Local energy markets are the real route to decarbonising social housing

Why? Because the process of competitively applying for centralised, but paradoxically, fragmented, pots of government subsidy demands it.

Big ideas that never get anywhere are no good to anyone. Nor is an energy decarbonisation market that is entirely reliant on subsidy.

What we need are schemes that will make a difference locally quickly, act as a catalyst for further progress and unlock local energy markets. That is why we worked diligently with Ofgem, the regulator, to innovate, create and take advantage of the regulatory sandbox – not just for Emergent, but for the whole market.

In the future, we hope that others will follow our lead, innovating and expanding the scope of what is possible at a local level for everyone.

“The council has invested in solar installations across three estates where our microgrid solutions will be deployed. This enables us to sell the energy back to residents at a discounted price and reduce their bills”

While we continue to work with housing providers in many ways, perhaps the most radical innovation we are working on, one that might point the way to a subsidy-free future, is with Hackney Council in London.

The council has invested in solar installations across three estates where our microgrid solutions will be deployed. This enables us to sell the energy back to residents at a discounted price and reduce their bills.

This discounted price still outperforms the rates available for exporting the solar energy back to the grid, and allows for the upfront investment to be paid back well within the lifetime of the panels themselves.

This is a radical innovation that offers the potential to deploy solar at net-zero cost. This, in turn, has the potential to unlock private financing of photovoltaic panels across blocks in both the social and private housing sectors. That would mean no more waiting for the next round of funding or competition for subsidy. Instead, we can build a revenue stream, not a cost centre, for housing providers.

While our project with Hackney is a pilot, it points the way to a methodology where we build a new energy system roof by roof rather than waiting for a grand central plan. This is a potential net-zero cost approach that can’t but be attractive for anyone under budgetary constraints. 

As with all radical innovations, our work to deliver low-cost clean energy to the residents of Hackney has unlocked multiple other benefits.

“The government  and GB Energy need to think outside the national infrastructure box to empower councils and housing providers to work with Ofgem and the market to innovate further”

The focus on delivering the lowest-cost installation solution and creating the minimum of disruption to residents has led us to use the existing electrical infrastructure in buildings. This means that installation is rapid and comes at a fraction of the cost of solutions that require complicated hardware deployment alongside the panels themselves.

So even if your priority is to deliver free energy back to residents or achieve an uprating in Energy Performance Certificates, our solution offers the opportunity to radically reduce any upfront investment.

Smart, data-led solutions are the key to unlocking these local markets, and we are already planning ahead for how we will trade between multiple microgrid assets for macro solutions.

But with an estimated 6.75GW of potential solar energy sitting on the roofs of UK flats, we can’t create local energy markets alone. Local electricity markets have the power to fund a fairer energy transition at the ‘grid edge’ while accelerating adoption of other technologies.

It all starts with solar, which is the key to unlocking the other three disruptive domestic electrification technologies: battery storage, heat pumps and electric-vehicle charging. As these technologies get deployed, the creation of local electricity markets is inevitable. With the changes that have already been made, we can start building local electricity markets today.

The government and publicly owned clean-energy company GB Energy need to think outside the national infrastructure box to empower councils and housing providers to work with Ofgem and the market to innovate further. They must innovate to create local energy markets that are as subsidy free as possible – markets where the generation, trading and management benefit residents, communities and society.

Let’s start building a new energy system one roof at a time.

Reg Platt, chief executive, Emergent