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The future for community energy (CE) looked promising 10 years ago when the last government published its Community Energy Strategy. The aim was to encourage local communities to develop their own energy efficiency and renewable energy projects. Indeed, the government stated that with sufficient support CE could power one million homes by 2020. So how has the strategy fared?
There was initial progress in the CE sector and, despite cuts in 2012 to one of the financial incentives to boost growth, the sector prospered from 2014 to 2017. According to Community Energy England (CEE), a body that supports CE groups, the sector doubled in size every year.
One such CE group is Halton Lune Hydro (HLH) in Lancashire. In 2014, HLH commissioned the first of two 100kW turbines at its newly built hydroelectric plant on the River Lune, with the second turbine added in 2015. However, like many CE groups, HLH’s experience is a microcosm of the business and regulatory environment affecting CE groups.
Since its inception in 2008, HLH has had to contend with regulatory obstacles, fluctuating national policies, alterations to funding and support mechanisms, and a changing climate that has resulted in volatile river flows that have periodically prevented the plant from generating electricity.
Despite these challenges, the project has been successful, generating enough electricity for 300 houses, including a direct cable to Lancaster Cohousing, a cooperative eco-housing development of 41 homes built to Passivhaus standards.
“There are huge benefits for the local community in addition to renewable energy,” explains HLH director Kevin Frea. “The community in Halton has already received large donations and will receive even more. There is also a whole team of volunteers, which creates a strong team spirit,” he adds. Last year, HLH made a record income and donated a third of it, £105,000, to the local community.
Lancaster Cohousing hosts an array of solar photovoltaic (PV) panels, installed by another local CE group, MORE Renewables, which also owns a solar PV and solar thermal water system located at Lancaster Boys and Girls Club.
Both MORE Renewables and HLH are community benefit societies, which are not-for-profit entities that can raise share capital. This enabled local people to invest in the renewable energy projects, and in return receive interest and the satisfaction that they are supporting worthy environmental and social projects.
According to CEE: “Community energy is about people and communities taking democratic control over their energy future by understanding, generating, using, owning and saving energy in their communities, as well as working together across regions and nationally.” CEE also compiles a national database and map of CE projects, and since 2017 has produced annual reports on the state of the sector.
“It is really important to have an organisation such as CEE to get support from experienced people who have worked on community energy,” emphasises Frea from HLH.
Many CE groups also provide other services, such as leased LED lighting to replace fluorescent tubes, home insulation programmes, advice and other energy efficiency measures and surveys. Early adopters of renewable energy and cooperative arrangements commonly provide mentoring to new groups.
However, when compared with Germany or Denmark, where there is a much higher proportion of community ownership of renewable energy assets, the UK has had a variable, disparate policy framework and support mechanism for CE groups. There has certainly been no shortage of grants and periodic funding schemes, such as the £15m Rural Community Energy Fund (RCEF), the Urban Communities Energy Fund and, more recently, the £10m Community Energy Fund to follow on from the RCEF.
"Community energy is about people taking democratic control over their energy future"
The most important financial incentive was the government’s Feed-in Tariff (FIT) scheme introduced in 2010, providing payments per kWh of renewable energy generated over a 20-year period. While the FIT scheme was responsible for the early growth of community projects, the government was surprised by the success and uptake of the scheme. As a result, the government first halved the FIT payments in 2012, and then closed the scheme for new entrants in 2019, although early adopters still benefited from the original rates of payments.
“This had an enormous negative impact on planned projects, especially PV installations, including community projects,” says MORE Renewables founder Anne Chapman.
Nevertheless, the effect of halving the tariff from 2012 was buffered by the reduced cost of solar PV panels, so a lower number of new projects were still viable. The rate of growth in CE projects has significantly slowed in recent years, especially since the FIT scheme closed altogether in 2019.
In 2015, the government also inadvertently curtailed proposals for community and other onshore wind farms by introducing requirements that included the full backing of the local population. “This meant that just one person could object to a proposed wind power project and halt it,” explains Chapman. The previous government updated the requirements last year, aiming to revitalise onshore wind power, but this segment of renewable energy has yet to recover from the 2015 changes. The new Labour government is removing the barriers and has pledged up to £1bn for local energy schemes.
Wind power aside, how has the rest of the sector fared since 2014? In its Community Energy State of the Sector 2022 report, CEE states that 495 community groups had installed energy projects with a total generating capacity of 331MW, helping to save £3.35m from people’s energy bills. But the generating capacity is enough for barely a fifth of the one million homes in the aspirational 2014 Community Energy Strategy, while according to The Future of Community Energy, a report by WPI Economics, the CE sector has a potential generating capacity of over 5GW by 2030, enough to power 2.2 million homes.
CE groups face challenges other than regulatory burdens and financial uncertainty. “You’d be surprised how hard it is to find an organisation willing to host a solar PV installation,” says Chapman.
Technology choices are also important. “We were lucky with our hydro plant, as we had an ideal location, a grid connection, a strong team of people and a lot of support,” adds HLH’s Frea. Yet he knows of stalled projects where there are years-long waiting lists for grid connections.
Chapman favours solar PV because developments in battery technology have made it much more viable. “A battery enables more of the solar PV to be used on site, and the host organisation can take advantage of time-of-use tariffs.” She also advises would-be groups to take advantage of the support and training available in setting up and running cooperative groups.
Yet if CE is to prosper and reach its potential, it needs stability and support. Both the Climate Change Committee and Environmental Audit Committee have stated this, adding that the CE sector is essential for the UK to meet its net-zero commitments.
Additionally, in his 2023 report, Mission Zero: The Independent Net Zero Review, Chris Skidmore MP said that the government had neglected the CE sector and should create a new Community Energy Strategy to enable it to prosper, stating that: “For a transition that delivers real growth, we need wholesale community action and involvement – and we need to make the growth benefits of net zero more real for ordinary communities. Community energy projects are one way to do this.”
Rick Gould is an environmental scientist and writer
