Community Renewable Energy
Generating community income and a sustainable future
European Social Franchising Network Case Study 3
ESFN Case studies
At the time of writing, there are just under 60 social franchises in Europe employing over 13,000 people. This is one of a number of case studies produced by ESFN to demonstrate the impact social franchises are having across Europe, share learning and raise the profile of this important approach to growing and developing social cooperatives/enterprises.
ESFN is a network set up by social franchises to support the development of social franchising across Europe. You can find out more at www.socialfranchising.coop. The production of this case study was funded by the European Commission as part of the Better Future for the Social Economy Learning Network of 7 national European Social Fund
Managing Authorities.
Community Renewable Energy (CoRE) business model
Community Renewable Energy (CoRE) works with communities to develop renewable energy systems which will: provide independent, sustainable energy supplies, reduce funding
reliance and generate an income. In return, CoRE will retain a stake in the projects set up to fund the establishment of more community owned renewable energy systems.
CoRE will set up a variety of types of renewable energy systems (eg hydro, wind and biomass) and through a variety of company types in response to local needs and
opportunities. Thus it is not possible to develop a fixed franchise business formula but it still a social franchise model because there is a common brand, independent social franchisees have been established by CoRE and knowledge and resources are shared between members CoRE sets up companies, jointly owned by the community it is based in and CoRE, to develop and run renewable energy systems. For example, Berwick CoRE is owned by Berwick
Community Trust and CoRE, has obtained full planning permission for an 800 kW wind turbine and is working on developing an anaerobic digester.
CoRE has two levels of franchise operation. Firstly, renewable energy operating companies that construct and own a renewable energy system like Berwick CoRE. Then there are development companies like CoRE North West which sets up renewable energy operating companies with community groups, or in its case with groups of farmers.
Thus CoRE is in the process of creating a federation of Developer CoREs (now agreed to be at County level) working across the UK with communities to set up Join Venture or Operator CoREs. (see below for list of CoRE operations).
CoRE has also developed services for its members. They include
1. a web site which members can use to promote themselves and provides information on community renewables
2. the CoRE Network with a membership of 400 people. It includes community organisations and individuals, renewable energy organisations and regeneration bodies. It meets on a quarterly basis and receives regular information bulletins.
1 Fiona Hall MEP speaking at CoRE Network
3. ESCoRE – an energy supply company to manage the sales of renewable energy, raise capital and ultimately manage maintenance contracts.
Origins
In the UK the government has incentivised the production of renewable electricity and heat through relatively small scale generators of up to 5000 kW (eg photovoltaic panels, wind turbines or hydro schemes). Even though small scale, such systems can generate profits of up to £1million a year.
One of the major problems faced in developing renewable energy systems is obtaining planning permission. Where the planning application is for the benefit of the community it is located in, planning is usually easier to obtain as there are fewer objectors.
There are therefore tremendous opportunities for communities to do something about climate change and make money for local benefit through renewable energy.
However, there are some major barriers to them achieving this. In the UK, like many other European countries they include
1. A lack of a clear financial driver to initiate community energy projects.
2. Very high set-up costs (planning, legal costs, co-ordination), which are at risk before the project is built and operating.
3. The time and skills to coordinate the diverse interests within the community itself as well as the range of other stakeholders (Local Authorities, utilities, finance providers etc.).
4. A lack of replicable well tested models for deploying community energy projects.
5. A lack of finance for the apparently risky smaller community energy projects.”
CoRE was set up to help communities overcome these barriers.
It was developed as part of an Equal funded programme that developed CoRE, CASA and Commonwheels. It received funding from a Regional Development Agency in the North East of England and set up office in Berwick, near the Scottish border.
For CoRE as a whole, having more members or social franchisees is of benefit to the whole organisation and to individual member CoREs. As CoRE gains new members it and its members will benefit from this, for example, with growing economies of scale, joint purchasing power, increased credibility and a range of other factors.
The franchising system today
CoRE is a company limited by guarantee and is a multi stakeholder cooperative CoRE, established on 2006. It has set up the following.
Operator Companies
Berwick CoRE — Wind Turbine Partner Berwick Community Foundation
An 800kW single wind turbine on land to the north of the Ramparts Industrial Estate in Berwick. The turbine received full planning permission from Northumberland County Council on 7 September 2010 and we are currently negotiating finance for construction.
2 Mock up of Berwick turbine
Berwick CoRE — PV Arrays Partner Berwick Community Trust
38 x 2.1kW photovoltaic arrays on community buildings in Berwick-upon-Tweed.
Berwick CoRE — Anaerobic Digester Partner Berwick Community Foundation
CoRE has completed an anaerobic digester feedstock study for Berwick. Possibly to be sited at the proposed Norham Abattoir.
Glendale CoRE
Partner Glendale Gateway Trust
Following a grant of planning, a meteorological mast has been erected on Weetwood Moor. Initial results are promising. This may lead to either a 500 kW single or twin turbine development.
Oakenshaw CoRE
Partner Oakenshaw Community Association
Preparing planning application for a meteorological mast to verify the wind resource on the site. This may lead to a 500 kW single turbine development.
Developers
CoRE North West was set up in response to a local resident who had been seeking to develop anaerobic digesters to help tackle a number of local issues
• The need to reduce greenhouse gas emissions and tackle climate change
• Halt the decline in farming, one of Cumbria’s most important employers, and provide alternative employment for those in the nuclear industries
• Ensure that communities see greater benefits from renewable energy & welcome its growth
He believed that anaerobic digesters could help tackle these problems. Anaerobic digesters take in slurry, food waste, silage and any organic material and convert them into renewable electricity and heat together with a high quality liquid fertiliser. By doing this, AD plants reduce the greenhouse gas emissions from its feedstocks and from the use of fossil fuels.
3 Rob Skinner of CoRE NW talking to farmers
In the UK there are a handful of farm based AD plant, but in European countries their
potential has been recognised. In Germany, for example, there are over 5000 farm based AD plants.
CoRE NW will ensure the North West capitalises on this opportunity with the support of Britain’s Energy Coast Cumbria. CoRE NWs team provides the expertise in agriculture, anaerobic digestion and cooperative development that is needed to do this.
CoRE is developing two Energy Farms (as the anaerobic digester plants are called) with farmers and others. The benefits of replicating a proven model are beginning to show benefits. The first AD plant cost about £200,000 and 2 years in time to get through planning and to the point of being finance ready. The second plant, however, has cost less than half that of the first to get through planning and half the time.
These plants will be the first of a cluster of 15 Energy Farms to be built over the next 10 years that will bring huge social, economic and environmental benefits. They will create
1. Directly over 105 jobs, safeguard 390 and save 1 million tonnes of C02e.
2. Stimulate local economic growth through the availability of low cost renewable heat and electricity in, for example, glass houses growing year round food or visitor attractions
CoRE NW does not have any employed staff. Members of the Board and approved partners deliver on the large part of its work with specialist consultants brought in for particular tasks (eg noise assessment or supply contracts).
CoRE initially resourced its development by a mix of project funding and by work being done
‘At Risk’. This means that those doing the work will only get paid (in this case with a stake in the Energy Farm) if they become operational.
More recently, funding from Britain’s Energy Coast has allowed CoRE NW to cover its revenue costs. The income from its first two Energy Farms will allow for the organisation to grow and take on permanent staff.
This approach of At Risk work and not having permanent staff has reduced the start up risk and reduced costs overall but does create a strain on organisational management. The projects CoRE NW is working on are as follows.
Blackdyke Farm Energy
Partners Blackdyke Farm Energy Cooperative and Maria Theresia Foundation
At Siloth in West Cumbria, CoRE NW is working with 6 farmers to create a 500kW AD plant, or Energy farm. It will create 4 jobs, safeguard 11.5 and double the number of farmer’s children staying in farming. Over its 25 year life it will reduce green house gas emissions by 70,000 tonne of CO2e and generate enough electricity for 1000 households. It will cost £2.7 million and generate annual profits of £300,000. A successful planning application has been submitted, a grid connection offer received and construction works have begun. The Maria Theresia Foundation is funding the construction of this plant and they will use their share of profits to support humanitarian aid projects.
Kirkbride Farm Energy
Partners Blackdyke Farm Energy Cooperative and Maria Theresia Foundation
Our second 500kW plant is at Kirkbride, 10 miles from Silloth. We have planning permission, for the plant and construction work will begin shortly
Kirkbride CoRE
Partner Kirkbride Energy Farm and Kirkbride Village Farm
We are also working with local residents to use the heat and power produced by our AD plant and another to make Kirkbride a carbon neutral village.
Create a major AD industry in Cumbria to meet growing demand in the UK built on its strengths in farming and energy.
CoRE 50
CoRE is working with Sustainable Moseley (SusMo), Transition Town Kings Heath and Balsall Heath Is Our planet to establish a CoRE in South Birmingham.
The work originally began with SusMo and has grown to include the other two groups. CoRE 50 has identified a number of PV and small wind opportunities and produced an outline development plan.
SusMo have successfully installed 4 PV schemes with funding from British Gas’s Green Streets programme. They involve a number of people with local environmental and social enterprise development skills. One of the groups has links to social enterprise PV installer.
A number of PV and small wind schemes have been identified. The name of CoRE 50 has been selected in recognition of the bus route that ties the three communities together.
CoRE 50 is developing an Industrial and Provident Society (IPS) rather than an approach like CoRE NW (a company limited by guarantee) because in an urban area there are only really opportunities to develop relatively small scale renewables (eg 100 kW wind turbine, 10- 40kW PV installations) which are too small to develop individual joint ventures for as with Berwick CoRE. An IPS structure also allows for the community to raise the finance to install smaller renewable energy systems.
Funding the franchise
CoRE was established with a grant of £400,000 from One North East (a government development agency). It has received funding from various other sources to develop particular renewable energy systems. This has funded the development of local Operator franchisees
Currently, Developer franchisees have to raise finance locally to develop a franchise, as CoRE NW and CoRE 50 have. They also rely on people in the franchisees putting in a substantial amount of voluntary work and working at risk.
Operator CoREs pay dividends to the Developer CoRE and CoRE which will provide the majority of their funding. Developer CoREs pay 2% of the income from renewable energy systems to CoRE as the franchise fee.
Raising finance to construct the Energy Farms for CoRE NW has been difficult. It is not an area that banks in the UK will finance without substantial financial guarantees that CoRE NW can not provide. CoRE NW worked with a private sector venture financier but the
profitability was not high enough and the project was also felt to be too risky. Now however, project finance has been secured from the Maria Theresia Foundation from Austria for both plants and the second will also receive substantial investment from farmers.
The Foundation are a social enterprise and will use their profits (they will own about 85% of the Energy Farms) to support innovation in renewable energy and sustainable development.
It is therefore a much appropriate partner for CoRE NW.
In the long term CoRE will generate the income from renewable energy systems it is involved with and this will finance both the establishment of Operator and Developer CoREs.
CoRE is beginning negotiations to secure finance for its first wind turbine, which due to greater profitability and greater market understanding, should be much easier to obtain bank finance with. We are also in discussion with Charity Bank and social enterprise about providing finance for this and future renewable energy systems we are developing
Future plans
CoRE is working with communities in Yorkshire and Local Authorities to develop activities in Scotland. However, it recognises it is vital to establish some functioning renewable energy systems and is focussing its efforts on this. However, with the first Energy Farms having begun construction, this should happened by the summer of 2012.
Relationships are also being developed with investors like the Maria Theresia Trust and Charity Bank to finance renewable energy systems. Having in place a relationship with a finance organisation will be a great advantage.
Discussions are also being had with a number of finance institutions and Charitable Trusts about establishing a revolving loan fund to finance the development of renewable energy systems to the point they are finance ready (ie planning, finance models, grid connection are
all sorted out). To develop a renewable energy system to this point can cost up to 10% of the total capital costs, so this can be as much as £2-300,000.
This is perhaps the most difficult finance to sort out as it is more risky than capital funding and CoRE hopes to set up a revolving loan fund to finance development costs. CoREs experience and proven models will also help reduce the risks involved and development costs.
Key success factors
Setting up a community owned renewable energy system is a challenging undertaking. CoRE is making this easier by enabling communities to work together and share knowledge and expertise. As we have seen in the Cumbria, this approach is beginning to pay of in terms of speeding up the development process, reducing costs and risks. This is being done through 1. Shared documentation – eg financial models for renewable energy systems farmer
supply agreements for anaerobic digesters and lease agreements for them and wind turbines
2. Shared equipment – eg wind data monitoring masts
3. Shared knowledge - eg of planning process, renewable energy technology, finance and the development process
4. Shared purchasing – eg being a credible buyer and ultimately reducing costs through combined purchases
5. Shared resources – eg website, ESCoRE buying and selling energy; CoRE Network and training courses such as Community Champions 3 day course.
4 Participants at Community Champions Course
Although CoRE does not yet operate a substantial renewable energy system, this should be happening soon and CoRE will be generating the income to fund its own growth and enable communities to be more economically and environmentally sustainable.
Contact
Val Tobiass
Office and Information Manager Community Renewable Energy Ltd The William Elder Building
56-58 Castlegate Berwick-upon-Tweed TD15 1JT
T: 01289 309669
val@core.coop www.core.coop
