Think local: Simple changes to regulations could inspire investment in cleaner, more affordable energy for millions, says E.ON

• First of its kind ‘solar sharing’ pilot based at East London primary school aims to prove concept with lower bills and emissions – but warns UK’s energy market ‘standing in way’ of nationwide growth
• Community energy can reduce the need for costly upgrades to national infrastructure, providing savings for network companies that can be passed back to customers
• Poll: most Brits back 2030 emissions targets and want more local investment in clean energy

Simple changes to how the UK’s energy is priced and how sustainable investment is rewarded could unlock huge innovation and drive more affordable energy for consumers and businesses, E.ON said today as it launched a pilot project that rewards communities for generating and consuming solar power locally.

E.ON Next’s investment in a pilot project based around an East London community is designed to show how local energy sharing can reduce bills and emissions.

It works by generating solar power at St Luke’s Church of England Voluntary Aided (CEVA) Primary School in Canning Town which is used in the school, and any surplus allotted to nearby homes at a discount – lowering bills for both. Instead of a physical connection between the school and homes, half-hourly metering data will ‘match’ consumption and production, applying  a credit to customers’ bills for the solar energy they use.

The project is a blueprint for more sustainable and efficient energy but E.ON has warned current regulations prevent wider use. The company is calling on the Government and the energy regulator to support the expansion of such innovative projects by updating regulations and policy costs.

E.ON argues that removing social and environmental levies from local power sharing agreements, and reflecting the advantages the projects deliver through network charges, would support further investment. This approach would allow communities to harness the potential of a cleaner energy system and make the Government’s local power ambitions commercially viable.

“The energy transition is about making energy more affordable and sustainable, and through our commitment to leading the transition to new energy in a way that works for everyone, we’re proving community projects can reduce costs for many people, as well as cut carbon and increase the UK’s energy resilience,” said Ramona Vlasiu, Chief Operating Officer at E.ON Next. “Our Newham pilot aims to prove the concept that sharing energy brings cost and environmental benefits, but we need to change the rules to jump start the expansion of projects like this to communities nationwide.

“We need to recognise and promote 21^st century solutions where we can generate and share renewable energy locally, avoiding the need for infrastructure investment and passing savings to consumers.”

St Luke’s CEVA Primary School in Canning Town is in the Diocese of Chelmsford. The Right Reverend Roger Morris , the Bishop of Colchester and Chair of the Diocese of Chelmsford’s Diocesan Board of Education, said: “We have so much to learn about how we can meet our energy needs without destroying the planet. The children at St. Luke’s CofE Primary School in Newham will be among the new generation of innovators and developers who will lead us through the next stages of this technological revolution – and this project will give them the impetus and inspiration they need. The fact that a place of education is at the centre of this exciting partnership with E.ON could not be more appropriate.

“By loading additional costs onto the cost of electricity, we have sadly made the fuel of the future more expensive than its fossil fuel alternatives. This project is a reminder of the sheer abundance of solar energy and the relatively low cost involved in harnessing that energy for our use.“

How it works | St. Luke’s CEVA Primary School, Newham St. Luke’s CEVA Primary School in Canning Town is a diverse and eco-conscious school with more than 200 pupils and five Green Flag awards. E.ON will fund, install and maintain 270 solar panels at no upfront cost to the school, generating c100,000kWh a year – enough to cover more than 50% of the school’s expected energy consumption and the equivalent of 37 average UK homes. The school benefits from renewable electricity and any surplus (e.g. after school and at weekends) is ‘shared’ with participating homes nearby at a discount. The solar also provides a return on the initial investment. This approach is expected to save the school and community more than £7,000 a year. Matt Hipperson, Headteacher at St Luke’s CEVA Primary School, said: "This exciting partnership with E.ON partners perfectly with the original trust deed for the school of over 150 years which relates to serving the community. The solar panels, alongside E.ON’s technical expertise allows us to use our large roof to help reduce electricity bills for the community we serve.”

Projects like these provide wider benefits to the energy system by generating energy in areas of high demand, where the power remains in the local network. E.ON argues it should be exempt from the policy levies and those benefits should reduce network transmission charges.  

E.ON Next believes recognising the advantages of local power sharing agreements will support further investment and allow communities to harness the potential of a cleaner energy system

Policy costs – that are added to all electricity bills – should also be removed so Government policy to subsidise large windfarms does not take away benefits from the local community. Instead, these savings should be shared among community members.

The two specific policy areas that E.ON says need attention are:

1. Network charges
   Today’s regulations don’t consider whether the electricity we consume is generated by a neighbouring house or a power plant hundreds of miles away. E.ON argues that in some locations sharing power locally helps to avoid the need for further investment in pylons and other infrastructure around the country – providing savings for network companies which can be redirected back to customers.

2. Policy costs and social levies
   Around 10% of an electricity bill is green levies that fund Government environmental and social policies, compared to 4% of a typical gas bill. Adding these costs to electricity bills rather than gas – the main polluter in UK homes – means there is an uneven comparison between the two when it comes to the true cost of energy, which is holding back the UK’s efforts to decarbonise. 

Other European countries incentivise community energy projects – avoiding network charges and other levies which can be around 40% of an average bill.

Ramona Vlasiu added: “The clarity the Government has provided on zonal pricing gives us a chance to re-examine the whole of the energy market; to focus as much on customers as on the decarbonisation of production, and to deliver a market which is cleaner, fairer, and more affordable.  We believe the UK’s energy system should take account of the benefits that community energy schemes – in the right locations – can provide, allowing them to spread  into communities across the country.  

 “The Government understands the impact of these charges, as seen with recent exemptions from social and environmental policy costs for energy intensive industries. A similar change for communities will inspire similar innovation and investment nationwide.”

With more than 20,000 primary schools across the UK – along with universities, car parks, and other public buildings – the opportunity is enormous. Estimates show potential for up to 117GW of low carbon electricity from roofs and other developed spaces such as new buildings, warehouse rooftops, or car parks, but unlocking its full potential requires an urgent update to market rules.

New research¹ commissioned by E.ON highlights overwhelming public support for the UK’s 2030 and 2050 emissions and net zero goals, as well as a desire for more investment in local clean energy projects. Despite the ongoing cost-of-living crisis and geopolitical tensions, the data showed that lowering carbon emissions remains a priority for people living in the UK.

E.ON Next’s Community Energy pilot is based around the idea generation should take place where it is needed, creating a more efficient energy system that supports local communities.

To join the pilot scheme, households will need to be an existing E.ON Next customer, live in a postcode starting E16 1 or E16 3 and have a smart meter or Smart Pay-As-You-Go meter in your home. More information can be found at eonnext.com/community-energy