Dissertation towards the degree of Master of Science in Management, Consumer studies
and Economics Supervised by Edwin van der Werf and Jeroen Klomp Sustainable Community Energy Network Sustainable Community Energy Network This study: motivation No way in which investors can easily assess the existing variation in organisational and project quality Lack of seed capital No national overview of this sector: Organisational structures and legal forms Business models Extent of the community sector Driving motivations Social, economic characteristics The next 15 minutes 1. Objectives & research questions 2. Definitions 3. Methodological approach 4. Theory and literature: constraining and enabling factors 5. Model outline 6. Some results and conclusions 7. *Why (community power)? 1. Objectives o To acquire a national overview of community renewable energy development (representative sample) o To operationalise the constraining and enabling factors in the early development of community renewable energy initiatives o To statistically investigate their relationship with early stage project success 1. What are the key determinants of successful early stage project implementation? 2. Do organisation-intrinsic or extrinsic factors cause significant differences in project quality and potential? 3. What are the implications for the capacity, growth and potential of community-led renewable energy production? 1. Research questions 2. Definitions Early phase project development Knowledge Decision Start implementation End implementation Planning consent Scope of this study Scope of technology adoption studies Community A place - based social enterprise That leads or is actively involved the project process (process) That distributes project benefits amongst its members and/or the wider community (outcome) Walker G., Devine-Wright P. (2008). Community renewable energy: What should it mean? Energy Policy 36(2): 497-500 2. Definitions Gubbins N. (2010), JRF briefing paper: Community Assets, November 2010. Joint venture arrangements Community-led projects Co-operatives/ Community shares Community benefit arrangements Non- profit distributing For- profit The individual as an investor/ beneficiary The organization as investor and beneficiary 2. Definitions Community project 3. Methodology Literature review on constraining and enabling factors Finding communities: web spider Digital surveys with embedded data (Qualtrics) Telephone interviews (CSPRo) Spatial data (QGIS) Regression analysis (STATA) 0 1 2 3 4 SOCIAL COHESION Operationalising constraining and enabling factors 3. Methodology Relevant literature: Econometric approaches to risk assessment in renewable energy Technology adoption studies in renewable energy SME survival and default studies (Sociological) literature on community renewable energy 4. Identifying variables Domain Variable Dependent Planning consent, rejection or project discontinuation Independent Organisational capacity Experience in running trading, commercial or revenue- generating projects Manpower Peer-to-peer mentoring Organisation profitability Education deprivation Regulatory Distance from special designated area Distance from settlement or locality Technical Distance to nearest grid connection Technology type Local grid capacity Social support Social cohesion History of collective agency/solidarity Level of network integration Community engagement and representation Landscape saturation / industry concentration Financial FIT or ROC rate at time of commissioning Land access Cost incurred during pre-planning phase Income deprivation Access to seed capital (leverage) 5. Binary Choice model 5. Binary Choice models y is a limited dependent variable y* reflects project potential for early stage success Value of Var() must be assumed Coefficients are confounded with residual variation Highly sensitive to heteroskedasticity A means to explore heterogeneity in choice situations (Alvarez and Brehm, 1995) Scale effects v. model specification effects? Long, Freese(2006). Regression Models for Categorical Dependent Variables Using Stata, p. 134 6. Survey results 405 community projects: - 20.2MW operational - 180MW in development - 97 full survey responses representing ~ 30% of all community projects in Scotland MW Projects Sample 922 405 Total 10.9 49 England 908 340 Scotland 2.1 8 Wales 1.2 8 N. Ireland 479.2 160 Analysis ~ m investment ~ 7% of UK installed MW (2012) Business models 6. Survey results 0 50 100 150 200 250 300 Community-led (other) Community-led (shares) Public / Community-led Joint Venture (Equity partners) Joint Venture (Community Shares) No. projects Total Analysis Technology 6. Survey results 0 20 40 60 80 100 120 140 No. of Projects Total Analysis Organisational types 6. Survey results 77.65 40.99 25.12 10.53 2.38 1.70 0.47 0.25 0.12 0.05 0.01 0.01 0.01 0.01 0 10 20 30 40 50 Energy co-operative Local energy / development Local development organization Agricultural trust Community group partnership Housing association Local environmental organization Sports/ Recreation association Museum/Heritage / Arts association Community building association Church community Educational charity Harbour trust Special needs care MW Key predictors for project completion are: Type of land acquisition Technology Capacity (kW) Education Questionable predictors include: Grid capacity and distance to connection Business model Years of community-oriented activity Access to peer organisations with experience Sample size: wait two years Selection bias: more project failures Low resolution effects : a technology - specific model Recall error Sample size, power and variable design LIttle (economic) insight in determining what variables to include, how they are defined and how they relate. Community-led RE schemes are more likely to succeed given greater human and material resources, and in less deprived regions than more deprived regions. >> Some evidence Community RE is more likely to succeed in regions with high degrees of social cohesion >> No evidence Communities that are less integrated into the established energy network are less likely to be successful. >> No evidence Community sector is small but on the rise Financing mechanisms changing Size of projects is increasing No surprises? Education, land access, technology and capacity Inconclusive effects of more complex socio- political and technical factors This work was funded by UKERC and the Edinburgh Centre for Carbon Innovation Media coverage on this project: http://thisiscounterculture.com/blog/2012/6/people-power http://www.energylivenews.com/2012/05/18/community-energy-projects- stuck-in-bottleneck/ Environmental and social justice arguments Demand-side reduction in energy use (Lovins, 1977) Rural regeneration: socio-economic development, diversification, resilience (Warren, McFayden, 2010; Murray et al, 2011) Restore democratic deficits, empowerment (Hirst, 2001) Rhetorical Social licence to operate *Why (community renewables)? See: Walker et al (2007), Global Environmental Politics 7:2 Instrumental arguments Circumvent public opposition to wind energy development Technical arguments Mediates intermittency challenges of renewable technologies (Hain, 2005) Reduced maintenance costs Business argument Communities invest and reinvest in the RE sector See: Walker et al (2007), Global Environmental Politics 7:2 *Why (community renewables)? Variable Data Data source Community representability Settlement populations General Register Office (2001) Council renewables policy and support Planning rejection rates Council online planning registers Education and income levels SNS data (2009) Experience in running trading, commercial or revenue-generating projects Years since tradable legal entity established, years Company Check Grid access and capacity Distance data, thermal headroom Council online planning registers, Scottish and Southern Energy, Scottish Power (2011-2012) Social cohesion 2009-2010 Urban Rural Classification based on settlement size and drive times Scottish Neighbourhood Statistics (2009-2010) **Data sources