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How could Labour’s local power plan work?

Backed by £3.3bn in investment, how will the net zero energy generation mission actually work at local level?

By Megan Kenyon

This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.

Labour’s Local Power Plan – which forms part of its overarching plans for the green transition – has gone somewhat under the radar. Backed up with a £3.3bn pledge, and a key part of the party’s promise to achieve clean power by 2030, the plan is currently still in its vaguer stages, but would, in essence, see local communities being given more of a say over energy generation in their areas. This could include the creation of new clean power assets, such as solar panels on the roofs of council buildings, or the construction of community wind farms. 

It was first announced by Ed Miliband in June 2023 – several months before Labour rolled back its headline £28bn pledge – and will somehow involve the party’s proposed publicly owned energy company GB Energy. The profits generated by local renewable energy creation will be fed back into communities through discounted council tax bills or help with energy costs for those on low incomes. This is aimed at incentivising grid and energy generation developments and quashing local nimbyism.

Currently, however, the detail on these plans is sparse. How will the Local Power Plan work with local authorities and community groups? Will it all be run centrally from the offices of the Department for Energy Security and Net Zero in Whitehall? And how will it relate to GB Energy? 

Well, luckily for Labour, the clean power experts at the think tank Common Wealth think they have the answer, and have shared their blueprint exclusively with the Green Transition. The new report Plug in Power: The Case for Community Energy Democracy suggests some of the building blocks which Labour could use. It takes examples from Denmark and Germany (where residents own 52 per cent and 50 per cent of renewable energy produced by wind respectively), and home-grown projects such as the Brighton Energy Cooperative. 

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[See also: Crisis in the Middle East: What does it mean for the energy transition?]

Speaking to the Green Transition ahead of the report’s publication, Mathew Lawrence, the director of Common Wealth, explained: “A publicly coordinated, publicly led transition is the fastest, fairest, most affordable way to decarbonise.” He described Labour’s Local Power Plan as a “really exciting opportunity to scale a new generation of power” but added “a key challenge is the institutional form that the investment takes”.

The report suggests this institutional form should be a “public-commons partnership” to oversee the generation of renewable energy. In other words, local public sector organisations – such as local or combined authorities – would work with community groups to develop new renewable energy projects (such as solar or wind farms). This would all be overseen by GB Energy, as “a representative of non-local public interests”, as the report puts it. 

But what does this look like in practice? 

The report’s German example details how 50 per cent of wind power production is owned co-operatively by residents. Energy projects are overseen by regional boards in order to ensure everyone who lives across the country or region – not just the community in which the project is located – can enjoy the benefits. Regional boards in Germany make sure that the surplus profit produced by local energy projects is redistributed either into a new local opportunity or into tackling inequalities between communities. 

In the central German town of Wolfhagen, 264 residents set up a joint energy company shared with the local authority. Membership of the company is open to anyone who has bought a share, and anyone who buys energy directly from the company, ie the customers. Shareholders receive an annual dividend, and any remaining money goes into an energy-saving fund overseen by a cooperative board that includes members from local government, as well as customers.

As Lawrence told the GT, the Local Power Plan’s success is “not just a question of money”. More importantly, “it’s about how the institution through which the money is centred makes sure it’s genuinely empowering the community”.

Lawrence adds that this will in turn help to maintain Labour’s momentum with voters on this issue. Scepticism over net zero is growing, as are the costs of implementing it. As renewable energy projects often take some time to materialise, it is difficult to present them as a fruitful use of funding when money is tight. Labour’s U-turn on its £28bn green investment pledge and Rishi Sunak’s scaling back of several key climate policies are symptoms of this. 

But, as Lawrence says, “if clean power is delivered by 2030” using a range of smaller local projects, residents will be able to see the impact. “People should be able to see there’s now solar panels on council buildings, or this farm has now got a community wind farm,” he said. “This is something you could realise because it’s quite literally physical, you can see the infrastructure.”

If Labour wins the general election, then we’ll find out if the shadow energy team is taking note.

[See also: More money isn’t the key to clean power by 2030]

This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.

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