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The Potential For
Community-Owned
Renewable Energy In
The Bude Area
APRIL 2015
Summary
TURNING BUDE ON TO SUSTAINABLE ENERGY
T
his summary sets out the main findings from a feasibility and business case study undertaken for
Bude Energy Community (BECo) by Communities for Renewables1.
The purpose of the study is to help BECo and Bude Community Power (BCP)2 understand
the potential for community owned renewable energy projects in Bude and surrounding parishes.
More specifically, the study will help BECo and BCP understand the challenges and opportunities
associated with establishing a sustainable social enterprise based on renewable energy generation
in the Bude area.
The technologies considered include roof-top and ground mounted solar PV, wind, hydro, biomass,
anaerobic digestion (AD), marine, heat pump and deep geothermal.
Different approaches were taken as follows:
• Roof-top solar PV was considered through preliminary work carried out by BECo.
• Area wide site searches were carried out for ground-mounted solar PV, wind and hydro. Basic
feasibility assessments were then carried out for potential sites identified.3
• The potential for biomass was considered through generic business cases.
• Marine, AD, heat pumps and geothermal technologies were considered on a generic basis.
The technologies offering most potential – roof-top solar PV, ground mounted solar PV and wind turbines
- were incorporated into illustrative ‘get going’ business case scenarios, taking into account the scale of
possible developments on potential sites.
The illustrative business cases in a couple of these ‘get going’ scenarios (amounting to 580kW of
capacity in each) are potentially just viable, and generate small annual surpluses. In the early years,
these surpluses would have to be used primarily to build cash reserves and potential capital repayments
for community investors, leaving limited potential for building significant early community funds and
other projects. However, these scenarios are capable of generating total surpluses for community funds
of between around £100,000 to £250,000 over 20 years. Furthermore, once BCP’s core costs have been
covered, any additional generating capacity that can cover project specific operations and finance
costs would generate additional income for community funds.
The potential for hydro power was explored and a number of sites assessed, but none were found
to be economically viable for a community project. Possibilities for the future include wave and tidal
power, AD and geothermal. However, these technologies are not established enough yet to be suitable
for a community-owned project and would require BCP to enter into a partnering or shared ownership
scheme with a commercial developer.
Overall, the study clearly identifies the challenges and opportunities in seeking to develop a
sustainable social enterprise based on renewable energy generation in Bude and surrounding areas.
The challenges arise from severe constraints on connecting new capacity to the local electricity grid,
and the limited range of renewable technologies that could currently be part of a viable ‘get going’
business case portfolio. The near-term opportunities arise mainly from the potential for rooftop and
ground-mounted solar PV schemes, or from small to medium wind turbines that already have a grid
connection offer. There may also be some potential for community-owned biomass schemes once the
price of oil returns to historic levels. Longer-term opportunities could arise from smarter grid connection
solutions, larger wind or solar PV projects, and shared ownership opportunities with commercial
developers, potentially across a wider range of technologies, including solar PV, wind, wave power, AD
and geothermal.
1. Communities for Renewables
EnergyFund was established by
community-owned renewable
Poundstock, St Gennys, Jacobstow,
(CfR) is a social enterprise that
EnergyShare, which is a digital
energy projects for the benefit of
Week St. Mary, Whitstone and
helps local energy enterprises
marketing and communications
local communities. The search area
North Tamerton.
develop and finance renewable
agency that helps people make
in the study covers the Cornwall
3. The full report of the study
energy projects that are owned
better choices around energy.
Council Bude Community Network
findings is not publicly available
by and run for the benefit of
2. BECo is establishing Bude
Area. The area covers the eleven
because it contains information
the local community. The study
Community Power (BCP) as a
Cornish parishes of Morwenstow,
about potential sites which have
was funded using a grant from
social enterprise (a Community
Kilkhampton, Launcells, Bude-
not yet been discussed with
EnergyFund Cornwall. The
Benefit Society). BCP will develop
Stratton, Marhamchurch,
potential site owners.
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Overview of the Study
TURNING BUDE ON TO SUSTAINABLE ENERGY
This overview sets out:
• the nature of the business model for establishing BCP as a
sustainable social enterprise
• the findings about grid constraints in the Bude area
• the main findings for each renewable energy technology
• the illustrative ‘get going’ business case scenarios
The BCP Business Model
BCP will be a Community Benefit Society, which means it operates primarily for the benefit of the
community rather than its investor members. The intention is that BCP will raise capital to fund
community-owned renewable energy installations through community share offers and loan finance if
needed.
BCP’s renewable energy installations will earn income from the sale of energy (both on-site and to
the local grid) and renewable energy generation incentive payments, such as the Feed-in-Tariff. Income
generated will be used as follows:
•
•
•
to cover the costs of maintaining the renewable energy installations (e.g. servicing and
maintenance, insurance and business rates) and running BCP (e.g. management costs, insurances,
accountancy and audit fees);
to pay community investors in BCP a fair return (this could be up to 6% per year with potential for
capital to be returned over 20 years);
any surplus income (after sufficient reserves have been built up) will be used to support local
community initiatives including fuel poverty reduction, energy efficiency and providing funding for
community organisations in the area.
A challenge is to identify and develop a portfolio of viable projects that will be of sufficient scale to
enable BCP to cover these costs and meet its aspirations for community initiatives and funding.
Grid Constraints
Constraints on connecting new renewable energy generation capacity to the electricity grid are a
major issue across Cornwall. The grid in the whole of the Bude area is constrained due to the amount of
renewable energy already connected (or given a connection offer and pending installation) relative to
local demand.
This means the potential for new medium to large scale community energy projects in the area is
likely to be restricted or prevented by grid constraints. However, there may be capacity to connect
small to medium scale installations where the installations can connect directly to a building’s existing
electrical connection. There may also be potential for installations up to 250kW for connections close to
a local transformer with good existing electrical infrastructure.
The study points out that actual grid connection capacity can only be determined by requesting
budget estimates or formal connection offers from Western Power Distribution (WPD) for a proposed
installation.
The position may improve over the next few years, because:
• ‘Banked capacity’ (based on connection offers from WPD) can become available if a planning
permission is refused or finance is not raised for a project. The only way of securing released
‘banked capacity’ is to submit a grid offer request for a specific project in a timely way.
• WPD is rolling out ‘smart’ connection solutions that may enable more capacity to be connected
into the existing network. These include ‘time constrained’ connections and ‘active network
management’ approaches.
The study suggests that to be able to take advantage of new grid opportunities as they arise,
BCP should progress site selection and landowner engagement work and submit grid connection
applications where appropriate.
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The Technologies
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Roof-mounted Solar
In conjunction with the National Solar Centre, BECo has undertaken preliminary surveys to identify the
rooftops of commercial and public buildings that might be suitable for roof-mounted solar PV schemes.
It has also issued a call for site owners to come forward if they are interested in hosting a community
scheme. As a result, BECo is involved in discussions with a number of sites about hosting a scheme.
Based on this early experience, and for the purposes of providing illustrative ‘get going’ business
cases, the study assumes that 80kWp of rooftop solar PV could be developed. In reality, the amount of
generation capacity developed could be significantly smaller or larger, depending on grid connection
issues and progress with discussions with rooftop owners.
Ground-mounted Solar
The study includes the results of a search for potential solar farm sites in the BECo area, focusing on
brownfield locations or sites with limited environmental impact (e.g. near to existing development),
as well as sites where electricity could be exported directly to an electricity consumer with significant
demand. The latter is beneficial because solar installations under 250kWp receive a higher FiT rate if they
can prove that at least 10% of the electricity generated will be used directly within a building.
Three potential sites are identified, with generation capacities ranging from 50 to 320kWp. For each
site, basic feasibility assessment has been carried out and business case assumptions are outlined. The
study also identifies key delivery requirements (covering the agreements and permissions that would
be required). In principle, these sites have potential to form part of a portfolio of community-owned
renewable energy projects.
Wind
Planning, environmental and physical constraints for wind turbines restrict the potential sites that are
suitable. Based on these constraints, and using GIS mapping software, the study undertook an area
search to identify potential sites which could be suitable for wind turbines. This exercise identifies three
potential sites in two areas, and provides illustrative business case assumptions for each. Site visits and
more detailed feasibility work and landowner engagement would be needed before a site can actually
be considered suitable.
Due to the grid constraints in the area, the study concludes that the sites identified are unlikely to be
viable until further connection space becomes available.
The study also reports on the Coppathorne site, where the site owners have approached BECo
about the possibility of bringing two proposed projects into community ownership, one of which is a
225kW wind turbine which is currently going through Appeal. This is a serious proposition as the site
already has a 500kW grid connection offer in place. Although the outcome of the Appeal is not yet
known, it provides a basis for including a 225kW turbine in one of the illustrative ‘get going’ business
cases in the study.
The study recommends that BECo/BCP should explore the potential for shared ownership
opportunities and partnerships with other developers and landowners that have already secured grid
connection capacity.
Hydro
Hydropower is an established technology that has been generating significant amounts of power in the
UK since the early 20th century. The study includes a search for potential hydro sites in the BECo area,
covering three types of site:
•
•
•
Small streams with significant gradient of more than one in fifteen and total head greater than 40m
(The ‘head’ is the height that water falls through immediately before a turbine).
Old mill sites with good abstractable flows likely to be greater than a mean of 500 litres/second
Significant dams and weirs with a head greater than 1.5m
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The Technologies
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The study identifies three ‘most promising’ local sites (Bude Canal overflow, Lower Tamar Lake dam
overflow and Whalesborough Weir), but finds that the sites are not viable from a business case
perspective because they would not generate sufficient income to cover all costs, including paying
sufficient community investor interest. It also concludes that it is unlikely that the most promising sites
will become economically viable in the future as hydro power is a mature technology and the costs of
purchasing equipment are unlikely to reduce.
There may, however, be some potential for a viable hydro installation if a weir site is being upgraded
anyway and the costs of developing a hydro scheme can be carried out as part of the upgrade. Other
small scale projects might be possible with different funding models, but not as community owned
projects that rely on income generation to cover all costs.
Biomass
The study provides a review of the key parameters for developing community-owned non-domestic
biomass projects, where oil of LPG boilers are replaced by wood pellet or log boilers. The key
parameters are:
•
•
•
a boiler size in the range 80-200kW, to ensure sufficient payments under the Renewable Heat
Incentive (RHI) to make the business case viable
a good constant heat requirement during the heating season, for example, as in leisure centres,
holiday complexes, hotels and residential care homes
boiler install costs at 30-40% of total RHI payments over 20 years and a maximum required payback periods of 7-8 years.
The study also provides two generic business cases for community-owned biomass installations to illustrate
how these might work. These assume an oil price of around 60p/litre. However, the price of oil in February
2015 fell below 50p/litre. The study points out that until the price gets back to 60p or more, it is likely to be
difficult to make a case for a community-owned installation based on replacing oil with biomass.
Anaerobic Digestion
AD uses the decomposition of organic matter to generate biogas and generate electricity. A wide
variety of organic matter can be used, ranging from manure, slurry and animal bedding through to
blood, guts, animal fat, crop residue, energy crops, medical waste, some degradable plastics, pulp,
sewage sludge and the organic fraction of municipal solid waste.
The study provides an illustrative business case for an AD plant using energy crops as a feedstock
(as food waste is already used in an AD plant at Holsworthy, and slurry is of relatively low calorific
value, and has historically been replaced with higher value/output schemes). The study finds that the
economics of an energy crop AD plant would be heavily influenced by whether it can sell heat or not,
and in the locality, it may prove difficult to find and secure a suitable opportunity. Without the sale of
heat, such a plant is highly unlikely to be viable. There are also significant questions about the long-term
environmental gain if land use change to growing energy crops is taken into account.
Overall, the study points out that AD is an inherently risky technology option to develop, being based
on a biological process that is harder to predict and manage than solar or wind energy sources and
being in an immature market in the UK. The study also observes that the track record for community AD
projects is so far very poor.
The study concludes that for the immediate future AD is not suitable for a community energy project,
especially for a new community energy initiative without AD expertise in-house. However, in the longer
term, if an AD project was identified that had the potential to be economically viable, and if feedstocks could be secured and a proven technology used, then BCP could in principle partner with a
specialist AD company with a proven track record in developing and operating similar projects. The
AD company would develop, build and operate the project. BCP could invest in the project through
owning shares in the project company or through a revenue share agreement.
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The Technologies
Marine
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The study reviews the current development status of three types of marine power technology:
•
•
•
Tidal Stream (using underwater turbines to capture energy from flowing water);
Tidal Impoundment (using barrages and/or natural structures to maximise the vertical difference
between high and low tide, with ‘hydro’ turbines generating from the difference);
Wave (various designs to capture electricity from the motion of waves, both offshore and nearor on-shore).
The study then discusses the potential for electricity generation from the seas surrounding Bude. It
concludes that:
•
•
The potential for tidal impoundment projects using existing structures (Bude Sea Lock and Bude
Sea Pool) is poor, because the projects would not generate enough electricity to justify the costs
(in money and energy) or the disruption incurred.
It is possible, however, that marine energy technology and industry infrastructure will progress
within the next 5 - 10 years to the stage where a tidal stream or wave project could be viable off
the Bude coast.
The study points out that ultimately offshore wave energy generators are likely to be the marine energy
technology most suited to generate significant energy for the Bude community. In the short term,
however, developing projects would be extremely risky and very expensive. The study suggests that
wave energy projects should not be considered until the technology is significantly better proven. This is
particularly the case given the importance of surfing in the region and the perceived potential impacts
of offshore wave devices on surf breaks.
In the longer term, when the technology is commercially proven and if the impacts are minimal and
acceptable, the sensible approach would be to partner with a specialist marine energy company with
a proven track record in developing and operating similar projects. The marine energy company would
develop, build and operate the project. BCP could invest in the project through owning shares in the
project company or through a revenue share agreement.
Heat Pumps
The study concludes that ground and air source heating is not likely to be suitable for BCP funded
installations. The income from RHI payments alone would not generate a sufficient return for BCP and
the technology is best deployed with underfloor heating which is integrated into the fabric of a building
so ownership arrangements would be complex.
Geothermal
Geothermal projects utilise heat within rocks deep underground to convert water into steam which
powers a turbine on the surface to generate electricity. Currently two schemes are planned for Cornwall,
one at the Eden Project and another at United Downs near St Day. Both sites are in areas where the
geothermal energy potential is over twice that of the Bude area.
If deep geothermal technology and industry infrastructure progresses to the stage where a project
could be viable in the Bude area, the sensible approach would be for BCP to partner with a specialist
geothermal energy company with a proven track record in developing and operating similar projects.
The geothermal energy company would develop, build and operate the project. BCP could invest in
the project through owning shares in the project company or through a revenue share agreement.
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Illustrative Business Cases
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Based on the potential sites identified, the study considered three ‘get going’
scenarios to illustrate a range of installation types and scales that could
form the basis of establishing BCP as a viable social enterprise. A minimum
economy of scale is required at the outset to cover the costs of setting up
BCP and its first share offer, and the costs of running the enterprise.
The three ‘get going’ scenarios:
Scenario
Portfolio
A
80kW of rooftop solar PV
B
80kW of rooftop solar PV + 2x 250kW ground mounted solar PV
C
80kW of rooftop sites
+ 275kW ground mounted solar farm
+ 225kW wind turbine
Scenario A
The study finds that this scenario isn’t viable as the portfolio is too small to cover fixed operational costs.
Rooftop installations could, however, form part of a larger portfolio with sufficient economy of scale to
cover BCP’s costs.
Scenario A: 80kW of rooftop solar PV
Cost
£115,000
Includes share offer and development costs.
Revenue
£15,000 p.a.
Rises with inflation. Assumes the 10-50kW FiT band
and FiT rate for Q3 of 2015.
Project operational costs
£2,500 p.a.
Rises with inflation.
Member interest
£5,500 p.a.
5% per year – annual cost decreases over project
lifetime as capital is repaid.
Company operational costs
£10,000 p.a.
Rises with inflation.
Surplus for capital repayment,
community fund and cash flow
reserves
-£3,000 p.a.
Business not viable as unable to repay capital or
generate community surplus.
Total 20 year surplus (NPV @ 2.5%)
N/A
The project operates at a loss so there is no surplus.
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Illustrative Business Cases
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Scenario B
The study finds that this scenario is just viable as the solar farms provide an economy of scale to cover
BCP’s costs. It assumes two 250kW sites with direct electrical connections to electricity users, such as
factories or business units, are developed so the higher sub-250kWp FiT rate is received by the solar
farms. This would also enable the sale of electricity at a preferential rate to the on-site users. If a direct
connection to a user was not possible the projects would receive the lower ‘stand-alone’ FiT rate and
the scenario would not be viable.
Any further additional installations that are viable on a standalone basis will increase the community
surplus if added to this portfolio.
Scenario B: 80kW of rooftop PV + 2x 250kW ground mounted PV with private wire connection
Cost
£710,000
Includes share offer and development costs.
Revenue
£92,000 p.a.
Rises with inflation.
Project operational costs
£19,500 p.a.
Rises with inflation.
Member interest
£42,500 p.a.
6% per year – annual cost decreases over project
lifetime as capital is repaid.
Company operational costs
£10,000 p.a.
Rises with inflation.
Surplus for capital
repayment, community fund
and cash flow reserves
£20,000 p.a.
•
Total 20 year surplus
(NPV @ 2.5%)
£98,000
•
Company cash flow reserves built up over first
few years.
Member capital repaid as early as possible to
reduce interest costs over 20 years.
Total community surplus over 20 years
Scenario C
The study finds that this scenario is also viable. It utilises a 225kWp wind turbine and a 275kWp solar farm.
In this scenario, the solar farm would receive the lower stand-alone FiT rate as there is no local demand
to utilise the generation but the income from the generation is enough to offset this. Wind turbines
receive the same FiT rate if they are connected directly to an energy user or the electricity grid.
Scenario C: 80kW of rooftop sites + 275kW ground mounted solar farm + 225kW wind turbine
Cost
£1,257,000
Includes share offer and development finance costs.
Revenue
£152,000 p.a.
Rises with inflation.
Project operational costs
£34,000 p.a.
Rises with inflation.
Member interest
£75,000 p.a.
6% per year – annual cost decreases over project
lifetime as capital is repaid.
Company operating costs
£10,000 p.a.
Rises with inflation.
Surplus for capital
repayment, community fund
and cash flow reserves
£33,000 p.a.
•
Total community surplus
(NPV @ 2.5%)
£250,000
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•
Company cash flow reserves built up over first
few years.
Member capital repaid as early as possible to
reduce interest costs over 20 years.
Total community surplus over 20 years
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BECo Observations
TURNING BUDE ON TO SUSTAINABLE ENERGY
In scenario B (580kW – all solar) the business case is just viable under favourable conditions (private
wire connections to nearby electricity users). This scenario generates a small annual surplus (£20,000)
which, in the early years, would have to be used primarily to build cash reserves and potential capital
repayments for community investors, leaving limited potential for building significant early community
funds and other projects. The position is a little better in scenario C (580kW – solar and wind), which
involves £1,257,000 of investment for £33,000 of annual surplus. However, this scenario generates a total
surplus for community initiatives and funding of £250,000 over 20 years. Furthermore, once BCP’s core
costs have been covered, any new installation that can cover project specific operations and finance
costs would generate additional income for community initiatives and funds.
Overall, the study clearly identifies the challenges and opportunities in seeking to develop a sustainable
social enterprise based on renewable energy generation in Bude and surrounding areas. The challenges
arise from severe constraints on connecting new capacity to the local electricity grid, and the limited
range of renewable technologies that could currently be part of a viable ‘get going’ business case
portfolio. The near-term opportunities arise mainly from the potential for rooftop and ground-mounted
solar PV schemes, or from small to medium wind turbines that already have a grid connection offer.
There may also be some potential for community-owned biomass schemes once the price of oil returns
to historic levels. Longer-term opportunities could arise from smarter grid connection solutions, larger
wind or solar PV projects, and shared ownership opportunities with commercial developers, potentially
across a wider range of technologies, including solar PV, wind, wave power, AD and geothermal.
WWW.BECO.ORG.UK
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