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Social enterprise solar PV scheme launched
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Installation of photovoltaic panels on up to 780 City of York Council homes has begun under the terms of the current Feed-in Tariff (FiT). The work will be carried out prior to the recently-announced 1 August Feed-in Tariff degression at no cost to the council or to tenants. Social enterprise Empower Community and Nationwide Solar have spearheaded the scheme.
Social enterprise solar PV scheme launched

Overall, profits from the scheme will be shared with City of York and the wider York community and the assets will revert to City of York ownership at the end of the 25-year FiT period. Once fitted, the panels will allow tenants to use as much of the free solar electricity generated as they wish during daylight hours. Research suggests this could supply up to 40 per cent of household requirements.

Alex Grayson, Empower Community’s managing partner said: “Our mission is to accelerate the transition to sustainable, low carbon local economies and to start with FiT-backed solar PV for social housing makes a lot of sense for all concerned. We’re very happy to be undertaking this initial project with City of York Council and are hopeful that we will be able to build on these first installations under the new Feed-in Tariff regime, both in York and nationally.”

Grayson adds: “Last year, Empower Community contracted 22,000 south-facing roofs of social homes and a household name pension fund investor with intention to commit up to £175m. The new FiT terms are obviously considerably tighter, but the combination of landlord, installer and investor experience means the rationale remains to take these programmes to scale nationally.”

FiT-backed roof-top PV for social housing provides the greatest possible benefits for tenants in fuel poverty, who often pay the most for their electricity with pre-payment meters. The Empower Community model also generates a profit share for the social landlord and the local community. Large-scale uptake of distributed energy and energy efficiency measures are urgently needed, but are not currently happening at scale. Existing investment in renewables tends to consist of banks, venture capital or private equity funds ‘cherry-picking’ a few of the most attractive projects at one end of the spectrum, and a handful of local share issue-funded projects at the other.

Neither is delivering a systemic approach, and levels of investment need orders of magnitude increases to begin to address our energy security and emissions reduction requirements. We are looking for long-term certainty for ‘community benefit’ schemes, due to be covered in the second phase of the current Comprehensive Review. This may entail the development of ‘community benefit’ criteria and tests, but will greatly aid the leadership potential of social landlords in their communities (i.e. where the economies of scale that they can provide can benefit the wider community), as well as community social enterprises developing projects for the benefit of all.

Social housing schemes which provide FiT-backed PV schemes for social landlords reverse the ‘taxing the poor’ relationship potentially inherent in FiT. FiT is vitally important in terms of job creation, fuel poverty alleviation and local economic resilience. FiT offers the estimated 6,000+ community groups that have been formed around climate and social causes a robust business model and opportunity for inward investment, sometimes for the first time.

The Feed-in Tariff (FiT) provides the UK’s first mechanism that drives resource allocation for community-scale renewables. This encourages large-scale participation (public, private and civil society) as well as share of income, local economic benefits, skills-transfer and jobs, reduced fuel poverty and potential for community ownership of assets. The provisions of the FiT allow for a funding mechanism for investment in projects at a community level that bridges the gap between decentralised energy projects and institutional investors, particularly pension funds.

The 25-year, RPI-linked revenue profile provides an excellent match for pension liabilities and allows for investment to be raised on the best possible terms for the community, promoting community revenue share and asset ownership.This is the premise of Empower Community, a social enterprise-based, rapidly scalable balanced stakeholder model designed to accelerate the transition to sustainable low carbon local economies.

Due to the pre-aggregated nature of the social housing sector, representing around 5m homes across the UK, there is a significant opportunity to quickly move the deployment of renewables, particularly solar PV, to scale. Since its introduction in April 2010, the FiT has catalysed much investigation of this sector, from both a self-funded and off-balance sheet perspective, with many new offerings being presented to social landlords.

Very few projects, however, were actually mandated up until the ‘emergency review’ announced in October 2011, with the large-scale investments that had been arranged across the sector impossible to close. Allowing large scale FiT aggregation for social housing can turn what could be viewed as a ‘regressive tax’ into a ‘progressive’ one, where the greatest benefits go to those in greatest need – those on low incomes and often in fuel poverty, including the particularly vulnerable tenants with pre-payment meters, who will receive the biggest benefit because they are offsetting the most expensive import tariffs. Using the Empower Community financing model, the roof owner (local authority or housing association) can also potentially enjoy a long-term profit share from the project overall that can be returned to that community for the benefit of all.

The purpose of Empower Community is to accelerate the transition to a low carbon economy by providing access to much-needed capital for community renewable energy and energy efficiency projects. It is designed to create a virtuous cycle of resource allocation for social and environmental benefit that encourages large-scale community participation, ownership and responsibility.While grass-roots, action-oriented responses to climate change continue to grow exponentially, the current limited access to finance is hampering the wholesale development and implementation of distributed energy solutions at anything like the scale or speed required.

Empower Community is a rapidly scalable funding mechanism that balances the interests of all stakeholders by providing a high quality investment opportunity with attractive returns, reinvesting profits in further community projects and facilitating ultimate community ownership of assets.

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