Cities should enter energy market, says think tank

A new report by the Institute for Public Policy Research (IPPR) argues that local authorities and cities can deliver local jobs and growth by engaging directly in energy generation and provision.


The report, City energy: A new powerhouse for Britain, argues that cities can present a viable alternative to the Big Six energy firms and drive local growth and investment in the process.


Local benefits


According to the report, engaging directly in local energy generation and provision could provide benefits such as lower bills for low-income households, greater investment in the decarbonisation of electricity generation, increased urban resilience from diversifying energy supply, and more local jobs and growth.


In particular, the shift could present a much needed economic boost for cities outside London, which – in contrast with large cities across much of the rest of the world – are failing to outperform the national economy. 


The report also argues that most of the opportunities for local energy infrastructure investment and provision can be delivered through existing local authority powers.


Emulating Germany


The report draws particular attention to Germany, where city authorities are key players in both low carbon innovation and energy markets.


For example, the city of Munich in Germany plans to invest €9 billion (£7.1 billion) in local renewable energy projects by 2025, which would generate enough power to supply its entire population of one million people.


Expanding activity


Early signs of similar activity are emerging in the UK. For example, the report notes that Lancashire County Pension Fund has invested around £200 million in low carbon projects to date, while Nottingham city council directly provisions enough electricity to power nearly 5,000 homes.


However, the report argues that there is further scope for expansion and recommends that cities:


  • Actively engage in the energy market through generation or supply
  • Create collective agencies to issue ‘green bonds’
  • Ensure that pension funds take environmental and social factors into account and actively seek low carbon investments
  • Work with the UK Green Investment Bank to develop low-carbon infrastructure projects.

‘Grasp the opportunity’


Nick Pearce, director at IPPR, said: “Local generation technologies like solar and medium-scale wind are radically transforming how energy systems operate, bringing to an end the dominance of centralised generation and distribution. 


“Cities should grasp the opportunity this presents to support local job creation and growth and enhance the resilience of local electricity supply. This will ensure that more low carbon subsidies directly benefit British communities.”


Further information


The report was launched at IPPR’s event, Decentralising power: The role for cities in the UK’s energy sector, at Westminster on 17 July. It can be downloaded in full here.


Posted under General Interest on 23 July 2014