge anyone who is curious to get in touch in order to become involved in further roll outs of these Energy Local clubs. This is a great example of how housing associations can work with community groups, as different skills and expertise from both parties can be combined, ranging from raising finance, access to land and so on for building the actual renewable energy generation scheme in the first place, all the way to collaboration on the set-up of clubs.

There are encouraging signs of the impact of the Well-being of Future Generations (Wales) Act 2015 on tendering and planning processes in driving community benefit in the energy sector, and this could be practically beneficial for local and community bodies.

Renewable heat generation

Domestic buildings in the UK account for around a third of our energy consumption and 15 per cent of all carbon dioxide emissions. Space heating remains the primary demand for energy in UK dwellings, accounting for around 60 per cent of demand.

Energy efficiency is of course key, alongside renewable energy generation. Take heat pumps as an example. There is plenty of evidence supporting the case for both energy efficiency and renewable generation for a heat pump if designed and operated correctly.

Western Power Distribution and Wales & West Utilities is currently piloting a ‘Flexible Residential Energy Efficiency Demand Optimisation and Management’ (FREEDOM) programme, in order to better understand if hybrid heat systems, which switch between gas and electric load, are technically capable, affordable and attractive to customers as a way of heating homes in providing flexible demand response services. Keep an eye on this and its roll out.

Our first work package, due to be published later this year, will provide a picture of current energy demand across Wales (to understand the challenge around renewable supply) and also consider likely energy demand changes in the future such as the electrification of heat. Projects such as FREEDOM will prove useful in determining solutions to flexibility around demand management and how we can reduce our energy demand.

Furthermore, if you haven’t already, make yourself aware of the opportunities that still exist under the Renewable Heat Incentive[4] programme and the opportunities that exist under Welsh Government’s Smart Living Programme, which has a range of pilots around heat networks amongst other things.

Transport

The challenge in decarbonising transport is significant and will include improving fuel efficiency of conventional vehicles, replacing conventional vehicles with electric and other alternatives, and various options for consumer behaviour change (with active travel through walking and cycling of course being encouraged as much as possible).

It’s worth highlighting the battery electric and plug-in hybrid cars/vans transition as an example. Cumulative year on year electric vehicle registrations are on the increase and their uptake is far out stripping the changing network expansion. However, there is some serious support to help this transition from the Office for Low Emission Vehicles[5] in particular. With costs for battery technology and hence storage falling, many organisations are realising the business case when considering such options for fleet vehicles. This could be an opportunity for the housing and regeneration sectors.

With so many drivers for this transition (excuse the pun), including air quality concerns and climate change, we must act more quickly in Wales to ensure we are well placed for the transition and key to this is having the right infrastructure in place. There is a lack of fast chargers across Wales, especially in the middle of Wales. We are aware of efforts by the National Trust in Wales and others to develop a network of rural charging points for electric vehicles and this opportunity exists for a range of organisations in Wales. In some cases, charging points should be linked to community-owned renewable energy generation.

It is worth looking at schemes already set up in Wales that seek to provide a community benefit through installation of charge points and other initiatives, including schemes such as Talybont on Usk Energy[6] and car clubs such as REV Cymru[7]. It is vital that the electricity used to power vehicles is provided by renewable energy generation as much as possible so that the CO2 argument, in particular, stacks up when considering CO2 embedded in the life cycle of electric vehicles.

These issues will be considered in work package two, due to be published in early 2018. Also watch this space for details of a low emissions vehicles event that the IWA is currently working on with partners, likely to be in the first quarter of 2018. Within Welsh Government, there is a developing interest in electric vehicles within the context of Smart Cities.

The focus on digitally connecting energy assets within the Swansea Bay City Deal[8] is also a good opportunity to be active in this space. Note the emphasis on buildings a power stations within the city deal which will be of interest to those constructing new buildings.

Final remarks

Re-energising Wales is an ambitious project, but we feel it’s timely and within Wales’ grasp. Alongside the work packages mentioned above, we will continue to push for the uptake of recommendations from our Funding renewable energy projects in Wales report launched earlier this year.

We called for Local Government Pension Funds in Wales to directly invest into local renewable energy projects. There is an imminent opportunity to influence pension fund investment as they go through the pooling process in Wales. A consultation response written by chairs of the pension committees for the eight Welsh local government pension funds comprises details of the establishment of the Wales Pool. It suggested raising current infrastructure exposure from 0.3 per cent towards 5 and possibly 10 per cent long term, suggesting a potential additional investment of around £1bn in infrastructure. This could mean investment in renewable energy generation projects or low carbon housing projects for example.

A particular challenge is that at present this does not necessarily mean that money will be spent locally. A significant proportion of the Welsh pension funds’ collective investment of over £13 billion worth of assets could well be invested globally. Wouldn’t we all like to see this invested locally on energy projects and housing projects such as the SPECIFIC/Pobl Group developments[9]?.

One thing that is certain is Welsh Government’s commitment under the Environment (Wales) Act 2016, which has put in place statutory emission reduction targets, which include at least an 80 per cent reduction in emissions by 2050 and carbon budgeting to support their delivery. We are certain to see the impacts of this filtering down into Welsh Government policy decisions.

The question now is whether housing and regeneration practitioners can be ahead of the curve to deliver the scale of the challenge and deliver clear impacts for the people of Wales.

Shea Jones is the Re-energising Wales project coordinator. If you would like further information about the project contact him on [email protected]

[1] www.iwa.wales/news/2016/04/re-energizing-wales/

[2] www.gov.uk/government/uploads/system/uploads/attachment_data/file/556271/Renewable_electricity.pdf

[3] www.energylocal.co.uk/

[4] www.ofgem.gov.uk/environmental-programmes/domestic-rhi

[5] www.gov.uk/government/organisations/office-for-low-emission-vehicles

[6] talybontenergy.co.uk/

[7] www.revcymru.co.uk/about-us.html

[8] www.swanseabaycitydeal.wales/

[9] www.specific.eu.com/news/view/78


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