Community hydroelectric scheme share issue opportunity shows how to do it!

A community renewable energy scheme is offering the chance for investors to get 5% dividend as well as helping a rural area become more energy efficient.

The share issue is being launched by a community co-operative, Esk Energy, to raise £320,000 to install a 50kw hydroelectric turbine, using an Archimedes screw, on the River Esk at Ruswarp, near Whitby, that will generate 200,000 kilowatt-hours of electricity a year, enough for about 60 houses.

The story of the scheme illustrates how hard it has been to get a community energy scheme like this off the ground, but shows that it is getting easier,

It also offers encouragement and hope for others wishing to do the same, since the rewards for the whole community will be greater than either individuals pursuing their own schemes, or outside companies undertaking fully commercial projects.

The project also illustrates the particular difficulties faced by hydroelectric schemes I highlighted recently, despite there being up to 4,190 eligible hydro sites in England and Wales alone.

Uphill struggle

“The Esk project began 6 years ago, and 2 years later we set up the Esk Valley Community Energy, following it up by creating an Industrial Provident Society, Esk Energy Yorkshire Ltd.," says Colin Mather, a technical director on the project.

“We originally had the help of the North Yorkshire National Park and the parish council. We began by encouraging energy efficiency in homes, and then did a survey of sites for the best renewable energy. We did look at wind power, but being in a national park, large turbines were not an option.

“Within surveyed a few potential hydroelectric sites before finally settling on this one."

The story of how the project gained approval illustrates the changing attitude that has happened in the last few years at the Environment Agency.

Initially, the organisation found it almost impossible to deal with the Agency. "They were against the scheme to start with," says Colin. “They had no staff who knew anything about hydroelectric power - all they knew about was fish.

“Then, between 2 and 3 years ago, they were getting so many enquiries about water power they realised they had a problem. So they organised a conference. We were among about 40 different groups invited.

“The Agency listened to their feedback and changed their attitude. They reorganised themselves and now deal in a more constructive manner with hydroelectric power," he says.

"At a more local level," Colin continues, "the Environment Agency people again were not cooperative. But when we reminded them that, in fact, it is part of the brief of the Agency to support hydropower they changed their tune too, especially since we were able to reassure the that we were not harming fish."

The turbine is situated next to the fish pass because fish swimming upstream automatically look for the fastest flow, and this is also where one wants to situate the turbine.

“We also had to negotiate hard to extract as much water as we could. We will be using 4m³ per second. The Environment Agency wanted to use less water, but we said 'you have more than the minimum amount of flow you need for the fish, why not let us have more?' and eventually they saw sense in our argument."

The turning of the screw

An Archimedes screw generator works by using the weight of water entering it at the top to turn it at a much lower rotation speed - under 100rpm - than other water turbines such as the Pelton wheel. The generator itself is situated at the top of the screw.

It is the preferred water turbine of the Environment Agency, because it is extremely fish friendly. This was an important consideration in obtaining approval from the Agency. Colin says that the River Esk is an important one for salmon and trout, being in the North Yorkshire National Park.

Since the device is 2.9 m wide, and a body of water entering the top of the screw is taken down without rotating itself, any fish entering it emerges unscathed at the bottom.

This particular type of device is also ideal for low heads; the head at the weir where it will be installed is only two metres.

The screw will have to be fabricated specially in Germany or Holland, since no one in the UK has the ability to make one. It will take 5 months, and so the group expects construction to begin next March and the project to be operational by the summer.

The share offer

The scheme will benefit from a rate of about 20p per kilowatt-hour from the Feed-in-Tariff, yielding a projected income of £40,000 per year.

Details of the share issue are on the Whitby Esk Energy website. The minimum share purchase is £250 (up to a maximum of £20,000).

Investors will receive a dividend from year three, rising to 5% by year five and shares are withdrawable from year five. Shares can be purchased through to Sept 2011.

A loan obtained from the Yorkshire National Park will be repaid in 12 years.

A surplus from the income will be retained by the co-op to run more energy saving projects such as solid wall insulation in the community's hard-to-heat solid walled properties.

In the past the group has benefited from a £40,000 grant from the National Park's sustainable development fund and £50,000 from the N. Yorkshire county council community fund.

A £20,000 grant from Yorkshire Forward had to be repaid when they found they could not spend the money soon enough to satisfy the grant conditions.

Microgeneration Strategy published - but will it over-achieve?

The government's new strategy envisages the ideal cost of installing renewable microgeneration technologies to move to around £5-6,000 with a payback period of around five years so that millions of householders take it up. But it's worried that if its strategy is a success, then its support schemes may run out of money.

Its new Microgeneration Strategy and Action Plan for England, published yesterday, aims to remove non-financial barriers to the spread of these technologies, and calls for more demonstration homes, which are known to be the best way to promote uptake, and for industry, local authorities and government bodies to work together.

But the Government is worried about the scheme becoming a victim of its own success. Its accompanying impact assessment warns that implementing the strategy "could encourage greater uptake than we have projected" which ″could drive up subsidy costs of the schemes".

As a result it promises to keep tight watch on levels of uptake given that more funding would not be available over and above the ｣15 million allocated to the Renewable Heat Premium Payments, ｣850 million funding for the Renewable Heat Incentive or the ｣610 million a year for FITs.

Launching the strategy and action plan, Greg Barker said, "The onus is on the industry itself to make the most of the opportunities presented by the financial incentives - supported by Government action to streamline regulation such as planning and standards, while at the same time ensuring consumers are protected."

As an example of what could be done, the Government proposes that information on financial incentives could be included in Energy Performance Certificates (EPCs) to stimulate take-up of renewables. Market research by Consumer Focus has shown that more people would take up renewable energy in their homes if this was included at the point of property sale or rental as part of the green deal advice process.

An army of skilled workers will be required to meet the demand but accreditation needs to be standardised. A survey is to be undertaken of all training schemes to recommend what's needed to create the competent installers of tomorrow to be completed by October 2012.

Industry must do its bit as well, including analysing the whole product life-cycle for each microgeneration technology to pinpoint where things could go wrong in advance and bolster customer confidence. It should do more to market the concept of microgeneration and the potential benefits to consumers with independent source of advice by September this year, and produce a guide on warranties and insurance schemes for customers and factsheets for each technology with information on maintenance and the longevity of key components, by April next year.

Micro-hydro will be removed from the Microgeneration Certification Scheme for the purpose of Feed-In Tariff eligibility to make it easier for customers to find an appropriate installer. Schemes under 50kW are already rigorously regulated under environmental and planning consenting requirements. The Chief Executive of the British Hydropower Association, David Williams, called this "a great relief".

Importantly, the strategy recognises also the value of heat pumps, micro-CHP and, into the future, compressors and absorption chillers which could provide solar-powered cooling.

Wood fuel is also considered vital and the Government is developing a Bio-energy Strategy for publication later this year, which will set out the government's strategic direction for bio-energy to 2020 and beyond.

Building Regulations and the Standard Assessment Procedure (SAP) will also be amended to better quantify the benefit of including renewables in developments.

Government and industry will work together to explore opportunities to expand the microgeneration sector by working with European level initiatives. This includes, for example, Smart Cities, which launched on 21 June, and addresses technologies, local production and energy networks, including electricity, heating and cooling.

Launching the initiative, Energy Gnther Oettinger said: "With an 80 million Euro package we plan to demonstrate smart integration of urban energy technologies in selected pilot cities. This will kick-start important new markets for European industry. Cities are key to the EU's objectives of 20% energy saving by 2020 and to developing a low carbon economy by 2050, because 70% of the EU's energy consumption takes place in cities." Manchester is the English city taking the lead in this imaginative scheme.

Community energy

Connected with this, the Government wants to encourage more communities to take up district level renewable energy schemes that would be owned by the communities themselves.

Currently there are many barriers forming an uphill battle to communities that wish to do this, such as lack of knowledge about planning, local awareness, skills, time and access to finance. DECC has pledged to do more to address these issues with a stakeholder group to be set up next month, including developing the Community Energy Online web portal and engaging in collective purchasing of renewable energy in order to get a better deal.

The latter opportunity was identified earlier this year in a BIS proposal, Better Choices: Better Deals. It cites the pioneering example of Barnet in achieving this and, in fact, many of the initiatives set out in the microgeneration strategy.

Good Energy in particular has welcomed the recognition in the strategy that community energy projects come in all shapes and sizes and could be as large as 20MW in capacity, and that the Government is committed to a wider distributed energy strategy as part of its Electricity Market Reform.