Could the future energy system be owned and shaped by ordinary people? In this episode, Lucy and Giles are finding out how digital technologies are providing new opportunities for people to source clean energy – and invest in the green infrastructure of the future…
With thanks to Agamemnon Otero, Sarah Merrick, and Louise Wilson. This episode was produced by Phil Sansom.
Lucy Yu: It’s clear right now that many of us are feeling the increasing cost of energy. Gas and electricity prices are rising – and as we discussed last time, that puts a burden on household bills for those who are already finding things hard.
Giles Whittell: So it’s no surprise that a lot of people are turning to a very different model of how their energy is owned and operated. And one of the best examples of this model can be found in northwest England, in the village of Halton.
Giles Whittell: If you were to take a stroll down one of Halton’s numerous countryside paths, following the banks of the river Lune, you’d end up beside a beautiful, sturdy stone building.
Lucy Yu: This historic site was once a mill – or rather, a series of mills. The first was built here in the 13th century. More mills were added during the industrial revolution for cotton, silk, and oil cloth… and eventually even electricity.
Giles Whittell: That was all before the 1960s. But then, the whole site fell out of use.
Yet now it has a much more modern purpose. A decade ago, when members of the local community saw their energy bills rising, as they are now, they decided to take matters into their own hands.
Lucy Yu: They embarked on an ambitious project: a hydroelectric power plant, run by and for the local community. And after years of development, Halton Lune Hydro opened in 2015 with two enormous water turbines.
Giles Whittell: The facility is capable of generating enough energy to power hundreds of local homes. And that isn’t the only benefit – the profits from selling surplus power go back into the community to fund local projects, and those who receive the power are protected from the rising price of oil and gas.
Lucy Yu: But this is only a single example, in a single village. We need to transition completely to renewable energy, which will take radical change at huge scale. And we also need to be using the full suite of digital technology at our disposal.
Giles Whittell: So what are the lessons we can learn here? Is it possible to create a future energy system that is owned and shaped by ordinary people?
Lucy Yu: Hello and welcome to Inside The Energy Transition – a podcast about the bright future of green energy. I’m Lucy Yu, CEO of Centre for Net Zero…
Giles Whittell: …and I’m Giles Whittell, the editorial lead on climate and sustainability at Tortoise. In this series we’re exploring the biggest questions, and debunking the most commonplace myths, about the energy transition: one of the defining goals of our time.
Lucy Yu: Giles, today we’re talking about the idea of a future energy system that is owned and shaped by ordinary people. Sounds like quite an appealing idea.
Giles Whittell: Indeed! And it’s one that’s been around for a while, and we’ve seen lots of so-called community energy projects over the past decade. I think of… well, I personally think of solar panels on people’s roofs, but that’s not quite what we’re talking about, is it? It’s more Archimedean screws, windmills, wind turbines, that kind of thing.
Lucy Yu: You’re right, but we’re also going to move beyond these basic concepts, and we’re going to explore what ‘community’ means in the digital age, and how to potentially turn an idea that works on a local scale into something that works for a whole country!
Giles Whittell: Right. We’ve already discussed on the podcast how we need to do this for whole countries, and fast.
Lucy Yu: Exactly. And so let’s start by setting the scene for community energy. What do these projects actually look like, how have they changed, and what are the opportunities and challenges they present?
Here to explain is Agamemnon Otero, who over his career has worked with about a dozen different community energy projects. He co-founded the group Community Energy England, has advised the UK government, and even has an MBE for services to community energy.
Today he’s director & CEO of Energy Garden… welcome Agamemnon!
Agamemnon Otero: Thank you. It’s a pleasure to be with you guys.
Lucy Yu: Pleasure to have you with us. So could you maybe start by telling us about the community energy landscape in the UK, and how it’s evolved over the past decade?
Agamemnon Otero: Community energy has grown massively over the last ten years. So with the Feed-In Tariff coming out in 2010, the community energy market exploded. It went from about four community energy groups to about 500 presently.
And the projects were not just in solar, they were in hydroelectrics, wind turbines, solar-thermal on rooftops, LED lighting systems… the projects have gotten bigger, and they’re not just in rural areas, they’re in the urban areas as well.
And those revenues have gone on to supply roughly around 450 jobs in community energy, as well as deliver roughly around 300,000 pounds towards community projects in the local areas where they are.
Giles Whittell: Okay, well let me dive in here and focus on what you’re actually doing in London. You’re working on a project called Energy Garden. Tell us what it is, where it is, who’s involved, and what it does.
Agamemnon Otero: Energy Garden started in 2010, and what it is is a collective of community gardens on transport infrastructure.
There are 30 gardens presently across London that are at train stations. And so those are actively invigorated with projects with schools, and youths, and local communities. There’s probably around 150 to 300 active members at any one time.
Energy Garden installed the first community energy project on the rail in the UK, in 2010 in the borough of Lambeth, putting hundreds of solar panels onto the roof. That would then generate the energy for the trains during the day, and then also excess energy to then sell on further.
We’ve got excellent partnerships. So we’re going to be rolling out across many different depots, NHS hospitals, schools… as well as when that generation is not being fully used on site, we have corporate partners.
And the clothing company Patagonia was the first one to do a corporate power purchase agreement with Energy Garden, to buy all their energy for all their stores in the UK.
Individuals will be able to invest in the projects and get their energy. And it really becomes an energy bank, where they can invest into their future and their reality around them – their built infrastructure – and get the future that they want to see back.
And that’s what’s been my dream and my goal for the community members that I’ve been working with and that I feel a part of for the last 11 years.
Giles Whittell: Where does the finance come to start these projects? And to what extent is that finance a barrier to scaling up?
Agamemnon Otero: Presently the money to run the projects in Energy Garden are coming from the community members. They’re investing into the energy infrastructure.
The financial return that they get, a four per cent return, allows them to feel that their money is doing something for their local community. But the excess, or the profit, that’s inside of the system as well then helps to run the program.
But when I started ten or eleven years ago, it all came from grant funding. And the projects themselves were on very small areas of space, and the generation that we could create was very small, so therefore the returns that we could deliver on our own projects would never wash their face.
To give you some numbers, it’d be about 95 per cent grant funded. And you could argue that we were directly addressing fuel poverty, and food poverty, and it was a worthwhile cause, but if you had just handed out the money, it would have been effectively more beneficial to those community members.
But as I worked with incredible other volunteers and cooperative members, we came up with this solution where we could go to scale in generating renewable energy; we could go to scale with bringing people together into larger cooperatives; we didn’t have to just work on one small community, and we could collectively work together.
We wouldn’t be geographically isolated. Even though we were in pockets of disparate places, we were collective on our clear vision of what the future would hold. So we were bound together by our values as opposed to just our geography.
Giles Whittell: Okay. So you started with 95 per cent grant funding. And are you down to zero or what now?
Agamemnon Otero: So we’re at 40 per cent grant funding. Energy Garden is scaling up, so we hope within the next two years that our core costs will be 100 per cent delivered by the energy generation. And I think that’s our real goal. In 2011, when we were generating the energy, we were not legally allowed to sell it to the residents.
So in a way I felt like we were building the road and building the car. So sometimes you had to get out, put some more road down, then get back in your car, drive a little bit longer, realise that you’re going to go a little bit faster, have to put on new wheels. So we were creating their way as we went.
And now, working with the corporate sector, working with the national government, working with local government, we’ve actually created a system where we don’t have to change the laws.
We’re just bringing people to the realisation that if we collectively come together to invest in our own physical landscape, the built environment, we can actually generate the returns and see the change we want to see. And it won’t be affected if this politician comes, or if this company goes.
It’s a strong structure that we can work together with. And that’s finally coming to scale, which I’m very proud to share.
Giles Whittell: Can I just follow up on that: as the proportion of grant funding declines relative to community investment, what does that leave the government – local and central governments’ – role as? And what more should government be doing to get behind this?
Agamemnon Otero: You can get seed enterprise investment scheme funding in the UK, which basically means it’s a tax deduction of between 30 and 50 per cent off for almost every business. But yet they pulled it off of solar.
It’s outrageous. Especially when we’re saying we have to have energy security. If we were allowed to progress at the rate we were installing in 2011, we would be a net energy exporter.
There are specific policies which have hindered the renewable energy revolution, and then giving the fracking rights? There is a clear pattern which needs to be addressed.
That said, I don’t need a leg up. I think we just need a level playing field. Because when you put it on a level playing field, not only is the energy cheaper to generate… the thing about community energy which I find to be truly revolutionary is that it allows people to come together and own their own future.
This is empowering people. And that is really the key element from a community energy perspective.
Lucy Yu: If people actually own part of the energy generation, and maybe they can see that, they can experience it on a daily basis, do you find that they use it differently or they make different choices?
Agamemnon Otero: I do. And at this point now in Energy Garden, there’s basically a 62 question survey. And it asks all these questions before they start as a part of the community cooperative, and while they’re doing it on an annual basis. And then we look at the actual hours that people are putting in.
And what we’re seeing: it’s roughly around 11 per cent increase in awareness around sustainability, or even technical skills being improved. But the massive growth is up to 70 per cent increase in sense of purpose, sense of wellbeing, and sense of community.
That just blows my mind, because it makes you realise that people are feeling they lack in a sense of community, in a sense of wellbeing, in a sense of purpose.
Giles Whittell: To be clear – you’ve alluded to this already – but how do these projects benefit the poorest in society who can’t afford, for example, to invest?
Agamemnon Otero: Right. The question that came up for many years when we first started in 2009/10/11 was: what about those who don’t have 50 pounds to invest?
When we first started community energy projects, no one had ever opened a share for less than a minimum investment of 250 pounds. And we said, “is there any legal stipulation around that?” And dropped it to 50.
Even then, councillors would say, “yeah, but some people can’t afford 50.” I said, “well, can they afford one pound?” The officers said “yes.”
But the kicker was that no-one who lived on the estates – no-one gave 50 pounds. The only people who gave 50 pounds were grandmas for their grandchildren, and local councillors who wanted their name on the project.
The people who lived on those estates – they were the ones who said there was no question that anthropogenic climate change was a reality. There was no question that they would rather have solar energy. And there was no question that they wanted to be a part of something.
Many of them had never invested into anything before, and they felt like they were a part of it. And we had one woman, I remember – she gave me 227 pounds in cash, and she said, “I don’t get paid until the end of the month. Can I give you another 75?”
It’s because we ask them what they want and we build it in. When you come and tell people what is good for them, they don’t listen. But if you say collaboratively, “how can we do this,” it transforms it.
Lucy Yu: We’ve talked a lot about how community energy projects have emerged and grown over the past decade in particular. What’s in store for the next decade? What do you think the role of these types of projects is in relation to the future energy system?
Agamemnon Otero: I think what you’ll see is: technology will become supportive of democracy. So people will vote and they will choose to do things around the policy around their homes, but they will also begin to invest into the projects they want to see.
And I think community energy will explode. Right now it’s less than one per cent of the energy systems in the UK are owned by communities. But we’re up now around 30 per cent are renewables. Who owns that? Not you or I. Who could own that? You and I.
We can all be collective owners in that. I think over the next ten years, you’ll see people coming together to become a part of that transformative program around policy and investment into their own built environment.
Giles Whittell: It’s pretty clear, then, that owning a part of your own energy generation helps you go green, cut bills, and feel empowered. But given that less than one per cent of the UK’s energy systems are community-owned, as Agamemnon said, scale is still an issue.
Are community energy projects, by virtue of being geographically focused, always going to be limited in scope?
Plus, it’s all very well building community-owned solar panels – is it possible to get more people involved and build something much larger?
Let’s now bring in Sarah Merrick, CEO of Ripple Energy – a digital platform that’s doing exactly that, with some pretty ambitious projects on the go. Sarah, welcome to the show!
Sarah Merrick: Hiya, really pleased to be here.
Lucy Yu: So tell us about Ripple – what are you doing and why?
Sarah Merrick: So what Ripple is is a clean energy ownership platform, and it enables individual households to own a tiny part of a large-scale wind farm, and then get the green low-cost electricity that it generates supplied to their homes via the grid.
So it’s kind of like an alternative to putting solar panels on your home. So instead of owning a whole solar panel, you own a tiny bit of a large-scale wind farm on a lovely windy hill – our first project is in South Wales. So you get low stable-price electricity, and you’re obviously making a big impact on climate change as well.
Giles Whittell: How exactly does that work? I’ve decided to go for Ripple instead of all the various option – do I have to pay a deposit? How does it work?
Sarah Merrick: Yeah, so what happens is you buy shares in the co-op, and the co-op owns the wind farm. But you can decide how many shares you want to buy, and that reflects how many watts of the wind farm you want to own.
So you can own… the maximum is as much as would generate all of your electricity, plus 20 per cent. The minimum is 25 pounds. That’s not going to buy you much of a wind farm. The average for our first project was around 1,800 pounds worth of the wind farm, so that’s around a kilowatt.
And then what happens is you get the electricity that your bit of the wind farm generates.
So Ripple’s not a supplier – we partner with suppliers. So your supplier then buys your electricity from your wind farm, and supplies it via the grid to your home, and then you get savings applied to your bills – because your electricity supplier buys your electricity from you, via the co-op, at the wind farm’s low operating cost.
Giles Whittell: Okay. So two quick questions. Have you found so far that normally, people buy enough of the notional wind farm to cover their whole needs at home, or just a fraction of their needs? And if I just get a quarter of my electricity from this process, presumably I have to go and buy three quarters of it elsewhere?
Sarah Merrick: About two thirds of people buy enough to meet all of their electricity needs, plus a little bit more, or at least a hundred per cent.
But because we partner with suppliers, it’s not as if you have to get some electricity from Ripple and some from your supplier. Your supplier supplies all of your electricity, it’s just that some of that is kind of coming from your wind farm. So if you only get half of your electricity from your wind farm, the other half is just being supplied from elsewhere.
And we don’t… obviously we can’t guarantee it’s those electrons coming through the grid. So it doesn’t matter when you use electricity or when the wind farm’s operating, you just get savings on your bill at the end of each month, basically, according to how much your wind farm’s generated the previous month.
Giles Whittell: And just to be clear, the savings that I could make on my bill – what do they depend on then?
Sarah Merrick: Exactly, so your savings are the difference between the market electricity price – so at the moment that’s really, really high – it’s the difference between the market price and the wind farm’s operating cost.
Now the cost of operating the wind farm stays the same no matter what’s happening in the electricity market.
But we estimate, if somebody owns as much of the wind farm as would meet a hundred per cent of their electricity needs, they’d save around sort of 20-25 per cent off their electricity bill.
Lucy Yu: What do you know about your customers? You mentioned earlier… you talked about solar PV. Do you find that your customers are people who maybe already have things like home solar panels, or is it a different group of customers?
Sarah Merrick: Yeah, so our customers – lots of them already have solar. And it works really well. So obviously solar generates more in the summer, less in the winter, whereas wind generates more in the winter, less in the summer.
Loads and loads of them have got electric cars. So they want to power their electric cars with their own source of green power, and by having a stable-priced source of electricity, you can then stabilise the cost of running your car for its lifetime, basically.
So, yeah, we’ve got lots of people with EVs, lots of people with heat pumps as well. So they’ve got their heating on an electricity-based system.
Because then, obviously, as we move towards electric cars, electric heating, having your own source of stable-priced green electricity to power your car and power your heating can give you real benefits, and sort of stabilise your household expenditure for the long term, essentially.
Giles Whittell: You’re wearing a T-shirt that says “proud wind farm owner”. So where is it? And have you visited?
Sarah Merrick: Yes. So I own a little bit, like 900 other people, of Graig Fatha wind farm. So that’s in South Wales. It’s about 20 miles north of Cardiff. I’ve seen it grow from literally nothing but a field with some sheep in, to there being a full wind turbine there now.
Now the wind farm’s up, once the weather gets better, people are desperate to sort of go and visit their turbine. So we will be trying to organise a sort of open day for the turbine, where members can go and get together and meet each other, but really importantly, go and visit their turbine, because they are just desperate to go and see it.
Giles Whittell: I love that idea. An open day for the turbine. It might get sort of stage fright. But you could, as a member, you could have, “proud solar farm owner”, or “proud tidal barrage owner.”
Sarah Merrick: And it’s not an either-or. So you could own 500 watts of a wind farm, you could own a few hundred watts of a solar park, a few hundred watts of an offshore wind farm, and get all the electricity from the whole of it, just one saving on your electricity bill.
But yeah, it’s really easy. And that’s… we want to make ownership as easy as possible. And that includes being able to own bits of different projects, across a range of different technologies as well.
Lucy Yu: And what’s the potential here for the green energy transition as a whole? How many of these wind farms will you be able to build, and how quickly? And is this just limited to wind, or could this also start to branch out into other forms of generation?
Sarah Merrick: Yeah, so we just want to do wind farm after wind farm and get as many consumers being part of this huge energy transformation that’s happening.
And you can’t own a bit of a coal station or a bit of a nuclear station or a gas station, but one of the amazing things about renewables is you absolutely can own a little bit of a wind farm or a little bit of a solar park to meet your electricity requirements.
So we just plan to do more onshore wind farms, hopefully do offshore wind farms, and solar parks as well. And the whole thing works exactly the same. So you might be able to own a little bit of an onshore wind farm, a little bit of an offshore one, a little bit of a solar one, and you’d get all of that electricity supplied to your home.
Because we just think that consumers… they can be part of the ownership mix!
Now it doesn’t have to, you know, all these wind farms don’t have to be owned by big utilities or pension funds or infrastructure funds. Ripple turns thousands of consumers into a sort of party that can own it. You can’t have thousands of people owning it on their own, but if you bring those people together, they actually can own it.
And that is just a fantastic part of the net zero future, is that consumers can be far more involved in the actual generation of the electricity, rather than just sitting at home and waiting for your electricity bill to drop on your doorstep.
Giles Whittell: And there are 900 owners – do they, between them, own the whole of that turbine?
Sarah Merrick: So there’s one member, his company owns a bit of it. And then the co-op got a grant from the Welsh government as well. That bit of the wind farm won’t go for bill savings for the Welsh government, it will go towards helping fuel poverty in the local area.
So again, because prices are so high at the moment, we’re estimating around 165,000 pounds will go towards alleviating fuel poverty in the local area. Because it’s high, the amount is high, but obviously that’s driving massive amounts of fuel poverty at the moment as well.
So yeah, it’s good to get more support when it’s needed the most, when electricity prices are high,
Giles Whittell: You could expand community ownership under the Ripple headline by buying existing turbines. You don’t have to build new ones to expand, right?
Sarah Merrick: Exactly, yes. And the beauty of the Ripple model… if every single wind farm in the UK was owned by consumers, all the grid charges get paid, all the taxes and levies get paid.
It’s possible to really, really scale it up and enable the consumers to be a really, really meaningful part of the ownership mix of our energy assets, which is fantastic.
Giles Whittell: And how do you think that would affect the way people think about their energy supply? Would that sort of personal involvement itself go some way towards this leap forward that we’ve talked about in terms of awareness of when you’re consuming, when during the 24 hour cycle you’re consuming energy.
Do you find that your members are – I mean, to Lucy’s point earlier – more than averagely aware of what they’re consuming and when?
Sarah Merrick: I think they are certainly more engaged consumers than your average customer. But what we’re finding is that people, once they see it’s actually really easy to own a bit of a wind farm, they then start to think, “okay, well if this is easy, maybe owning an electric car is easy.”
It’s a really easy gateway into the zero carbon world. But also by knowing that you’re doing something really genuine – I think there has been quite a lot of concern about greenwashing and that sort of thing – you know you own a bit of this wind farm, you can go and see it, you can go and touch it, it’s yours.
And that sort of really tangible impact that you’re having – you’ve made this wind farm happen, or if it’s an operational one, you actually own that wind farm – it makes it really real for people, and then they do start to look at, “okay, what else can I do next?” And you kind of get people wanting to do more and more.
And ultimately we do need people to be more engaged and aware of how they use electricity, and wanting to move to electric cars, move to electric heating. And by owning your own source of clean power, it can just, I think, make it all seem a lot more doable for people, which is another part of what we want to do.
Lucy Yu: So far, we’ve learnt that new ownership models offer great opportunities for more people to own and participate in the energy system. But questions remain as to whether this kind of digital innovation can get us all the way to the 100 per cent renewable grid we need.
So how can we achieve change at scale and give everyone a stake in the energy transition? The answer might come down to money – giving ordinary people the chance to use their cash to help fuel the transition.
To discuss, we’re joined by Louise Wilson from Abundance Investment, who’s going to tell us how money really does make the world go round – and how we can leverage it for good! Louise, great to have you here.
Louise Wilson: Thanks so much, it’s great to be here.
Lucy Yu: So could you break it down for us Louise: what is it you’re trying to do here that goes beyond community energy, or even decentralised ownership models like Ripple’s?
Louise Wilson: Our ambition has always been about system change, and system change when it comes to finance.
My background is mainstream investment banking. I fell into that by accident, but 16 years later I managed to navigate my way out. I began to feel increasingly that finance was actually not serving society in general. It was serving pockets, but it really was not in step with some of the really big problems that we face in society.
And in particular, my concern was increasing around the environment and global warming, as we called it at the time. Now we kind of more correctly call it ‘climate emergency’.
So I took the opportunity to leave when we had the last financial crisis, and I wanted to do something that would make a difference and make it easy for people to become part of this transition.
And I spent some time thinking about, overall, our system. And I considered the role of politics. And that’s actually on a pretty short voter cycle of five years or thereabouts, and also the fact that there is a lot of influence when it comes to taxes on politicians, and that the biggest part of taxes actually comes from business.
So I shifted my focus to business, and thought about the role of the boardroom. But then if you think about the role of the boardroom, actually the board is largely dictated to by a kind of mantra of shareholder value. And that brings you back to the money. So that brought me back to there, full circle.
Lucy Yu: So what is it that Abundance is actually doing?
Louise Wilson: We are bringing people and their money much closer together again.
Over the last, let’s say, 50 years, as individuals we’ve been moved further and further away, in many instances, from the decisions around what our money does.
And the jargon around financial services just puts up barriers, and any kind of survey around how people think about money and investing will very often throw up the comments that “it’s too complicated” or “it’s boring” or “I don’t understand it”, or actually quite often a sense that “if I make a bad decision, I’m going to feel stupid.”
And we are about removing all of that, taking out as much of the jargon as we can, making people feel as though they are informed and they can make an investment decision that puts clearly what the risks and the benefits are, so that at the end of the day, even if I get it wrong, it’s not because I feel stupid, it’s just because actually one of those risks materialised and it didn’t go according to plan.
So we are a platform where people can come and invest directly in green infrastructure.
And also the other, the kind of corollary effect of that is as well as making people feel like they’ve made that good decision and informed decision, they are actually also feeling like they’re part of the change. They are helping drive that transition.
The businesses that people are funding that come on the platform to raise money are either producing green energy, or waste from energy, or EV charging, or sustainable food. And so on.
Giles Whittell: And how does it work for individuals? Say I’ve got a little bit that I want to invest. Is there a minimum? How do I get started?
Louise Wilson: Our minimum is five pounds. When we got going – myself and my two co-directors – and we talked about that five pound minimum, people looked at us like we were crazy. Because they thought, “well, you’ll never make money doing that”.
And it’s true. We don’t make money if you only invest five pounds. But the point about the five pounds is it’s a signal. It’s kind of saying, “look, this is a platform where you can come, you are welcome,” and then when you get to the platform, hopefully we make you feel like you’re continued to be welcomed.
Then you go ahead and you will look at the opportunities that are open at any given time on the platform, and decide which of those that you’d like to put your money in.
And we hope that you will actually invest across a range of them, because pretty much any financial advice would start with: never put all your eggs in one basket. So diversification is always a good thing.
Giles Whittell: But if I understand it right, I might invest in specific projects – or a range of specific projects – but that doesn’t mean that with my fiver or my 50 quid or my 500 quid, I’ve actually bought a share of, say, a wind turbine.
Louise Wilson: Yes. So we are letting people lend money to businesses, and also to local authorities, who are then rolling out green infrastructure of different types.
So rather than a share, which is basically giving you a… you own a piece of the company, we let people lend money.
And we chose at the outset to focus on debt rather than equity, because actually in many ways it’s a much simpler instrument for people to understand. I’ve lent you five pounds, or 50 pounds, or a hundred pounds, and the company then is promising to pay back on a defined schedule, with a defined amount of interest as well.
Giles Whittell: So give us a sense of how much you’ve raised, and from how many different investors.
Louise Wilson: So we’ve raised 127 million and counting from over seven and a half thousand investors.
Giles Whittell: That’s quite a lot.
Louise Wilson: Yes, on the one hand that is very significant. But on the other hand, it’s much smaller than our aspirations. We’re not going to change the system on 127 million.
But having said that, we can see already that this principle of putting people and their money close together, as a way to kind of create agency in driving this transition forward, is really beginning to gain traction as a kind of concept.
And that’s been evidenced by the work that we’re doing with local authorities, where what we’re saying to them is: we all know, it is well understood, that actually bringing people along is one of the hardest things about getting to a net zero world. Because it requires all of us to do something. It’s not just business, it’s not just industry, etc.
And local authorities have understood that actually, if they help raise the money that they need to drive their own climate emergency plans from their residents and citizens, actually that’s a very effective way to bring them along on the journey.
Lucy Yu: And could you tell us a bit about some of the green energy infrastructure projects that you’re currently funding?
Louise Wilson: Yes. So our current projects: we have two that are installing EV charging infrastructure. Ultimately actually they sell electricity, they’re electricity suppliers, if you like, and they want to be green electricity suppliers. They’re not generating it though obviously.
We have a sustainable food proposition, that’s vertical farming.
And we have a forestry proposition, which is actually working with landowners to plant a fast-growing hardwood on degraded agricultural land as a way to sequester carbon. Because it’s hardwood, it can be used in the timber industry. So actually that’s green infrastructure of a different type.
Lucy Yu: What do you know about the people who are investing on your platform and how they choose which projects to invest in? Do they generally prefer projects that are local to where they’re living?
Louise Wilson: No, not necessarily. If you like, it’s kind of ‘communities of interest’ is the way that I would describe it.
So that might relate to geography. It could relate to a particular appeal for a type of technology. We definitely have some people who have been quite focused on energy, rather than some of the other sector verticals that we have.
And then we have those who just actually see that we’ve got to attack this problem from every angle, and therefore they kind of support all of it, including our local authorities, who are also then going on to spend the money on things like energy, or EV charging, or nature rewilding, and so on.
Giles Whittell: So 127 million pounds. Ambition is big. How do you scale up what you’re doing so that it’s operating at a massive scale? How do we get from where we are now to there?
Louise Wilson: Well, that’s the beauty of operating in the digital world. So back to your earlier question around: how much do I need to get involved? It is being a digital operator that allows us to do five pounds as a minimum. The economies of scale are really powerful.
The main constraint actually in terms of our growth to date has been the fact that policy in the UK has… I talk about it flip-flopping a bit over the last ten years.
We kind of look back fondly at the greenest government ever – you might remember those heady days – which then became quite austere subsequently. And then we had, as I call it, the policy vacuum of Brexit – where actually the only mandate was Brexit, but we didn’t know what that meant.
So the arrival of net zero as a policy direction is really powerful. There’s a lot of detail obviously that needs to fall into place, but there’s no doubt that we can see a lot more activity across the board.
And it’s no accident that this is the busiest time we’ve ever had on the platform. We’ve got five open investments. I think our record before is four, and that was back in 2017. And then we’ve got another one opening soon. And we’ve got a really interesting pipeline building behind that.
So that gives me a lot of hope that business, policymakers, industry is really on board. So that will, I think, continue to change the way that we think about how we plan for the future.
Lucy Yu: Final question from me, which is whether there are any things that government could do, or that you would like government to do, to help scale your platform and other platforms like it?
Louise Wilson: Yeah, we see that there is just huge demand for sustainable finance. You look at the statistics on the growth in funds on sustainable finance, and that’s been really positive. Although what they’re actually investing in, sometimes people are a bit disappointed when they dig into what’s really there.
So we don’t necessarily need help on that side. Although I hope I’m not going to regret having said that.
What we do see though actually is that a lot of the projects that we’d like to fund: it’s really hard making those happen. It can take years. And if you’re a really big business that’s building out hundreds of megawatts of offshore wind, you probably have the resources to manage that. But actually that isn’t going to fix it on its own.
So the kind of projects that we’re funding, which are small to increasingly medium-sized – how can we remove the barriers? How can we make the planning process easier? How can we make access to the grid more straightforward?
How can we have a presumption of innocence? Ask later, ask forgiveness later, if you can prove that you are making a really significant contribution to a net zero transition in all aspects.
Lucy Yu: So Giles, are you tempted to invest in any of these projects? Maybe own a piece of a wind farm, or perhaps finance part of your local council’s energy transition?
Giles Whittell: Well, the short answer is yes. If I had anything spare. A couple of caveats…
Lucy Yu: I’m sure you have a fiver.
Giles Whittell: Well actually, that’s a good point. Yeah. I think you might actually get a bigger return, if you’re lucky, then on a deposit account these days. So yes is the answer.
But what about you Lucy? Is Centre for Net Zero or Octopus Energy doing any of this sort of work?
Lucy Yu: One of the things that’s perhaps closest to the things that our guests have described is Octopus Energy’s Fan Club. Now this relates to two wind turbines.
Giles Whittell: Fans! I’m there.
Lucy Yu: Fans, exactly. One of them is in Yorkshire and the other is in Wales. And people who live within proximity of those turbines can sign up to the Fan Club.
And when you are a member of the Fan Club, you get a special rate on your energy when the wind speed exceeds a certain amount. So it’s a special tariff that’s attached to those wind turbines.
But I think what is particularly interesting about the Fan Club model is that actually, Octopus has been contacted by many, many hundreds – and perhaps even thousands – of customers, who have heard about the first two fans and the Fan Club special tariff.
And they’ve been in touch and said, “how do we get a wind turbine in our community?” So lots of interest and engagement just around those two initial wind turbines.
Giles Whittell: That’s amazing. It might be a way round wind turbine NIMBYism.
Lucy Yu: It could be.
Giles Whittell: Just give people a stake in it.
Lucy Yu: You’ve been listening to Inside the Energy Transition, a podcast from Tortoise Media and Centre for Net Zero. A big thanks to our guests this week: Agamemnon Otero, Sarah Merrick, and Louise Wilson.
Find out more about Centre for Net Zero and what we do on centrefornetzero.org.
Giles Whittell: And if you’re new to Tortoise, we’ve got a weekly newsletter called the Net Zero Sensemaker, which tells you everything you need to know about getting to net zero. To sign up for that and more journalism from our newsroom just go to tortoisemedia.com/invite and use my code Giles50 for 50 per cent off membership.
Giles Whittell: Tune in next time when it’s the season finale!
Lucy Yu: The episode was produced by the fast Phil Sansom, with support from the furious Izzy Woolgar. The executive producer is Ceri Thomas.
Giles Whittell: If you enjoyed it, please do leave us a review, or recommend us to a friend. Thanks for listening and see you next time