|Dai Lloyd AC|
|David Melding AC|
|Joyce Watson AC|
|Mike Hedges AC||Cadeirydd y Pwyllgor|
|Simon Thomas AC|
|Benedict Ferguson||Cyfarwyddwr (Trysorydd) Ynni Cymunedol yn Sir Benfro|
|Director (Treasurer), Community Energy in Pembrokeshire|
|Grant Peisley||Cyfarwyddwr Cyd Ynni|
|Director, Cyd Ynni|
|Holly Cross||Cyfarwyddwr Ynni Adnewyddadwy Cwm Arian|
|Director, Cwm Arian Renewable Energy|
|Jenny Wong||Coetir Mynydd (Consortiwm Cyd Ynni)|
|Coetir Mynydd (Cyd Ynni Consortium)|
|Merlin Hyman||Prif Weithredwr, Regen|
|Chief Executive, Regen|
|Robert Proctor||Rheolwr Datblygu Busnes, Ynni Cymunedol Cymru|
|Business Development Manager, Community Energy Wales|
|Louise Andrewartha||Dirprwy Glerc|
|Martha Da Gama Howells||Ail Glerc|
|4. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiant||4. Introductions, apologies, substitutions and declarations of interest|
|5. Ymchwiliad i ynni cymunedol - sesiwn dystiolaeth lafar||5. Inquiry into community energy - oral evidence session|
|6. Ymchwiliad i ynni cymunedol - sesiwn dystiolaeth lafar||6. Inquiry into community energy - oral evidence session|
|7. Papur(au) i'w nodi||7. Paper(s) to note|
|8. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer y canlynol:||8. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the meeting for the following business:|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle y mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd rhan gyhoeddus y cyfarfod am 10:23.
The public part of the meeting began at 10:23.
Good morning. Bore da. Can I first of all welcome Joyce Watson back to this committee, which she served on with distinction during the last Assembly term? I thank Jenny Rathbone for her contribution to the work of the committee since 2010.
The meeting is bilingual. Headphones can be used for simultaneous translation from Welsh to English on channel 1, or for amplification on channel 2. Can people please set their mobile phones on silent and turn off any other electronic equipment that may interfere with broadcasting equipment? Are there any Members with any declarations of interest? No.
Well, can I first welcome and thank our panel members for coming in this morning? We're very grateful for you giving up your time, especially this close to Christmas, to come in and talk to us, so thank you very much. If you could give your name and organisation for the record, and then would you be happy if we went straight into questions?
That's fine. Shall I start? Robert Proctor from Community Energy Wales.
I'm Merlin Hyman. I'm the chief executive of Regen.
Thank you very much. If I can start off with the first question. Do you think the 1 GW target of locally owned energy by 2030 is achievable as policy currently stands and whether the financing and the structures are there in order to achieve it?
I think it is achievable. There needs to be, probably, things that are thought about in order to achieve it. There's an issue around the grid capacity, and so a strategic review needs to be done on that, and perhaps a review of technical advice note 8, and looking at new opportunities in Wales.
When you look at local authorities—and there could be more targets set to local authorities—if you've got 22 local authorities in Wales, 10 MW each is potentially a reasonable: that's 220 MW. You've got other organisations like Natural Resources Wales. Finance I think is a big issue because what's needed is a considerable amount of investment, so it's whether there are opportunities to look at alternative finance opportunities in Wales. And then, also, it's looking at planning because, obviously, with changes to things like the feed-in tariff and the renewables obligations certificates et cetera, we may be needing to look at things like larger wind turbines, potentially, to make projects more viable. So, I think those are some key areas that need to be considered.
I think I'd endorse the central point that it's undoubtedly achievable. There is good progress: we've just completed the 'Energy Generation in Wales' report for the Welsh Government—Regen—and I think we came up with a figure of 397 MW of electricity, locally owned electricity. At the moment: a 40 per cent increase since 2014, so we're seeing some interesting trends there.
We can endorse many of the points that Rob has made. Perhaps two things I'd say that are fairly quick wins could be purchasing—communities taking ownership of existing assets that are already built. We're seeing quite a lot of effort to do that and the main barrier there is access to affordable finance. They're essentially being outcompeted by large infrastructure funds in terms of the rates of return—the cost of capital that the community organisations tend to face. So, that's a potential to bringing quite large amounts of interlocal ownership quite quickly. And the other thing is just a bit of a warning that when you set these kinds of targets, if you think about the definition, it's not particularly hard for people to find ways around those set up locally, registered special purpose vehicles, and you don't always get what you expect. The experience of the split-ownership community-interest companies, which I won't go into in detail, but over the UK, over a particular period, about 150 MW, I think, of supposedly community-owned solar generation was established—a lot of those are essentially controlled by private companies, not actually by communities and it wasn't policed sufficiently.
Diolch, Gadeirydd. A allaf eich holi chi'n benodol ynglŷn â tharged Ysgrifennydd y Cabinet yn y fan hyn ar gyfer pob prosiect ynni adnewyddadwy newydd i gael rhyw elfen o gynhyrchu cymunedol erbyn 2020? Beth ydy'ch sylw chi ynglŷn â'r targed yna? A ydych chi'n cytuno bod eisiau bod yn fwy uchelgeisiol? Beth bynnag—.
Thank you, Chair. Could I please ask you specifically in relation to the Cabinet Secretary's target here for all new renewable energy projects to have an element of community ownership by 2020? What would your comment be on that target? Would you agree that we should be more ambitious? Whatever you'd like to add to that.
I'm very supportive of that target. We've recently just started work on a shared-ownership project with Innogy on a NRW site in Denbighshire, and we're looking to enable 15 per cent of that site to be community owned. So, I think, obviously, there needs to be some support to enable that. There are costs involved in legal agreements and making sure they're in place with the energy companies. But also, I think the biggest challenge will be—. There's quite a considerable increase in scale for these projects. So, for this project, potentially, we're looking at raising £5 million or £6 million for our share in that project through community share offers, for instance. That's a large amount of money and it could take a very long time to raise that and you may not even raise the full amount. So, I guess what we would need, I think, most importantly, to take those sorts of projects forward is some sort of finance that we can access that offers similar terms to those share offers so that we can, effectively, guarantee that we can be part of those sorts of schemes. And also, as we raise community share offers—which I think is what we would like to do to enable people to have a stake in these schemes—we can then, as the share offer increases, repay that debt. But if it's similar terms it makes it a lot more straightforward to do that.
So, I lived through the shared ownerships process debate, if you like, in—. I'm not quite sure how it applies, but there is a statutory power within UK legislation to require an element of shared ownership of renewable energy schemes. At the time, Ed Davey who was Secretary of State said, 'Well, we don't want to implement that; we want a voluntary approach'. I sat on the shared ownership taskforce, which came up with the shared ownership protocol, and it's quite a complicated area to get right. So, there's the definition of what local or community ownership means, and we came up with a definition. I think, in Denmark, the definition is purely a distance one. We came up with a slightly different kind of definition, but I think considerable thought needs to be put into that.
The concept behind it I think is a very important one. It turns the debate about renewables on its head and it gives the opportunity to actually engage people in this development. The reason that Regen has put so much time into this over seven or eight years is that the scale of change we're talking about with the take-up of renewables, the shift and a complete transformation of our energy system, is not something that you can impose on people anymore. I don't think that's—. And I've done numerous interviews on TV and local radio with people shouting down the other end of the phone very upset about particular developments in their area. And so I think we've got to bring in and engage people much more in this. This is a very powerful way of doing that, saying communities have a right to invest in this stuff. But you have to get the detail right. And then, when it comes to the—. And you have to make sure that the ownership stake is genuine, if you like, because there's an imbalance of power in the negotiation between say, InEnergy and Community Energy Wales—a very good organisation, but it's clear who has got the most money to pay the lawyers and draft the contracts, et cetera.
A final thing is the finance point, which is critical. We saw quite a major investment in community energy and shared ownership schemes over a number of years a few years ago, and it was driven by tax incentives, tax breaks. So, communities could offer share offers with enterprise investment scheme tax incentives. The Treasury has removed all that and that has really pulled the rug from under the community share offer approach. There is a tax incentive called the social enterprise investment scheme, which community energy, uniquely amongst social enterprises, is banned from using. We saw that there is the capacity and willingness for crowdfunding, community-led funding, into these kinds of projects with the right incentive structure, but that is no longer available.
In the evidence you've given, there seems to be a dislocation, really, between the levels of government. The Welsh Government emphasises the value of community schemes, and, obviously, we've got the target. So, at that level, there is a lot of encouragement in terms of the direction of public policy, but then local authorities, who are at the sharper end of practice, I suppose, don't seem to be in line with these growing expectations. So, is this a temporary thing, or do you think there's something more deeply rooted that is causing this?
Well, it's been quite a long temporary thing, I think, for several years, really, where communities have been seeking to engage more with local authorities. I think, partly, a lot of the targets are Welsh Government targets and perhaps they need to be set as local authority targets so that there's more ownership from the local authority to engage with the ambitions of Welsh Government. So, I think that's a key issue, but there's a problem around process. With a number of community organisations, they may approach a local authority and the response they get can be anything from pretty much being ignored to a long-winded process that ends up with nothing, ultimately, happening. So, I think there needs to be a firming up of approaches.
I think we can look at having more structures in place. We can look at things like the Community Empowerment (Scotland) Act 2015 or the community rights in England, where we can start to create processes that are clear. So, if a community puts a proposal forward then they should have a response within a certain amount of time. They should have feedback on exactly why the decision is a 'yes' or a 'no' or whatever it is, so that there's some, I guess, work that a local authority is obliged to do to assess those opportunities.
I think there are also other opportunities, as well, to create greater engagement between the community sector and the public sector. We could create opportunities for the local authorities, perhaps, to buy their energy from community energy schemes directly, so there could be opportunities to look at those sorts of measures. I think I talked in my paper about—currently in Wales, it would be straightforward. I think there's the opportunity—the public sector could buy their energy from all community energy schemes and therefore guarantee a price for community energy schemes. So, there are those sorts of opportunities.
I think, also, we have one really great example in Wales, which is the Swansea Community Energy & Enterprise Scheme, and that is a great example. If that was replicated across all local authorities in Wales then we'd be in a much stronger position. So, I think we can really build on that success and try and replicate that across Wales.
It has been going on for a long time, this question, and some local authorities—and to take examples outside Wales, Plymouth set up Plymouth Energy Community, essentially set up by the local authority, but as a separate body, owned by the community. It's essentially put all its renewable and energy work through that entity, and it's been a very successful partnership. Bath has had a very successful partnership with its local community energy group. A lot of other local authorities have, I think, either thought, 'We are the community' and been slightly defensive about the idea that someone else was the community or been very financially driven—and understandably, in today's world—about their approach to energy and wanted—. 'Well, there's a good roof over there, we can make some money. We should be making it, not allowing a community energy group to take it.' I think that's a little bit short-sighted, and there's a lot of opportunity there to bring more drive and energy and commitment locally to this agenda.
So, letting local authorities work out for themselves that this is a good opportunity seems to have resulted in some good practice, but pretty patchy. So, I guess Robert's probably right that it needs more drive. One of the areas that Robert didn't pick up there on is in planning, where one could use the planning system to require more shared ownership, open up, give communities first rights of access, et cetera. There's a lot that could be done, and I think there's been quite a lot of pressure from Welsh Government at the first level to do the evidence-based gathering and things, but there needs to be more of a push to turn that into something, really, and put it into local plans. The planning system would be one opportunity to really push that, I think.
Okay. And on the leadership side and the—I don't know the Plymouth example, but, presumably, it offers support and mentoring and encouragement. Even if they haven't done it as a community enterprise model, or whatever they're using, in Plymouth, are those sorts of services provided by any local authorities in Wales?
Well, I think Swansea—
Well, support, mentoring—you know, when people say, 'We have an idea for a scheme.'
Swansea is a very good example. So, that would be a great example in Wales. The other frustration, I suppose, is, from a community energy perspective, we don't mind if the local authorities develop the project themselves, because, obviously, the benefits still are retained in Wales. I think the frustration has been that, often, a community has been prepared to develop a project, and then, for whatever reason, the local authority have either taken it on and not developed it, or haven't developed it, and the projects aren't developing. So, we're not in opposition to local authorities. We are supportive. If all local authorities decided they were going to invest in renewable energy then we'd be really supportive of that. So, I think that's—. Also, another issue is that there hasn't been enough initiative from local authorities to take advantage of things like the feed-in tariff to develop projects, but there still are opportunities out there for them to take, which, ultimately, could save money on electricity bills and running costs for local authorities, so it's good for the public sector in Wales.
I think a comment there is that, looking at local authorities across, certainly, England and Wales, those that have really pushed the agenda on energy and really started to do something have almost universally created some kind of separate structure, legal structure. The dynamics of the way local authorities work, the kind of—. This is a fast-moving, fast-paced, high-risk energetic sector. If you think of the drive and commitment of the developer community, and indeed some of the community energies, local authorities have not been able to do that in-house.
Do they feel there's a conflict of interest sometimes, because, obviously, they're the planners and have that role in terms of determining—
My experience of local authority planning departments is that they're extremely good at retaining their independence and they're quite happy to reject schemes put forward by the same local authority—their professional standards are high. I think it's just that a local authority culture doesn't enable the kind of speed and risk-taking that you need to develop community energy and energy projects. And those that have—and there are some great examples around Bristol, Nottingham, Plymouth is a good one, bits of London, so, in England—. And all of them have set up some kind of legal structure, where—or Public Power Solutions in Swindon—sometimes in co-operation with the community, so it's a community energy thing; sometimes it's just a private thing, a wholly owned subsidary, but it's had a different culture and different approach to risk. I think that can be really positively done in partnership with the local community energy group. And some of the—. Robert's talked about them having opportunities and not bringing them forward, and that's just because the level of expertise and drive just isn't there. The setting up of a separate structure allows that more entrepreneurial culture to be used.
You mentioned earlier that greater weight ought to be given to the community aspect of energy schemes in general and that sometimes—. I infer that when some local authorities see 'community' on an energy project, they think, 'Frail, vulnerable lot; I need to be reliable and succeed'. I wonder how we get around that sort of culture because, presumably, there are enough community schemes that are very successful now to show that the model is a very enterprising one.
Firstly, anyone who spends very much time with community energy groups will realise there's a big range, but they'll be pretty swiftly disabused of the notion that they're dealing with a bunch of local worthies who are kind of fiddling around, because we all live in communities and often the people who are driving those community energy schemes are highly experienced and highly skilled. They may be retired, they may bring technical skills, legal skills, they may be working—
But it's still a cultural barrier that, with community schemes, you are generally looking at a group of people—they may have expertise in their own community, of course, but they've set up for that purpose; whereas a company coming along, an energy company, would be established in that field and be running all sorts of things and therefore is assumed to have all the expertise built in and are not having to prove it at that level. I just wonder—because you do mention in your evidence that, often, as soon as the local authority sees 'community' they subject it to perhaps a different set of criteria than standard or traditional applications.
There's a simple process of just—. Regen has supported a lot of community energy over the time and we do a lot of trying to bring people together, essentially, in all sorts of different ways, and build trust and experience over a number of years. We've done it in Devon a lot, in England, and Community Energy Wales have done this kind of stuff a lot here, and it does—you know, there's a certain amount of confidence building, so, active, technical support for community energy groups and trying to build a network and allow community energy groups to come together through things like CEW, where they can come together, share and bring in private sector expertise and bring in local authorities and start to all work together. But it does take time, that, and it's an ongoing process. We have found that it has taken us several years to build that kind of trust and relationships.
I think the growth in the community energy sector in Wales recently and across the UK, where we've now got over 20-odd community energy projects in Wales, generating 11 MW to 12 MW of energy throughout Wales—so there's a huge amount of expertise that's been developed in the community energy sector. Also, I think there's a bit of a misconception. You know, we're still buying the turbines from people who build wind turbines, we're not making them ourselves—that sort of thing. We're still getting the same legal advice that a commercial firm would, and we're still having to go through all the due diligence on the financing et cetera—those sorts of things. So, we're still having to go through the same processes and draw down the same sorts of skills and expertise as any commercial project would. The main difference is that the drive is coming from the community from volunteers, and obviously their aim is to put as much money back into the local community as possible. That's the main difference, I think, and as I say, the main challenge is bringing in the resources, because, obviously, a commercial company has the balance sheet that they can pay for that immediately. We may need to find that money as we go along and draw down bits of money to invest in things. But I think that process is improving, definitely, in Wales, and the support from Ynni Lleol and things like that is enabling that to happen much more smoothly.
And finally from me, you mention in particular that we could use permitted development as a principle more. Presumably this would just be over fairly micro things, would it, in terms of solar panels, or does it have a more general application for the community energy sector?
We had quite a long discussion about it, but I think in terms of things like rooftop solar, I don't see why on any roof you couldn't have solar as long as it's suitable—you know, it's not north facing or whatever it is. So, whatever the scale of the solar, that certainly could be a permitted development, and I know that NRW have looked at permitted development for small-scale hydro. So, I guess we were supporting what they've been looking at. But I think, ultimately, as much as we'd like to say that a community-owned wind turbine should be a permitted development and you shouldn't have to go through the planning process, ultimately, we felt that the planning process was an important process to go through. So, we haven't pushed that agenda, but we have discussed it.
Yn nhermau ynni cymunedol, a allwch chi ymhelaethu ynghylch unrhyw anawsterau rydych chi wedi eu cael wrth ymdrin â rheoleiddwyr, yn benodol Cyfoeth Naturiol Cymru fel rheoleiddiwr?
In terms of community energy, could you perhaps expand on any difficulties you might have faced in dealing with regulators, especially NRW as a regulator?
I think things have improved with NRW. I think a lot of the issues early on were in terms of the licensing process; the length of time that that took was often an issue. I think there were some inconsistencies that have been resolved. There were a few other inconsistencies where their policy was stating that a community energy project on their land could pay lower rates compared to a commercial project, but that wasn't necessarily happening in practice. The people they were dealing with were still agreeing higher rates than what the policy of NRW was, so it just wasn't filtering down.
I guess the other big challenge for us with NRW—but, again, we are talking to them about this—is in terms of the procurement process. So, there was an opportunity recently for a single-turbine site on NRW land, but the process and the requirements basically made it impossible for a community energy organisation to be considered to go for that tender, because they wouldn't have passed the first stage of the financial requirements, et cetera. So, I think things like that need to be looked at, and also the significant costs that are incurred in that tendering process. Commercial developers incur those costs as part of the tendering process but, obviously, a community organisation may not be able to incur those costs, so could there be more work done by NRW to provide more of the information at the start rather than expecting each of those tendering to cover those costs?
And also, with the Well-being of Future Generations (Wales) Act 2015 coming into being, should there be more onus on organisations like NRW—the same with local authorities and health boards—to actually look at how they can actively engage communities more in developing projects on their land, and not just purely looking at things from an economic perspective and trying to look at the social side of things as well? Because I think there are definitely massive opportunities with organisations like NRW, and I guess we'd be really keen to develop them further.
I particularly want to ask about business rates. You mention quite a lot in your paper, I suppose, the possibility that they make the projects unviable. You quote a figure of 30 per cent of your take, or the profit, going back into paying business rates, and, of course, that 30 per cent can be the make or break of any business, and some work on very much lower profit margins than that.
I think the big problem with business rates recently has hit the hydro schemes, where there was a change in the valuation, and that has effectively led to an increase in business rates of—I think the average was about 200 per cent for our members, but for some it was 540 per cent. So, how any business can—. You can't project that sort of increase. You would never expect that sort of increase to occur. So, for those schemes, particularly the hydro schemes, it's created a huge amount of uncertainty in the sector. Some projects that were viable are now looking like they may not be viable any longer. So, the group have got to look at either—. And these are schemes that are already in existence, some of them, as well as some that are in development. So, they've got to then look at, 'Well, can we continue as a scheme, or are we going to have to cut our losses because we can't be loss making?'—if they've borrowed money or whatever. These are volunteers who have put their time into developing these schemes in the anticipation that there'll be some sort of return through the social investment that they can make in their local communities. Obviously, if they no longer make that return for their communities, then they've invested a lot of their time and energy without seeing the benefits.
So, I think it's a massive issue, particularly for community hydro, but if the changes in valuation can happen on hydro, what happens if it's wind the next time they have the valuation, or solar the next time they have the valuation? I think, for any energy project, you need to have some sort of confidence to get investment and to get the buy-in from the volunteers, and it's created a huge amount of uncertainty. I know there was talk about potentially in this budget of community hydro perhaps having a 100 per cent rate relief, but is that for a year? How long does that last for? Because these schemes are financed over 20 years, a lot of them. So, it's a really big issue, but it's not actually a huge cost to the public purse. At the moment, there's probably, I think we worked out, just over £100,000 worth of business rates. So, it potentially feels like something that could be quite simply resolved at a low cost, and you're not losing that money from Wales, it's being reinvested in local communities. The money is still being retained in Wales and benefiting Wales and Welsh communities. So, it doesn't feel like—. No-one's losing out from making those changes.
So, there are two things, then. You need to resolve whether there's going to be a reduction and you're going to go back to where you were in the market. So, you need that answer. And the other one is how long for. Quite clearly, any project is fairly small scale, so they need surety and certainty going forward. So, those are the two big issues.
Thank you very much. Can I ask a question? What do you think the Welsh Government could do to support the development of more appropriate and sustainable finance solutions for community energy in Wales, so that they're not at the whim of commercial banks?
There's been quite a lot of experience now, I think, in community finance raising, and working quite a lot with large charitable trusts and Big Society Capital and these kind of institutions across the UK. What we did see was, when there was a tax break, the enterprise investment scheme enabled quite a lot of community energy finance to come forward without really very much effort. Of course, that's Treasury controlled, but that was working very well, essentially. The social enterprise investment scheme exists, and a simple tweak to eligibility would make a big difference there.
I think, beyond that, then, there is the potential for a social finance facility to be made available at competitive rates. Those community energy organisations I've been talking to, who have been bidding to purchase existing renewable energy schemes in the market, have found themselves uncompetitive with large infrastructure funds and the rates of return that they have to achieve on their capital. So, access to finance at a more competitive rate—social finance—I think, would be the other key one.
Then, starting right at the beginning—and Rob's going to mention some of the early development costs—sometimes the problem is that communities can't—. If you think, a commercial operator is likely to share their risk across a number of developments—for those that don't go, they can pay out the profits of those that do—whereas community energy schemes are less likely to be able to do that. So, some early-stage finance to do early-stage feasibility linking work, before you can get to actually doing share offers, is also important.
The good thing in Wales at the moment is we do have some of that early-stage finance. That's available through the Ynni Lleol scheme and also through Robert Owen Community Banking's community energy fund. That is really important and we need to make sure we keep that. I guess if our ambition grows we may need to increase the amount of money available for that, but that's really crucial.
I completely echo Merlin's points. Ideally, particularly with shared ownership, we need finance on similar terms that we would offer in a share offer, and over similar periods of time. I think, if we were able to access that, then we could effectively continue to enable people to invest in schemes, so we've got more democratic ownership, but gradually repay it over time. It just gives a huge amount of confidence. It gives confidence to commercial partners that when we say we can have 15 per cent of a scheme, that we can own 15 per cent of that scheme. So, I think that's probably what we were looking for.
Thank you very much. We've got some specific questions now for Regen South West. I think Joyce Watson has got the first one.
Yes. Okay. Really, what we're looking for is an overview of the work of Regen South West.
Okay. Thank you. We formally trade now just as Regen, and that reflects the fact that we work across the country. Regen grew out of an agency set up to enable the south-west to encourage the development of renewables and energy efficiency, and to take advantage of the economic opportunities that came along with that. When public funding disappeared a number of years ago, we kind of transformed ourselves into an independent centre of expertise—a 'think and do tank' if you like—in the transforming energy system. We now have a group of about 20 people with a range of expertise in all aspects of renewables and, increasingly, the whole energy system. I think the issues have moved on for us all, from simply trying to attach as much renewables as we can to the grid to trying to work out how a decentralised, decarbonised energy system can work and balance most effectively, and that brings you into smart technology storage and the whole way the system works and is balanced. So, that's very much our focus now—trying to make a decentralised, decarbonised and more democratic energy system work, and to be at the cutting edge of the thinking on that.
We do that through pioneering projects and work on various trials and initiatives. We run one in Cornwall called the Sunshine tariff, which is a local time-of-use tariff trying to line up solar with local demand better, so, balancing supply and demand at a local level, as an example. We use our expertise to work with people who are at the cutting edge of this system, people like Western Power Distribution, who run the local energy systems, and we do quite a lot of convening—bringing people together—and whenever there's a lot of change, and the energy system really is going through a revolution at the moment, then you need a space where people can get together and share experience and ideas, because no-one has the answers at the moment. There's a need for a collective will. The community—so, we're working across the energy system, the community energy piece is part of that, and that's part of our conviction that you cannot transform this energy system without engaging and bringing people along in that transformation.
Thank you. Could you set out the main barriers to development and delivery of community energy projects in the south-west and do you think we've got the same problems in Wales?
The main barriers—firstly, there are barriers to renewable energy schemes generally and those are: are they financable? There are no incentives anymore so projects have to be financable off their own bat. The income you get is obviously selling your power. You're trying to raise capital, which you then get repaid over 15 or 20 years, and you're exposed to the wholesale power price risks now, you have no other income stream except the price of power, and it's very difficult. No-one has a very good track record of predicting what that price of power is going to be, so it's very difficult to raise investment against that, which is why there is nobody really in any—. No-one is building fossil fuel power stations, nuclear power stations, on the price of power alone. So, we're probably in a situation where pretty much every other generation technology does have access to subsidies of some sort and renewables don't. There's a basic challenge there and the potential for contracts for difference to be opened up to solar and wind, not necessarily at a subsidy level, but at a sort of—so, offering the current wholesale price but providing a guarantee of that income. And that equally applies to community energy schemes as to anything else. So, it's very difficult to finance just on the power price risk and people are trying to innovate and find new ways of doing that but that is a major barrier and that's why we've seen a hiatus in renewable development, generally, across the board.
Access to grid is another critical issue. The basic principle is the same in the south-west and across the UK, broadly, as it is in Wales—that we have totally transformed this energy system from a top-down 50 power stations to over 1 million generators across the UK, with power flowing in all directions, people starting to store power, people using power in very different ways, and we need to rethink the way that we manage that system and we need to rethink it in a more bottom-up way. Until we do that then there are significant constraints on the network. There may be very basic physical constraints like in mid Wales or there may be more localised constraints, which is what you tend to get in places like the south-west. So, there is a need to run that system much more intelligently, and I think probably the critical debate going on at the moment is the way access to that system is charged for, and that's a process led by Ofgem through something called the charging futures forum. That is critical, because that's what sends the signals through the system as to what sort of technology will receive a return and where it's located. So, I think financing schemes, and then thinking about the system in a bottom-up way, where we try and balance supply and demand at a local level and reduce energy flows higher up the system, and then running it much more intelligently with smart digital technologies is the other critical area. I think those two will enable community energy schemes as well as renewables generally.
The big challenge is to get energy storage working better than it is now, because that's one of the great weaknesses, isn't it? If you store energy some of the energy will be lost as heat, some will be lost as sound and some will be lost through other things, which does reduce the amount that is usable over a period of time.
So, the big challenge is to make an energy system that has 1 million decentralised generators that are variable in their generation work provide a secure energy supply at the end of that. The technologies you can use to do that include storage, include shifting demand, they include different technical solutions and they include gas back-up, essentially. I think we're moving pretty rapidly towards that kind of world. Storage is going to be a critical technology within that but it's probably not going to be just battery storage; you may see putting electricity into gas as hydrogen as another way of storing power. If we can shave off peak demand in some cases—. I don't think the question left is whether we're going to go down this route, I think everybody is now accepting that, but it is a major technical challenge. At the heart of it is the switch from DNOs, distribution network operators, to DSOs, distribution system operators, and that's an area where the Welsh Government could be perhaps getting a little bit more involved and making sure that that switch enables local and community solutions to play a role and it isn't just set up in a way that's too complicated for those kinds of schemes to engage—. So, in a way, for us, going back to the community and local thing, this transformation is going on—at the moment it seems a bit too complex for community players to engage in, apart from the odd example, and we really need to make sure that this transition does enable local and community schemes to come forward.
And the final question from me: can you tell us of examples of best practice in the south-west and the key lessons that have been learnt so that we don't have to relearn them ourselves?
I would say that, in terms of community energy, Wales is one of the bright spots, if you like, in terms of the number of companies and the innovation and the ideas coming forward. There are lots of schemes around the country with some interesting features, so Wales is certainly in the mix as one of the leading ones. When you look at the national awards and things, there are a number of Welsh community energy schemes that succeed. I guess that this approach, and this approach of community and local ownership, is not going to work if it is just the public sector that's driving it. You need to find a solution that enables the market to partner and bring together businesses and communities and release local capital to enable this kind of transformation. I'd like to see partnerships with community energy schemes and I'd like to see tax incentives and things that enable localities to take a lead, rather than seeing this as something that has to always be public sector, centrally led. We've seen—. I think that's one of the lessons in the south-west, that, when you do that, when you create a viable mechanism—viable income streams, viable opportunities to raise capital—then this sector can really develop very, very quickly.
We've got another minute left, so can I ask a question to Mr Proctor—whether you feel the Local Energy Service/Ynni Lleol needs to be changed in any way or whether it's working well?
I think it's generally working well. I think, ultimately, the challenge is the route to market. I guess, as Merlin described, it's creating these viable projects, and Merlin discussed some of the reasons why it's more difficult to develop a renewable energy project. I think to expect the Local Energy Service to resolve all those problems is probably asking too much. They can help enable projects to happen, but there needs to be a viable business model for those projects in order for them to be able to develop. So, I think the main area—. Some of the key work that needs to be done—and that could be incorporated into the Local Energy Service but should be done more widely—is to look at how in Wales can we create more certainty for these schemes. I guess a lot of our recommendations in the report that was sent around previously are looking at (a) are there ways you can reduce the costs of developing these schemes to make them more financially viable, but also are there ways of enabling them to generate more income.
So, a number of community energy projects are developing innovative trials, such as the Energy Local project in Bethesda, which is a fantastic opportunity and can create cheaper energy for local residents but also give more certainty of income and increase the amount of income for the generator. So, things like that are fantastic opportunities, but I also think there are opportunities with the Well-being of Future Generations (Wales) Act 2015. As the public sector, we could be looking at buying our energy from renewable sources, which will increase the demand, which will either increase prices or increase the amount of generation available. But there's also, potentially, opportunities for public bodies to actually buy their energy from community energy schemes or local energy schemes and, again, that can help to provide some certainty on the price of the electricity that they're able to generate. And whether, under the well-being of future generations Act, you can look at it holistically and say, 'Well, perhaps we can pay a little bit more to encourage more of this sort of development in Wales' and so you're, in some ways, replacing the sort of feed-in tariff type model that's being gradually—we're gradually losing over time. So, I think that's where we need to focus on, and, again, more flexible finance and looking at the holistic, rather than just that support service for the community energy sector.
Can I thank you both for your very detailed answers? I found it very helpful and illuminating and I'm sure my fellow colleagues on the committee have also done so. You'll be sent a transcript of the meeting to check before publication. I would urge you to check, because sometimes words are missed, especially at the beginning when the microphone comes on, so, if you do fully check it—. I always check it and sometimes words are missed, or sometimes, if you turn away, like I just did then, they may well miss part of it. So, apart from that, thank you again very, very much. It was very helpful and thank you for coming to see us. Thank you.
Gohiriwyd y cyfarfod rhwng 11:12 a 11:26.
The meeting adjourned between 11:12 and 11:26.
Can I welcome everybody back? It's a continuation of our inquiry to community energy, and this is one of the oral sessions. We've got two people who we're hoping are going to join us by video conference later on, and we've got two other witnesses here. I think that Benedict Ferguson would also like to explain his role today.
Yes. Thank you very much, Chairman. So, I have a dual role, which has been noted in the paper that we submitted on behalf of Community Energy in Pembrokeshire. I am a development officer for Welsh Government's Ynni Lleol local energy programme. I've worked for that programme both in this manifestation and previously, since 2010, under Ynni'r Fro. But I'm supported in that role. I have been supported by my current employer, the Energy Saving Trust, and my previous employer, Severn Wye Energy Agency, to take an active role in community groups that I've been supporting. So, I've been a director previously of Carmarthenshire Energy and I am currently sitting here mainly in my role as the director of Community Energy in Pembrokeshire, which is a community interest company seeking to strategically support sustainable energy in Pembrokeshire.
Yes. Hello, I am Holly Cross. I am a director of Cwm Arian Renewable Energy. So, we're a community benefit society, initially attempting to simply put up a wind turbine in our local community that would be 100 per cent community owned. So, it's developed now where we've got some funding to do more projects to do development work in renewable energy and sustainability in our community, but what I'm bringing to the committee today is that experience of trying to put up a wind turbine.
Well, thank you, both, for coming along to talk to us today. If I can, perhaps, ask the first question: is the 1 GW target of locally owned energy by 2030 is achievable with current policy drivers, financing mechanisms and structures?
Do you want to start off?
I don't want to start, no.
It's certainly achievable. I think I noted in the evidence that we submitted that, technically, it's achievable. We've got the technology, we have the sites. You know, the sites in Wales have been looked at absolutely endlessly, so if we want a gigawatt of energy, it's really about political will and about making the structures work. The barriers, again, have been noted elsewhere in the evidence to you. So, I think there are some issues still. There are issues with the support mechanisms in terms of feed-in tariff receding. There are issues that are still outstanding and haven't been revisited much in the last couple of years with the problem of getting local planning permission, for example, for wind turbines. They've been less of an issue because we haven't been delivering or developing new projects. We're trying to build the old projects that were almost killed previously by not getting planning quickly enough. So, the short answer is a gigawatt is easy, but we've got to have the will and we've got to have the right structures to deliver it.
Yes, I would. And I think that the following questions will explain why, whilst it is easy to say it, it's not easy to do it at the moment.
Ie, diolch, Gadeirydd. Yng nghyd-destun ynni cymunedol, a allaf i jest ofyn am eich sylwadau chi ynglŷn â tharged Ysgrifennydd y Cabinet ar gyfer pob prosiect ynni adnewyddadwy newydd i gael rhyw elfen o gynhyrchu cymunedol erbyn 2020? A ydych chi'n cytuno efo hynny? A ydych chi eisiau bod yn fwy uchelgeisiol, neu a oes unrhyw sylw cyffredinol gennych ynglŷn â'r gofyniad yna?
Yes, thank you, Chair. In the context of community energy, could I just ask you for your comments about the Cabinet Secretary's target for all new renewables projects to have an element of community ownership by 2020? Do you agree with that? Do you think it should be more ambitious, or do you have any other general comments about that requirement?
If I've understood you correctly—
Rwyf yn siarad Cymraeg, ond rwy'n ceisio—
I speak Welsh, but I'm trying to—
—understand. But, my initial knee-jerk reaction to that is, as a volunteer myself, the volunteer capacity is a huge issue when it comes to community ownership, if we're all defining community ownership in the same way, that is. So, yes—great to have targets, but the volunteers who, I presume, would be expected to be a huge driving force in community energy, need more support. They need the support that's existing from Ynni Lleol, for example, but they need more support, and as Ben has pointed out, the paper that we submitted does outline ideas of training and solidifying what's already there with a more holistic approach to building a ground source of people who are skilled. I wasn't skilled; I'm not terribly skilled now, but thankfully, Ynni Lleol has supported my group to become more skilled. But we're at risk of burning out, because it's taking so long.
So, there's volunteer capacity, but then there's also support coming down from Welsh Government and up from local authorities, which hasn't been happening at the moment; it's been very dispersed, like different agendas almost. So, yes, volunteer capacity won't burn out if things can happen quicker.
Yes, diolch. Thanks for the question. I think this comes back, for me, again, to the drivers and it's about being clear why we want community ownership and what we'll get out of community ownership. So, we could have, at one end of the spectrum, community ownership that really just looks a little bit like the community benefits that we've seen previously. So, from a large-scale wind turbine, if we're seeing £5,000 per megawatt of capacity, if that's the same level of feedback but with a small change in the legal mechanism, there's very low burden on communities, but we might not be getting the values that underpin the reason for a target like this being set. And then we come back more to the points that you've been reinforcing, Holly, about giving communities capacity, but also, talking about the potential for new energy markets to be more local, to be about generating, selling and buying locally in a network rather than a distributed network operator-led system. I think that there's a lot more value that we can get out of that, and it's much harder to deliver and achieve.
Os caf i jest ddod i mewn ar hyn hefyd, mae'r hyn rŷch chi newydd ddisgrifio, er enghraifft, yn gofyn am chwyldro, i bob pwrpas, yn y ffordd rŷm ni'n dosbarthu ynni a newid o system sydd o'r top i lawr, yn sylweddol, i system sy'n llawer mwy organig a llawer mwy gwreiddiol yn ein cymunedau.
Mae Holly Cross wedi sôn am y pwysau sydd ar wirfoddollwyr i helpu yn y maes yma. Faint ydych chi'n meddwl, os yw Llywodraeth Cymru'n mynd i geisio gwneud hyn, y mae angen i Lywodraeth Cymru ei hunan ddatblygu rhyw fath o gwmni ynni, neu ryw fath o intermediary y gall fod rhwng y lleol a'r cenedlaethol? Achos, rydw i wedi gweld enghreifftiau—i atgyfnerthu'ch pwynt chi—o ddatblygiadau gydag elfen gymunedol, ond, i bob pwrpas, beth sydd wedi digwydd yw bod rhyw gwmni mawr wedi dweud, 'Cewch chi 10 y cant o'r tyrbin yma, neu beth bynnag', ac mae'r holl beth yn cael ei yrru un ffordd i'r gymuned yn hytrach nag yn cael ei yrru gan y gymuned. So, a oes angen, hyd yn oed yn fwy nag Ynni Cymru, rhyw fath o gwmni neu rywun sydd yn gallu chwarae gyda'r chwaraewyr mawr, fel petai, sydd yn gallu sefyll ysgwydd yn ysgwydd gyda nhw a bod yn llais i gymunedau lleol gan hefyd bod yn atebol i'r cymunedau hynny?
If I could just come in on this as well, what you've just described, for example, asks for a revolution, to all intents and purposes, in terms of how we distribute energy and a change from the system that is top down to a system that is much more organic and rooted in communities.
Holly Cross has mentioned the pressure on volunteers to help in this area. How much do you think, if Welsh Government is going to try and do this, the Welsh Government itself needs to develop some kind of energy company or intermediary that can exist between the local and the national? Because I've seen examples—to reinforce your point—of developments with a community element, but, to all intents and purposes, what's happened is that some big company has come in and said, 'You can have 10 per cent of this turbine' and everything is driven one way to the communities rather than being driven by the communities. So, do we need, even more than Energy Wales, some kind of company or somebody who can play that role with the big players, one of those people who can stand shoulder to shoulder with them and be a voice for local communities but also be accountable to those communities?
Yes. That's a question I'm not sure I know the answer to [Laughter.] Yes, it would have to be something I would want to consider. I think, for me, the experience of working with—. I know Ynni Lleol isn't exactly what you're describing there—
—but the experience of working with them has been empowering, actually, so it's really important that the people who are willing to push this forward in representing their communities aren't being disempowered. So, yes, it's a delicate balance—
It is. It's really important that we, as representatives of our community, are continuing to hold that power and are able to develop it and do it, as you describe, and as we want to do it and the benefits come back to the community 100 hundred per cent, if we want it to. So, yes, I'd be really interested to explore what you're explaining, but I wouldn't be able to say, 'Yes, that's a good idea'. But, I don't know, Ben, if you have any ideas of—
Whenever this topic comes up, I have to put my hands up and remember the first time I was laughed at for suggesting exactly that in a fuel poverty forum, in 2007 I think. There certainly is potential value in, I think, community engagement in every level of the way the market works. I don't ask, myself, for anything less than revolution, but I'm not sure that simply an energy company is the whole solution. There are large energy companies that are working on those solutions. So, for example, you've got Co-operative Energy seeking to take a lead in community energy. They're the partner in the trial that's going on in Bethesda, confusingly called Energy Local. In that case, you've got an excellent partnership with an existing energy supplier that is licensed. There's a lot of work that goes into becoming a licensed supplier. There are very narrow margins in the markets at that scale.
I did make a note earlier that, not included in this, there's a new company called One Wales Energy. I haven't spoken to the people there. I don't know the limit of their own capacity as a company or of their will to work with communities. I do think that there's an awful lot of places to put our effort and we need to, sort of, think carefully about where partnership brings us better value, perhaps, than having our own new thing, you know, with the costs of that. So, it certainly might help, but if there are other partners that could do it quicker and easier and that are off the blocks already, that should be considered. You know, both options should be looked at.
Thank you, Chair. I just want to explore how Welsh Government, in the setting general targets and policy direction, then feeds in and co-operates with local authorities. I think, in your written evidence, Mr Ferguson, you said some fairly pungent things about the dislocation, in effect, and I just wonder do you see any improvement, or is this still a huge barrier?
I think local authorities, in some ways, sort of meld into local government, right down the system. I think it's a really huge question; it's quite hard to pull that into one point. So, the written evidence might be useful to go back to. I certainly sense some improvement in one of the local authority areas that I work in at the moment. I think that local authorities are extremely hard-pushed and they've been confronted with issues that—. The issue that I've noted about—. I don't think the planning policy was clear enough for local planning authorities to deal with, and we went back for feedback repeatedly and were told that it was clear enough, but the message we were getting from local planning officers was that they couldn't cope and they couldn't interpret and they didn't feel supported to interpret and deliver on that. So, to me, those are the facts that emerged.
I think that we have currently two programmes: one supporting local authorities, called Local Partnerships, and one supporting communities, called Local Energy. I think that, quite accidentally, probably, that suggests that the two interests are divergent rather than common, and I'm pleased to recognise that the tender that's out at the moment for the next service seems to be drawing those together, and I think that will be helpful. I think that, going below local authority level, again it's about community capacity and understanding and communication, and I think there's been a real failure on the part of the current programme that I work for and the previous one to have enough resource to really strongly engage local communities and local community councillors to be supportive on this agenda.
In your written evidence, you seem to go a bit deeper than that and say there's a culture of—. You know, some planners see a community project and it's like a dire warning to them rather than an invitation for engagement. How prevalent is that?
Okay, that's interesting. I can see where the nuance of my comments have suggested that. I think that has been the case in dealing with one particular planning office, where I suspect that there's an inherent personal dislike of wind turbines, and that has fed the issue.
Actually, in Carmarthenshire, for example, I've had very positive engagement, but not with successful results, unfortunately. But I think that the problem is that, when communities have gone and said, 'We need to be treated differently', the planners have not felt that they've had policy to rely on that gives them comfort with that. I think that has been very challenging for them to experience and to respond to, and I have sympathy with that—frustrating as it's been. The fact is that if they don't feel that they've got policy to rely upon, then they're the ones that are at the sharp end in their local communities, supporting decisions that some very vocal local people will really dislike.
I live in Pembrokeshire, so I know who you're talking about. [Laughter.] I can perhaps say more things than you can. But the point is a very serious one here and it comes back to your final comments about local authorities being empowered or compelled to deliver renewable energy and, at the same time, bringing the community behind that because that's ultimately what you're trying to do. So, I suppose my question to you is this: how are you going to meet the challenge of what is already there, which is an inherent move within the community and maybe authority, for whatever reason, against any form of wind turbine, wherever it is, and turn it into a positive rather than a negative perception in people's minds? Because I think that's the reality. If I can just add to that that the previous witnesses that we had suggested actually delegating down a responsibility to local authorities to have to draw up plans to produce some alternative energy. Easy question.
I noticed that one of your questions was, 'How are you going to?', and I'd love to rephrase that as, 'How are we going to?'
I recognise that, yes. Without crying into my beer, I think we've missed a big opportunity to deliver that by missing the feed-in-tariff opportunity and the benefits that could have arisen, if we'd got a few more through and been a bit clearer during 2011 to 2014. That boat has sailed.
I think, on your final point about actually handing responsibility and targets down to local authorities, we probably do need quite a hard stick, unfortunately, and the carrot needs to follow. Notwithstanding that I come from a community development standpoint and I've got a great belief in supporting grass-roots activity, you are putting grass-roots volunteers in the way of severe opposition from a small group of people who are generally more willing to behave badly, frankly. That is genuinely psychologically and healthwise challenging for those volunteers.
That's really the point that I'd like to bring to the fore in this: we're not going to create a story where wind turbines suddenly become acceptable and welcomed with open arms and warmth by this hard minority—which is what these people actually are—of opposers who are stopping everybody else from moving along on an agenda that is fundamentally positive and will deliver. We need to protect those community volunteers and give enough stick to local authorities—and a statutory stick—to help them get through and help them to help you deliver what you want to see in these targets.
Yes. I suppose you've almost said what I was going to say, because I noticed that you said that there's community opposition, and you're right, but the word 'minority' is really important, because they really are the minority. Our project's got volumes more support, written support, in through the planning. Yes, the supporters are the quiet majority, and nobody must be frightened of the minority. Yes, they're significant and vociferous, and they're not always rational—they don't always behave well—but that can't be the reason why onshore wind is not supported, from the governmental level or from the community level.
So, if there's anything that can be done to protect volunteers from that kind of abuse, yes, a hard stick would be wonderful. Because there are personalities and there is—. If there's one planning officer who doesn't like wind turbines, he or she will find a way to advise what is essentially a group of not-very-knowledgeable people on the committee to not allow it. That's what our experience was, and it was incredibly demoralising. We were constantly looking to the Welsh Government and trying to interpret what was quite foggy, and it was guidance, wasn't it? Guidance isn't enough. It needs to be much clearer, for them and for us.
Yes, we can hear you here. We can't see you at the moment.
You can survive without seeing us as long as you can hear us. We're part of the way through, so if we carry on from where we are and then go back to the beginning and start with you, that might be the best that we can achieve, unless anybody objects. Okay. Back to you, then, David.
Yes. I'm trying to get onto a more positive cycle. Are there any authorities at the moment that are more engaged, and give good weight to community involvement and projects, and mentor and support them, I suppose, in their early stages of development? And—sorry, I'm losing my thread now with the musical chairs element of what's going on. Also, then, with larger projects, are they encouraging them, or requiring them, indeed, to have a community aspect as well? For commercial projects, I mean.
Certainly Pembrokeshire, at the moment, I'm having much better conversations with. So, naming names, I'm having much better conversations within Pembrokeshire, and that probably is where I've noted that separation. So, they're getting advice from local partnerships and then conversations with us, and it looks like it's a different thing and a different agenda. There are certainly larger scale sites there where we could do more to engage.
I think historically, at the very beginning of the Ynni'r Fro programme, that was very difficult. There was a county council-owned asset, a hydro scheme, that we thought we could deliver in partnership with the community, and ultimately the local authority felt that they wanted, I think, to own it themselves, and felt uncomfortable about making that a genuinely shared project for the community. That meant that we couldn't apply our support. I'm confounded, confronted by that sort of thought, but I think it is prevalent. I think local authorities feel they have to run as businesses, that when they're taking community groups on they're taking on groups that have less skill, less governance, less reliability, that they're introducing risk to themselves and to the project, and they'd quite like to consider all of those things, but it would be so much more positive if they felt a real synergy of interest in delivering these projects together, where the community really offers a market, and we can tap into that community and tell that positive story, and they can buy their energy, and they're providing the anchor market to those generating assets, which could be a great marriage.
Well, can I do what I should have done earlier, and welcome Grant Peisley and Jenny Wong from Cyd Ynni to the meeting? Do you want to add anything to what's just been said?
Well, no. Only that I've had very similar experiences to those that Ben described up here in the north. But from within the community network itself, it's not been a problem for us.
Finally, given the scale of community projects—some of them can be very small indeed—would there be a greater role for permissive development, do you think, or is that a principle that is not wise to apply to this sector?
Yes. Local development orders and permissive development, I think it's a great shame it hasn't been looked at already. The devil is in the detail, isn't it, around the definition, but that would really help.
Because we can't see you it's very difficult to know when we can come in or react. I would say with regard to permitted development that it depends also on the technology. It's about ownership status, but also about which technology you're talking about. Permitted development for larger solar schemes that are community-owned, I think, is much easier for us to think about than perhaps a hydro scheme, where you would need to consider other environmental impacts that permitted development might not take into account.
Nothing more to add, really.
Okay. Dai Lloyd's got the next question. Can I say to our colleagues up in Cyd Ynni that I will call you in first on the questions, so you won't be coming in after anybody else? So, as you can hear us, immediately after the question, if you could answer it and then we'll share it out, and apologies to the people who are here. Dai.
Diolch, Cadeirydd. Roeddwn yn mynd i sôn, yn dilyn profiad pawb o brojectau ynni cymunedol, a allech chi ymhelaethu ynghylch unrhyw anawsterau rydych wedi eu cael wrth ymdrin efo rheoleiddwyr, megis Cyfoeth Naturiol Cymru yn bennaf fel rheoleiddiwr? Beth yw'r anawsterau neu'r problemau, neu'r llwyddiannau rydych chi wedi eu cael wrth ymdrin â Chyfoeth Naturiol Cymru?
Thank you, Chair. I wanted to mention, following your experience of community energy projects, perhaps you could let us know about any difficulties you've come across in your dealings with regulators such as NRW, mainly, as a regulator. What are the difficulties or problems you've come across, or successes also that you've had in dealing with NRW?
One of the members of Cyd Ynni—Cyd Ynni is a consortium of five community energy organisations—and one of them, Ynni Ogwen, has had some issues with receiving permission from NRW that led to them missing a FIT regime, so there was a reduced FIT because NRW's consenting didn't come through within their own timescales.
It took a year instead of four months.
So, it took them one year instead of four months to give consent to Ynni Ogwen hydro scheme, and that's had a considerable impact on the returns and therefore the benefits that can be provided locally. That's certainly some feedback we've had from Cyd Ynni members. Any other, Jenny?
No, not really. The word 'regulators' is a bit confusing to me. The local planning authority, as you say, you've heard from us what our experience was, but other than that, no, no problems.
Certainly, we have a 95 kW run-of-river hydro at Allt Cafan in Carmarthenshire that was pretty much destroyed by taking six years to achieve a licence with NRW, following which it took 11 months [Correction: 9 months] for the planning officer to sign off a planning consent that we were advised had absolutely no problems and should have been in time. That project is struggling horrifically to be built and would have been not only a decent money-earning community enterprise, generating green energy in its local community, but on a site of some historic value that would have received a really beneficial investment, and there would have been a heritage outcome from that. So, that's unfortunate.
Equally, with working with Transition Bro Gwaun, they've sought to take a very open partnership approach for the last three years, looking at their tidal project, and I think their first experience was of three NRW officers appearing to attend a meeting for four hours, called a partnership meeting, and responding to the question as to how could they engage by being told to look at the website, and the guidance on the website was disappointing. At the moment, certainly, with marine licensing, there's a new regime in place where there's a very clear pricing structure. So, that project has been able to submit an application for funding to Ynni Lleol to cover the costs of that support. I would still like to see more. I'd welcome a pricing structure and clarity, and something that we can fund, even if does seem a little bit circular, if that releases good support. But it would be great to feel that NRW were resourced in some way to get someone who would sit down with community groups and talk to them in ordinary language about their project, and just to feel engaged and human about it. It feels inhuman and distant.
I want to talk about viability and any potential impact of changes in business rates—and we're talking hydro projects in the main—and to hear your views on that.
Business rates have been a significant problem for members of Cyd Ynni, with the changes that occurred in the last 12 months, where we've seen increases of about 200 per cent in business rates costs, and some members have seen increases above 500 per cent in their business rates costs. We've been grateful to have some relief from the Welsh Government for small scale hydro schemes, but that doesn't help all community energy hydro schemes. Some of our hydro schemes up here are quite large. Abergwyngregyn, for example, is the largest community-owned hydro scheme south of Scotland, so they're not helped. And the changes to the business rates have left some potential schemes now being seen as unviable, and, of course, this has a huge impact on the level of benefit that can be delivered into our communities here in north-west Wales.
I think just to emphasise, if I may, that there is change, and unexpected change, that couldn't be planned for by existing schemes, and there will be a number of schemes in development at the moment that have only made the investments they have so far on the basis of a regime that's now changed. And fundamentally looking to the future, I go back to my point about what we need is a revolution. If the markets aren't working, good businesses should pay good business rates to support our local authorities to develop and deliver services. So, there's nothing wrong with that principle, we've just got to have the markets working better.
Diolch. Os caf i ddechrau gyda diwedd y cwestiwn gan Joyce Watson, achos, i fod yn onest, fe fyddwn i'n llawer mwy hallt nag ydych chi wedi bod fel tystion ynglŷn â'r ffaith bod un fraich o Lywodraeth ddim yn gwybod beth mae'r fraich arall yn ei wneud. Ac mae'r codiad syfrdanol dros nos mewn trethi busnes wedi cael effaith andwyol iawn ar ddatblygiad hydro yn benodol, ac, wrth gwrs, mae'n dueddol o fod taw'r gorllewin a'r gogledd, oherwydd natur y tirlun ac ati, sydd yn addas ar gyfer datblygiad o'r fath. A gaf i jest ofyn yn benodol, achos roedd datganiad yr wythnos yma ynglŷn â rhyddhad ar gyfer hydro ar lefel lai—ydy hi'n glir i chi, fel pobl yn y maes yma, beth yw'r hydro sydd yn mynd i gael rhyddhad, ac ydy hi'n glir i chi ym mha ffordd nawr mae hyn yn mynd i gael ei weithredu gan y Llywodraeth?
Thank you. If I could start with the end of the question from Joyce Watson, because, to be honest, I'd be much harsher than you have been as witnesses about the fact that one arm of the Government doesn't know what the other arm is doing. And the astonishing increase in business rates has had a very detrimental impact on the development of hydro specifically, and it tends to be in the west and the north, because of the nature of the landscape and so forth, that it is appropriate for those developments. Could I just ask you specifically, because there was a statement this week about relief for hydro on a small scale—is it clear to you, as people in this area, what is the hydro that's going to have relief, and is it clear to you as to how this will be implemented by the Government?
We're a hydro, which—. Hello?
The hydro that we're proposing to develop at Ynni’r Ocar I suspect is going to be above the thresholds of—[Inaudible.]
We're unclear as to—
As to what the thresholds are—we don't anything about the proposal except there's been a proposal, so it's very difficult to respond to that question. The critical point is one that Grant made earlier, in that we don't know what the thresholds are, and the community hydro that we're proposing—we're just submitting it for planning consent now—is only marginally smaller than the Ynni Anafon one, and both of us are concerned that we don't know whether or not we're going to be eligible under any of these relief schemes or not.
Can I just ask you on that: how quickly would you need to know about this in order for there not to be an effect on your developments?
About three months ago, Simon. [Laughter.]
I agree with the last speaker, as somebody who's looking to develop a community hydro, I don't have any objection to paying business rates and recognising that we're doing economic activity and there's a responsibility to share that. It's just these unanticipated, very, very large increases that make planning—and when you're doing a hydro, it's about long-term planning and financial planning—very, very difficult to do. So, our main request is for stability in what's going on.
Ben, I saw you nodding a lot there. Did you want to add anything to that?
I was simply nodding in agreement. I don't have any direct experience of this, but I've seen colleagues go through it.
Diolch am hynny. Wrth gwrs, mae yna job o waith gyda ni fel Aelodau Cynulliad o hyd i bwyso am fwy o wybodaeth, a gobeithio bydd y pwyllgor yn gallu helpu yn y maes yma hefyd, os caf i ddweud, Gadeirydd, jest i roi'r sicrwydd yna i ddatblygiadau.
A gaf i droi nawr a jest dweud wrth y bobl Cyd Ynni: cyn i chi allu ymuno â ni, roedd rhywfaint o drafodaeth yn y pwyllgor ynglŷn ag a oes angen rhyw fath o gwmni ynni cenedlaethol i Gymru i helpu rhai o'r datblygiadau hyn. Nid wyf eisiau ailagor hynny, ond jest i ofyn yn fwy penodol: a oes angen datblygu'r gwasanaethau cefnogi sydd ar gael? Rydym wedi clywed am Ynni Lleol a rhai o'r pethau sydd wedi cael eu gwneud yn lleol, ond yn eich barn chi, nawr bod y Llywodraeth wedi datgan yn fwy cryf y diddordeb mewn ynni adnewyddol, a hefyd y diddordeb mewn cael rhanberchnogaeth gan gymunedau lleol, a oes angen datblygu’r gwasanaethau cefnogol nawr hefyd i sicrhau bod hynny'n digwydd?
Thank you for that. Of course, there is a job of work for us to do as Assembly Members to press for more information, and I hope that this committee will be able to help in this area, if I can say, Chair, just to give that certainty to developments.
If I can turn now and just say to the people at Cyd Ynni: before you joined us, there was some discussion in the committee about whether there was a need for some kind of national energy company for Wales to help some of these developments. I don't want to rehearse that debate, but could I ask you more specifically: do we need to develop the support services that are available?We've heard about Ynni Lleol and some of the things that have been done locally, but in your opinion, given that the Government has stated more strongly the interest in renewable energy, and also the interest it has in having partial ownership from local communities, do we need to develop the support services as well to ensure that that does happen?
Yes. Certainly from the Cyd Ynni members' perspective, the support that we've had recently from Ynni Lleol has worked well—the combination of grants to be able to buy in expert support and the advisory support—but what we need is for that to continue, or we can sit down and review what could be refined about that. It's the uncertainty all the time. We're at a stage now where we're just about to apply for planning consent and every six months, we're told, 'Spend all your money quickly' or 'I can't help you after next month because the programme's going to finish' and then 'Oh, it's okay, we're back on again, but only for six months.' It's that level of insecurity and uncertainty that is the problem, not the support that we're getting. The supporting we're getting—we're grateful for it, it's working well.
I would add to that, if I may, that the level of support we have here in the north is stretched very, very thinly. I can't speak about whether the level of support is also as stretched in other parts of Wales, but, certainly, through no fault of the individual involved—. Individual—you'll notice I'm talking about one person that provides this support for the Welsh Government service here in the north. It's through no fault of his, but that lack of capacity and resource in the support system leads to bottlenecks within the system. More support could be provided to move some of our schemes faster and therefore arrive at FIT preliminary accreditations or avoid other problems associated with uncertainty. It takes so long for our developments to happen because we don't have the resource or capacity. It's always coming back to the same issues around resource and capacity for us. There are resource and capacity issues within the groups themselves and volunteers, and then we're also finding that there's a resource and capacity issue within the service being provided through Ynni Lleol.
As an example of that, with our own project, we were concerned that—the person who we have offering support obviously can only do so many groups at a time and we've had to wait two years to actually get to the top of the queue and actually get the support that we needed to progress the project.
I think, given my conflict, I'll be careful what I say about the programme, but I would only emphasise again: these volunteers who work in these community groups are some kind of berserkers or something—it's an incredible task to take on. It's such a huge privilege, really, that we're confronted by these people—I'm speaking as a development officer now—in our daily work. I think that that additional support—I recognise the point about development officers perhaps being scraped thin, but I think that finding a more sustainable way to support the volunteers and to support the community organisations and build their sustainability is where I would really like to see a focus on that support.
Yes, I agree with all of the above, really, and I would make a plea: just don't withdraw the programme. As I said, there's a statement directly from our group in the paper that we submitted, and if it wasn't for Ynni Lleol and Ynni'r Fro before us we wouldn't be where we are. Yes, we have a strong team of volunteers and, yes, we've got grit and we've got determination, but it's not enough. We need that extra support and that's not just the funding. Yes, of course, the funding's invaluable, but the moral support, the expert support, from Ynni Lleol and Ynni'r Fro development officers has been wonderful, and even just a little bit less right now for us would be too little and we wouldn't be able to carry on. So, I plea: don't withdraw it, expand it.
Okay, good. We would agree very strongly with that—that we like what we're getting at the moment, we just want more and more security for it. But on the point about capacity, Cyd Ynni itself is a consortium of five community energy groups in adjacent catchments, and we formed simply to try and address this issue of being able to provide support to the five groups themselves within the membership. So, we've just secured—is it £240,000?
It's £250,000 or near enough.
It's £250,000 from the lottery to do that, so that we will have a full-time officer that we can share between the five groups. You were talking earlier about having an energy company and I do wonder whether or not something similar to what we're trying to do here in Cyd Ynni, which is really about solidarity between the groups, is something that could be considered on a broader scale.
Wel, diolch am y neges glir sydd gyda chi yn fanna ynglŷn â pharhad y rhaglen gefnogaeth, achos rydych newydd amlinellu, Jenny, fod y gefnogaeth honno, yn ei thro, wedi eich galluogi chi i gael mwy o gefnogaeth gan ffynonellau eraill, achos, wrth gwrs, dyna beth yw rhinwedd gwneud hyn ar lefel datblygu cymunedol, sef gallu mynd—mae'n anodd—o ddrws i ddrws yn y ffordd yna.
Ond jest i gloi gen i, gan ein bod ni wedi trafod rhai o broblemau cefnogaeth Llywodraeth Cymru, yn enwedig rhai o'r problemau o gwmpas trethi busnes ac ati, a oes yna rywbeth cadarnhaol neu rywbeth penodol, yn enwedig o ran cefnogaeth gyllidol neu strwythurol, os leiciwch chi, y byddech chi'n dymuno i Lywodraeth Cymru wneud nawr? A oes yna rywbeth ar goll yn y fframwaith? Rydych yn ymwybodol o'r hyn mae Llywodraeth Cymru yn ei ddweud sydd eisiau cael ei wneud, ond a oes rhywbeth y byddech chi am iddyn nhw—? Gan gofio bod rhaid gwneud trethi busnes, rwy'n gwybod am hynny, ond ar wahân i hynny, a oes yna rywbeth arall rydych chi'n credu y dylen nhw wneud nawr er mwyn cau'r bwlch yma sydd rhwng y geiriau a'r gweithredoedd ar hyn o bryd?
Well, thank you for your very clear message there about the continuation of the support programme, because you've already outlined, Jenny, that that support, in turn, has enabled you to get more support from other sources, because, of course, a merit of doing this on a community development level is being able to go from door-to-door in that way, even though it's difficult.
But just as a final comment from me, as we have discussed some of the problems in relation to support from Welsh Government, especially regarding business rates and so on, is there anything positive or specific in relation to the financial or structural support, if you like, that you would like Welsh Government to do now? Is there anything missing in the framework? You are aware of what the Welsh Government is saying about what needs to be done, but is there anything that you would like them to—? Given the business rates situation, of course, and I know about that, but apart from that, is there anything else you think they should be doing now in order to close this gap between what's being said and what's being done currently?
Yes, thank you. I think it's an excellent question, Simon—
Where to start? I think one of the issues—. I've noticed a difference from travelling up to Scotland, over the past five years perhaps, and learning from Scotland and attending conferences in Scotland—and the difference that we see in Wales is how supportive the Scottish Government has been of community renewable energy. When we have a Minister in Scotland delivering a statement to a conference—it's very passionate, it's very heartfelt and it's very much based upon the evidence: 'This is what we're delivering now and now we're going to be doing this more and this is how we're going to be doing it.' There's a sense of real leadership coming from the Scottish Government that I don't feel we've had consistently here in Wales.
I would like to see—. We get some very fine statements, and we need to have that followed up, I think, with some greater action on behalf of the Welsh Government to help us, by providing further resources to the support schemes that are being provided, by helping to access land—and I'm sorry if I'm going over some issues that you may have covered before we were able to join you—and buildings that community energy groups can then develop on top of helping community groups become part of joint ventures with some of the larger developers, so that we can tie these benefits back into our local communities, which far outweighs the patronising payments that may get made in some developments that leave communities feeling passive in the eye of that, and that some communities could then get a sense of being more active as part of these developments. So, it's not just about the finances; it's also about a culture, it's about the community benefits that come along with that. These are the things that immediately stand out to me on my Christmas list.
Yes. I'm talking about a vision.
If I could just say a few things just to be controversial if nothing else. What I think would be really nice to do on the financial side is possibly to go back and have another think about the way in which the financial support is delivered. We have a mix of grants backed up with the advice and they don't work without the advice, up to the point where you're thinking about building. After that, we have a situation where you've got the FIT-style incentive, and if you sign up for FITs, you can't have grants. I think we need some clarity on that, and maybe to rethink what is the best way to support the development of community energy. Is it through something like a FIT or is it better to be a grant? In my submission, I suggested you could call it an asset creation fund, in the same way that we have asset transfer—there's no reason why we can't use funds to create an asset. Or we could go for some of the ideas that are again being trialled in Scotland about having a bond system where you could take out a very low-interest investment to put against it, so that we can have more options on the table for the way in which we can put things together and think about how the incentive itself could provide more renewable support to the sector. The FIT is available to everybody, it's not community sector focused. The nice thing about a bond is that it becomes a revolving thing that you can then use to fund the advice and the grants at the beginning as well. It would be nice to open that box up and have a look at what pieces need to be in it and have more things in it.
If I may add again—because Jenny's sparked something in me that I left off my Christmas list, which would be access to pension funds as well. If we could encourage local authority pension funds and help them to be able to invest into local renewable energy developments, then that would also help to increase the local benefit, because some of the return would be coming back into those funds. We've seen where some of those funds are invested in and they're not really providing the level of local benefit that they have the potential to provide. So, I would add that to the list. And finally, I would also add something about looking forward with our vision—that it's not just about community groups trying to replicate what private developers are doing, but also being able to think forwards into the future like the private developers are doing now and start saying, 'Okay, how do we get involved in demand-side management? How do we smarten our grids locally? How do we work with the rolling out of electric vehicle chargers around Wales so that they provide benefit back into communities as well and we don't end up in a position where these assets become all held by companies based not just outside our communities but often outside of our country, and we start losing benefits right out of Wales? We don't want to go back into the situation that we've seen happen through Wales's history.
No, I think Grant's Christmas list and mine are very similar.
I'm going to say the most challenging thing I've said all day, which is I'd love to never hear Welsh Government say, 'We don't have the powers' anymore. I'd love to start hearing, 'This is where we've got powers and that's what we can deliver and we will focus our minds and do it'. A highlight that I'd pull out of that is, for example, Transport for Wales. So far, it's looking very good, the tendering process for the new franchise, and I'm very focused on the next stage of that bid, which will be for ancillary services. I think that communities should have a really strong role there.
Another thing on my Christmas list is longer term cheaper finance. You've been really making progress with the Development Bank of Wales. I know that it's tough and there have been a lot of issues around state aid, but that will release projects to have long-term underwriting. A lot of it can be replaced by share offers. A lot of that money you'll get back, but the quicker you can make that available, the quicker you'll get more of that target—the target that you're aiming for, the 1 GW.
Third on my Christmas shopping list would be to find ways to get more core resource down to local communities. Jenny and Grant made—. It was really helpful, I think, to explain about Cyd Ynni as a consortium. I just wanted to emphasise that Community Energy in Pembrokeshire is in a similar place. We just made a bid for about £0.25 million of LEADER projects to do that capacity building and have officers on the ground. Cwm Arian Renewable Energy are doing similar things. Awel Aman Tawe would be another candidate, and Ecodyfi in mid Wales. So, there are candidate organisations that could have more resource trickled down to have that core capacity and make that leadership stand.
Thank you. The people from Cyd Ynni missed the first three questions, so perhaps we could run those at them and, again, if it sparks anything with either of you two, please don't feel that because you've spoken once, you can't speak again. The first question, which is from me, is whether the 1 GW target of locally owned energy by 2030 is achievable with current policy drivers, financing mechanisms and structure.
Sorry, that's a difficult question for me to answer.
I'm happy to have a go at that. Can you give me the rundown of the three points? Structure, policy and finance, was that—
—what you're interested in us considering? I think 1 GW is definitely achievable. I think there are questions around understanding what is meant by 1 GW. We need to be clearer in our statements here about this 1 GW of locally owned energy—what 'locally owned' means. In a recent presentation I saw from the Welsh Government, it included business ownership. I was sitting at a large table, similar to this one here, with developers from Denmark and from Spain. Both of them immediately went into conversations around how they can set up subsidiary organisations in Wales so that they can contribute to the 1 GW of locally owned energy. I think we need to be careful about how we define this locally owned energy and be much clearer.
Yn adeiladu ar yr ateb yna, a dweud y gwir, a'ch sylw chi, yn dilyn beth mae Ysgrifennydd y Cabinet yn ei ddweud yn fan hyn bod pob project ynni adnewyddadwy newydd i gael elfen o gynhyrchu cymunedol erbyn 2020—dyna beth yw'r targed, i gael rhyw elfen o gynhyrchu cymunedol, pa bynnag ffordd rydych chi'n diffinio hynny, erbyn 2020—beth ydych chi'n meddwl o'r targed yna gan Ysgrifennydd y Cabinet yn fan hyn?
Building on that answer and your comment, following what the Cabinet Secretary says here that every new renewable energy project should have an element of community ownership by 2020—that's the target, to have some element of community ownership, however you define that, by 2020—what do you think of that target from the Cabinet Secretary?
It's an excellent start. To make a statement that every development should have an element of it is a great start, but again, we're left without the detail in there, and we need to have the detail. What sort of element is it? Is it a 1 per cent element? Is it a 50 per cent element? Is it a majority stake? A minority stake? It's trying to understand how that works and what is meant by 'community ownership'—what is the community? Is it a geographical community? Is it to be linked to 1 mile from the development or 5 miles from the development? Or is it a community of interest? According to Community Energy Wales, there's a community of interest involved in being the community owner, for example.
I don't know if they want to add anything. I think they obviously heard the way the question was developed and, I think, did have an opportunity to contribute. But the premise was that Welsh Government policy is fairly robust, but the practical implementation of policy at local authority level was problematic, both in terms of the leadership of the local authorities and supporting, mentoring and encouraging schemes, and then the planning process. So, I don't know if there's anything that they didn't have an opportunity to react to, but now's the time if they want to take it.
I would add, perhaps, only that further support for local authorities to help them to understand how they can use the assets that they have alongside communities, in joint ventures, would be appreciated. Ben gave an example where they were held back from a local authority. We have similar examples up here. There was a 5 MW potential solar array on local authority owned land that we presented as a community group to develop that the local authority was so interested in that they decided that they would do it themselves, not involve the community, and, of course, as would have it, actually nothing's happened on that site at all. There has been no developments and we've missed a great opportunity.
I just want to add as well that today it's been great to feel invited and feel listened to by Welsh Government, and I've never felt that with our local authority. I've never felt included and I've never felt that they're interested to hear what we have to say or sympathetic to what we're trying to do. And we are all trying to do the same things, you know? The local authority represent the community and we've got the well-being of future generations Act, which feels like a real underpinning, but how do we, as volunteers, still not feel included and listened to at that level? I haven't got the answer, but there have been words like 'revolution' and 'culture shift' and that's really what needs to change if there's going to be a move forward to hit those targets.
I feel like I've been maybe slightly unfair to one local authority area that I work with. So, I would reflect that experience in Pembrokeshire with experiences in Carmarthenshire.
Okay. So, there are cases where I think community groups have actually actively done work that has supported local authorities to then act in their own interest and cut the community out.
I would say this, wouldn't I, but we've had witnesses talk very well about Swansea and the work Swansea has done.
And that's lovely to have a positive story, yes.
I always think it's wonderful to have a positive story with Swansea in it. Okay. Well, can I thank all the witnesses for coming along? I've found it very informative and I'm sure my colleagues have. Thank you for giving up your time and apologies to our colleagues up in Bangor, but we did get through in the end. It wasn't ideal—it might have been if you couldn't see me. It wasn't an ideal method to do it, but we got through it all. So, thank you all very much. Thank you all very much for putting up with a far from ideal situation. Can I remind people that they will have copies of the transcript to check? Can I urge you to check them? Because sometimes, if you turn away or something, some words can be lost. So, can you just check to make sure that everything you've said is captured? Again, thank you all very, very much.
If we move on now, we've got a number of papers to note. Are we prepared to note them? Yes.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).
Cynigiwyd y cynnig.
Can I ask now that under Standing Order 17.42 we resolve to exclude the public from item number 9 of this meeting? Yes? Thank you.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 12:23.
The public part of the meeting ended at 12:23.