Anna Harnmeijer, MSc

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