Give power to cities to transform the energy market

Giving cities more power can help provide an alternative to the big energy companies.

Giving cities more power can help provide an alternative to the big energy companies

Cities are the powerhouses of the UK economy accounting for 58 per cent of jobs, 60 per cent of the economy, 72 per cent of high skilled workers and 74 per cent of the population. They are dynamic and forward-thinking and increasingly they want to run their own affairs.

Unusually, there seems to be cross-party agreement that cities should have greater powers, with the current government introducing ‘City Deals’ that hand over economic powers, and the Labour Party planning to devolve £4 billion of spending each year as well as increased financial powers.

Cities themselves are also taking the initiative through, for example, the Core Cities group which promotes their role in driving economic growth.

At the same time, the big utilities that have dominated our energy system over recent years are facing substantial challenges. A recent poll found exceptionally low levels of trust in energy companies. This prevents many consumers from engaging in the market to look for a better deal with the result being they are often overcharged.

The big utilities are also struggling financially as they fail to keep up with changes in the energy system – namely the move to renewable energy – and they have given their profits away in dividends rather reinvesting in the infrastructure we need.

Their financial woes mean they are unable to deliver the levels of investment that are required in the energy system over the next 15 years as we replace old kit and install low-carbon alternatives. The Environmental Audit Committee called this the ‘green finance gap’.

So we find ourselves in a situation where people are looking for a trustworthy alternative to the big energy companies and where we need to find new sources of investment to fill the green investment gap.

And in step the cities.

With their wider objective of taking back powers and delivering high-quality services, cities are starting to see that there is a huge opportunity for them in delivering energy services that are cleaner, smarter and more affordable for the residents and businesses in their area.

Bristol for example has set up an energy company that will supply heat and power in the local area, systematically roll-out insulation across the city to slash bills, open up public spaces and council roof-space for renewable energy and invest in low-carbon technologies. Their aim is to install 1GW of solar panels by 2020 – to put this in perspective there is currently 3.6GW across the whole of the UK.

The potential for city energy is huge. Munich in Germany has a target to supply its 1 million residents entirely from renewable electricity by 2025. They have already invested €900 million in renewable projects and have plans to invest a total of €9 billion before 2025.

There is no reason why Britain’s cities could not match this level of ambition and be the driving force behind a move to a cleaner energy system that actually has benefits for consumers rather than just costs.

A new report out today, entitled ‘City energy: a new powerhouse for Britain’, sets out how cities can become involved in energy and what central government could do to remove barriers and open up this opportunity. Greenpeace has supported this research because our belief is that cities should be the central player in a future energy system for three key reasons.

Firstly, cities could deliver the investment that we so desperately need to decarbonise our energy system. Although they have been hit hard by the cuts, this new report sets out how they can raise their own finance through issuing green bonds and by making better use of their pension funds.

With a total of £150 billion invested, local government pension funds collectively represent the second largest fund in the country. If even a small proportion of this was directed at low-carbon development the impact would be huge.

Secondly, city energy companies would deliver benefits to city residents rather than shareholders of foreign companies. In 2012 50.4 per cent of offshore wind and 69 per cent of nuclear generation was owned by nine foreign state-backed companies.

This means consumer-funded subsidies are leaving the country.

If these were going to city energy companies they could be reinvested in other energy projects, or used to tackle fuel poverty, or channelled into public services. This would bring many more people on board with the process of decarbonising our economy.

Finally, cities could be a powerful voice in support of the low-carbon economy. Already, the Core Cities Group have recognised that there are huge opportunities to be gained from taking back control of the energy system and they are able to provide a strong counter-voice to the vested interests who are profiting from the energy system of the past.

More cities should enter the debate to argue for stable support for low-carbon technologies because they could become the main beneficiaries.

The cities want more powers from national government so that they can become powerhouses of the British economy. At the same time, the energy system is being radically transformed by the need to decarbonise and the emergence of new, clean energy technologies.

There is a clear opportunity for cities to be at the forefront of the changes that are happening. Through this engagement cities can boost their local economies, demonstrate that they have the ingenuity, skills and capacity to take on more powers, raise their influence at the national level and bring people on board with the low-carbon economy.

Dr Jimmy Aldridge is a campaign researcher and analyst for Greenpeace and a contributing editor to Left Foot Forward

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