Tuesday March 15, 2022
How can we make energy more affordable?

With higher energy costs globally contributing to cost of living concerns, this week’s edition of Global Local explores some of the steps local government can take to reduce energy costs and fuel poverty.

Global energy prices have soared in recent months, with natural gas, electricity and coal just some of the commodities that are surging in value. Despite targets, dwindling global investments in renewable energy and continued reliance on imported fossil fuel energy has left many countries vulnerable to price fluctuations, with citizens paying the price. This month, inflation hit a 31-year high of 7.2% across OECD countries – largely due to increases in energy costs – prompting widespread concern over fuel poverty and the cost of living.

So what are the options? On the demand side, the work of local authorities to reduce energy dependence is likely to look like a package of energy efficiency initiatives alongside supporting measures such as support and advice for struggling households and businesses and working closely with organisations that help people living in fuel poverty. More radically, projects such as district heat networks (as detailed later in this newsletter) can pipe waste heat from power generation into homes, saving energy.

When it comes to supply, local government can actually provide some heavy-hitting solutions to reducing community dependence on high-cost imported energy. Municipal energy production and local energy initiatives (LEIs) are enticing propositions for many local authorities. Energy sovereignty is defensible from almost any ideological perspective and is at the heart of numerous citizen concerns including climate change adaptation and mitigation, resilience of public infrastructure and prevention of energy poverty.

However, the path of local energy initiatives is fraught with risk, as well as technical difficulty and legal complexity. Overcoming these barriers requires acceptance of long-term political and financial commitments. This edition of Global Local focuses primarily on practical examples and advice for councils considering steps toward improving energy affordability and community resilience to cost fluctuations.

Welcome to the Global Local Recap from LGIU!

Each week we’ll focus on a different global topic, highlighting innovative content and insights from LGIU and our members around the world. Please forward or share this free newsletter. If you’ve been forwarded this email, join our mailing list to get free, fresh insights from LGIU Global Local each week. 

Featured briefing

Switching on to Spain’s community
energy initiatives

This briefing explores how local governments in Spain have experimented successfully with local solutions to energy affordability. Read the full article.
Spain, like many other countries in the 1980s and 1990s, privatised its electricity sector, centralising energy around large plants that proved impossible for small companies to replicate and creating an oligopoly. National and European legislation makes reversing the privatisation process practically impossible and politically costly for central government. The consequence is that with little competition, the price of electricity has increased for public administrations, companies and individual consumers. 

As long as this situation does not change, commercialisation is the most accessible point in the Spanish electric market and a pragmatic starting point from which local authorities can start doing things differently. This is what dozens of town councils across the country have done, including cities as big as Barcelona, also rural municipalities for example Isaba. In the latter case, the town has managed to reinvest profits to create its own hydroelectric power generator to supply over five hundred homes in the mountains of the Navarrese Pyrenees. Each municipality has faced its own challenges in taking the plunge and setting up its own electricity trading company, but the results of those that have succeeded are overwhelmingly positive.

Becoming a public utility, or a public electricity operator, allows the direct purchase of electricity for all public consumption. This has the direct consequence of lower costs for the municipality and the possibility of directing surplus energy to social housing and local businesses. In addition, the management of energy allows for first-hand knowledge of market price data and consumption data, eliminating intermediaries and commissions. Local regulations have proven to be more flexible than national legislation in allowing purchases from municipal entities, and the municipality’s own purchasing volume favours both lower prices and the economic sustainability of the project.

Click here to continue reading this article
LGIU Global Local Highlights
Energy policy in turbulent times: the economic lever of local government’s role in energy systems
Rising energy prices are pushing more households into debt and poverty which will have significant implications for the public sector, including local authorities. This briefing utilises case study examples that explore how local authorities can take the future of energy systems into their own hands. Read this briefing here.
Hotting up: the growth of district heat networks
District heat networks are a growing feature of towns and cities around the world and are a vital tool in making homes and other buildings more energy-efficient. But how do they work and what part can councils play to ensure they operate successfully? Read this briefing here.
How Hawaii’s biodiesel production supports its circular economy model
The world needs community-based, equitable climate change solutions. Kelly King, Maui County councilmember and co-founder of Pacific Biodiesel, reflects on the role of biofuels in supporting a circular economy. Read this case study here.
Case study: District Heat Network

Copenhagen, Denmark

One of the oldest of its kind, Copenhagen's district heating system provides 98% of the city with affordable, environmentally-friendly heating. 
Click here to read the report containing the full case study

Image: Amager Bakke, also known as Amager Slope or Copenhill, is a combined heat and power waste-to-energy plant and sports facility in Amager, Copenhagen. It opened in 2017 and doubles as a year-round artificial ski slope, hiking slope and climbing wall.

One of the oldest and most successful of its kind, Copenhagen’s district heating system was set up in 1984 by 5 mayors and today heats 98% of the city with clean, reliable and affordable heating. 30% of the annual heating demand is covered by surplus heat from waste incineration, contributing to a circular economy, while the remaining production is from geothermal energy and fuels such as wood pellets, straw, natural gas, and oil.

The system captures the waste heat from the electricity production of incineration plants and Combined Heat and Power plants (CHPs). This heat would normally be released into the sea as a byproduct. Instead, it is delivered to homes through a 1,300 km network of pipes. Four CHP power plants, four waste incinerators, and more than 50 peak load boiler plants, together with 20 distribution companies, are connected in the large pool-operated system, producing 30,000 Terajoules of energy. Compared with oil or gas boiler alternatives, CPH-based district heat reduces CO2 emissions by 40-50%.

The system cuts the average household bill by €1,400, reducing fuel poverty, and saves Copenhagen from using over 200,000 tons of oil every year – equating to around 665,000 tons of CO2 emissions avoided.

• Lower cost heat to households, reducing fuel poverty
• Can be delivered to businesses, greening retail and private sector firms
• Flexible in choice of production plant and fuels used
• Environmentally friendly due to use of a byproducts and sustainable fuels 
• CHP technology is well-established; 12% of Europe’s electricity is generated from useable heat

So how does it work, how was it financed, and what are the conditions for success of a project like this?

Click here for more information
Policy & Resources

Explainer: Introductory Guide: Community Energy for Local Authorities
This short, introductory guide from Pure Leapfrog (UK) de-mystifies the various areas required in setting up and delivering a community energy project.

Report: Models of Local Energy Ownership and the Role of Local Energy Communities in Energy Transition in Europe 
For a deeper read, this comprehensive report by the EU Committee of the Regions examines different models for local energy ownership, providing best practice examples to identify typical success factors and obstacles. The report also explores energy cooperatives as an example of local energy communities, examining their socio-economic impacts.

Podcast: The Local Energy Rules podcast features twice monthly interviews (and accompanying written case studies) with policy experts and community leaders (mainly in the USA), focusing on alternative and clean energy at the local level.

More LGIU Global content

Local government and the Ukraine invasion
Our collection of LGIU and other resources to support local government with dealing with the impact of war on areas from cost of living, defending truth and council data to defending local democracy. View our resources here.

Global Local Executive Panel – Local Government Reform – 24 March
Our first session for 2022 – join LGIU, the Victorian Local Governance Association (VLGA), and a panel of council CEOs from England, Australia, Ireland and New Zealand as we tackle the multi-faceted subject of local government reform. Sign up here (free for members).
Thanks for reading! 

Next week, we're producing a special edition of Global Local focusing on the ongoing Ukranian/Russian conflict and ensuing refugee crisis. Later in the month, we'll look at how local governments can use social procurement to benefit their communities.

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