Meet Energy Local, a new UK energy venture keeping small-scale green generation within the community

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We think community-led local energy projects will be key to Zero Carbon energy grid. There are hundreds of tiny community-run green generators dotted across the UK – but the way the energy system is set up currently means there’s no advantage for a local community to purchase local produced energy.

We've partnered with Energy Local on a BEIS-funded research project to investigate ways to give communities the (financial) benefit of buying energy locally, as a way to encourage crucial new green, local energy into the UK system.

We’re partnering up with Energy Local to find new ways of helping small green energy generators to directly power homes in the neighbourhood at far cheaper prices.

Our research project has funding from the Department of Business Energy & Industrial Strategy via the Smart Energy Savings competition – have a look at the full list of SENS projects here.

All across the UK, clean, green electricity is being generated on a small scale from the sun, the wind and currents and tides. This is local renewable generation. Many communities fund these sorts of renewable projects, doing their own bit for the environment.

The problem is, the energy these sites generate doesn't stay local, meaning none of the homes in the neighbourhood can get the benefits being powered on home-grown energy....

Why can't you get power directly from the solar farm down the road already?

Because of the way the UK grid works currently (ha ha), we have to send all generation including small-scale renewable ventures through the same wires via the national network, meaning the ‘local’ nature of the energy is lost.

What would be so great about getting local energy, anyway?

Right now, the cost of distributing energy for suppliers (and therefore consumers), is the same, no matter how far that energy is really travelling to get from generator to consumer.

Imagine paying a flat single travel rate to get anywhere on the whole UK railway network. It’d cost the same amount to travel from York to Warwick as it does to go from Warwick Parkway to Warwick Town Centre (2 minutes 48 seconds when I timed it this morning).

Energy in the UK is purchased by suppliers using PPAs - Power Purchasing Agreements - and extra costs are added to cover the cost of the grid use (Transmission and Distribution costs) which are actually a higher portion of our bills than the energy generation cost.

But Transmission costs are also a one-size-fits-all additive amount; they don’t reflect the distance or use of grid resources along the way. So an electron travelling from the hydro power station in the valley above the village to my home has the same transport costs as any other energy, no matter where it's from in the country.

We wanted to find a way to this system, so that local people could directly buy the energy being generated down the road – directly supporting a community-run green venture, without paying the usual transmission costs of energy from the grid. It’s bonkers to think that this doesn't happen already. We all know buying local is the better thing to do – more efficient, and directly benefiting the local economy and community.

We've teamed up with Energy Local to bring you the solution...

Our new partnership will help us kick off our mission to get communities buying their local renewable energy straight from source and look at the technology needed to do so.

The idea is simple: communities with local generators offer Energy Local Clubs for anyone to join. You measure the energy produced by, say, the hydropower site up in the valley above the village (so far I’ve visited the Crickhowell and Bethesda clubs), share that equitably amongst the homes that have joined the Club, and charge them at a low local rate without any of the usual transmission costs for their share of the power. Any energy used beyond that is paid at a normal tariff.

This is not as easy as it sounds. So how do we do it? Prepare yourself for a bit of techsplanation.

Technical level: 🌶🌶🌶

First, the local renewable generation site has to have a PPA with us and be sending us half-hourly meter readings so we can measure the generation.

Second, we need all the Energy Local Club members to have smart meters that are set up to send half-hour readings, too.

This only works at a very local level (like a mile or two radius of a village) because everyone in the Energy Local Club has to be on the same substation (a substation usually covers a small town, or in a larger city, a few streets).

We then combine these in a way that means in aggregate we can see the total import and export from/to the grid in each half-hour - and that delta is what the collective buys from or sells to the grid. Let’s say 10 homes consume 2kWh each from 7.00am to 8.00am and the hydro produces 8kWh during that time. Each home gets 1/10 of the renewable energy so 0.8kWh and therefore their other 1.2kWh is grid-supplied. In aggregate we see a grid demand of 12kWh (1.2 x 10) not a grid demand of 20kWh and a grid supply of 8kWh.

If we adjust the figures and say the generator produces 80kWh then each home gets it’s full 2kWh and the excess generation of 60kWh is what the collective export is to the grid.

And with the half-hourly data from the generator and set of homes, we can bill each homeowner for their renewable supply and grid supply. There’s more algorithms involved too – if I consume only 0.1kWh in my home in that hour then clearly I can’t have my full allotment of 0.8kWh so my remaining 0.7kWh gets shared back out to the other 9 homes, and so on.

Seeding new investment in community energy

The Energy Local Clubs have close cooperation with the renewable generator, and frequently the site is funded by the local community, with local households owning a share of the business. The Club can choose to pay a higher rate for the local energy than the market value, which means more investment in community generation can be quite financially feasible, and the community itself can benefit from increased local profits.

We need more renewable suppliers, small and large, to help decarbonise and decentralise the UK grid. But to spur these efforts on, we ALSO need to encourage people to go to the trouble and cost of setting these community ventures up. Offering far cheaper energy is the key.

Finding the perfect sites

There is a balance to achieve though - there needs to be the right number of homes for the amount of energy the site can generate, so that the majority of the local energy is consumed locally. My numbers above indicate the extremes; 0.8kWh of 2kWh means 40% of that hour is locally supplied which is good; if my home only received 10% or less, maybe the saving is too low for all the fuss. At the same time, if only 20kWh of the generator’s 80kWh is used by locals, that’s a little low to go to the bother but if more than 50% is used locally then that’s a result.

Afon Berthen

Matching green generation times with home energy usage times

This is a big factor too – for example a local solar site will reach peak generation in the middle of the day, but energy consumption will basically always be higher in the evenings, when everyone is home from work and cooking dinner. You probably know about all our experiments with ‘time-of-use’ technologies to address this very issue of consumption and generation mismatch, like our dynamic pricing tariff agileOctopus, which incentivises people to use up these clean, green, midday electrons and avoid putting extra strain on the grid at peak times. We’ll be providing a special tariff with four different rates throughout the day to incentivise moving energy consumption out of peak times – and of course, I’m here with open arms for anyone who might be interested in automating their energy use with smart home/IoT products!

Peer-to-peer solar trading

If a home in the Local Club has solar PV on the property, then in theory they could also share that energy with the rest of the Club, too – any surplus solar energy gets shared with other members, and the house that generates it gets paid a higher rate for exporting to locals.

Is this sustainability mission... sustainable?

As with all research projects, there are challenges and risks involved. Lots of people ask how it's possible to buy local energy at a rate that’s around 50% lower than any other grid-based tariff – surely someone is losing out?! In a way, the grid and energy supplier do.

Energy Local in some ways 'hacks' the grid by settling scores of generation and consumption off the grid before giving a final, “aggregated” settlement (the total imported/exported to the grid AFTER local generation has gone to local homes). This Energy Local scheme is in effect using the grid’s infrastructure without paying for it, because the energy only hits the network for such a short time to get from generator to local properties. You wouldn’t pay to go to the lido if you’d only dipped your toe in.

Our scheme does mean there’s less cover of transmission and distribution costs – which might be a challenge at scale, especially because rapid decarbonisation of the UK will require a bigger load of electricity on the grid to cover the high demand of electric cars, electric heating etc.

But on the other hand, growth of decentralised local renewable energy, including rooftop solar, and better smoothing of demand to match supply, will go a long way towards reducing strain on the grid anyway – so there won’t be a need for as much reinforcement. Using tech and enabling consumers to benefit from changing their habits is a more efficient way of moving to a greener, electric grid. For example if I have enough solar energy being generated straight from my roof, invest in insulation and the latest electric heat technologies rather than relying on gas, (such as air source heat pumps) and use home batteries to store cheap off-peak energy to use later at times of high demand, how close am I to being energy self-sufficient?

Want to get involved? Email to chat.

Published on 24th September 2019 by:

image of Phil Steele

Phil Steele

Future Technologies Evangelist

Hey I'm Constantine, welcome to Octopus Energy!