The UK government’s strategy is ambitious and wide ranging. It includes a series of initiatives and investments to remove barriers and enable the growth of community energy and remove barriers.

The strategy highlights the important role that community energy could play in the UK energy market in the future and how individuals and local communities can get involved in local projects. In addition, the government believes that community involvement in generating electricity – whether fully community-owned projects or part community ownership of larger commercial projects – can help achieve its goals of decarbonising the power sector. There are perceived wider social and economic benefits too, such as the opportunity for people to develop new skills and experiences through involvement in the projects and, through coming together, helping to foster stronger communities.

In other countries in Europe, community energy schemes are more advanced. In Germany, over 50% of renewable energy capacity is owned by people and groups, rather than energy companies. In Denmark, also, the majority of wind turbines are wholly or jointly owned by communities. It is hoped that in time, the UK can mirror what is already going on in Denmark and Germany, as well as parts of the USA, where community energy is central to the transformation of the energy market.

Some 5000 community groups have been set up since 2008 and the government’s strategy aims to support many more. Examples of successful community energy projects include Amberley Primary School in Newcastle, which is able to generate 25% of its electricity requirements from solar panels and a wind turbine thanks to a project funded by the Big Lottery Fund.

Another example is Brixton based, Repowering London, a not-for-profit organisation that specialises in co-producing community owned renewable energy projects in partnership with local authorities and community groups. Its third project, Energy Solar 3, on the Roupell Park Estate, has raised funds through a community share offer.

"Over half the people surveyed claimed that saving money on bills would be the major motivation for getting involved with community energy schemes"

As a co-operative, Repowering London has found ways to engage and appeal to the local community through initiatives such as lowering their usual minimum shareholding from £250 to £50 so the majority of the community can be active participants in the projects, and providing work experience placements for young people. Projects like this have the power to transform communities, particularly those that are in poorer neighbourhoods.

Looking ahead, there is significant consumer interest in community energy schemes – largely driven by the desire for people to reduce energy bills. Research from the Department of Energy and Climate Change (DECC) found that over half the people they surveyed claimed that saving money on bills would be the major motivation for getting involved with community energy schemes. 51% of people said that they would be motivated to get involved in community energy if they could save money on their energy bill and 40% said they were already interested in joining a community energy group, and taking part in collective switching or collective purchasing schemes.

The government wants every community with a desire to set up an energy scheme to be able to do so. It sees local communities as the ‘energy producers’ of the future and believes that if more local communities generated energy they could help drive down prices through increased competition, create warmer homes, cut carbon emissions and diversify the energy mix.

The government suggests there are four main areas where communities can get involved in energy projects: producing electricity and/or heat; reducing energy use (via improved energy efficiency and behaviour change); managing energy (helping to better balance supply and demand); purchasing energy (eg, collective purchasing or switching).

Government support schemes

To help communities generate energy the government has launched a £10m urban community scheme that will provide neighbourhoods with up to £150 000 each to generate their own renewable energy from wind turbines, solar panels or hydro plants.

This investment follows the £15m DECC/Defra Rural Community Energy Fund (RCEF) launched in 2012 to provide finance for rural communities in England to explore the feasibility of, and planning for, electricity and heat projects.

The Green Investment Bank is also expected to have greater involvement in supporting the new strategy. Communities will be encouraged to come together and collectively apply for the funds and the support of a newly created advice team to install renewable energy plants and take greater control of their utility bills.

Local neighbourhood groups will be invited to apply for grants of up to £20 000 for feasibility work, while loans of up to £130 000 will be made available to support projects from planning applications through to connection to the grid.

The government has also pledged to work with communities and Ofgem to look at ways to enable communities to supply energy, including promoting schemes such as ‘Licence-lite,’ which removes barriers for smaller suppliers and makes it easier and more affordable for them to enter the market and sell their energy.

Ofgem’s Smart Grid Forum is tasked with considering barriers to the development of the smart grid, which includes community energy schemes and community storage. The government is working with the Smart Grid Forum to ensure there is a co-ordinated and joined up approach to formulating policies and regulation and that involves community stakeholders.

Overall, the government’s strategy has the potential to fundamentally change Britain’s energy market – placing communities in control of collectively purchasing and generating energy and playing an integral role in maintaining supply and reducing carbon emissions.

About the author

John Peters, managing director, Engage Consulting