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What is community energy?

Communities are creating a radical alternative to our fossil fuel driven energy supply. So what is community energy, and how can consumers support it?

Community energy can give us control over our energy supply. It can create local jobs, lower energy bills and stronger community ties.

In this article, we look at whether community energy could help address the rising energy price crisis. We look at tariffs supporting community energy, and we explore how to become a member of a community energy initiative.  

What is community energy?

Communities all over the UK are leading the way to more sustainable generation and energy use.

‘Community energy’ is when citizens work together to build renewables or support households in reducing their consumption. It often refers to community-led generation projects, for example a wind farm or solar panel project which members of the community part or fully own.

The UK currently has over 120 community energy projects involved in everything from tackling fuel poverty to providing energy advice and community education.

Energy Gardens, for example, is building community-owned renewable generation and using the profits to create community gardens in railway stations across London. The group seeks shareholders to invest in solar panels, and uses extra money made from selling the energy to transform trackside space into food growing, educational and other green public spaces.

In most community-energy initiatives, members have a say in how the project is run, and what local or social benefits they’d like to see from it. For example, they may be able to decide where to put the profits, whether to pay them to shareholders, revive the local pub, or set up an electric car sharing scheme.

Why is community energy important?

Community energy moves us towards renewable and clean energy generation and use – supporting our transition away from fossil fuels and towards net zero. By giving citizens power and control over the energy system, it can build our resilience and energy sovereignty.

“Community power can help place citizens and communities at the centre of the low carbon transition,” according to ClientEarth.

“It involves them directly in energy decisions, and provides them with more control over possibilities to switch to a more sustainable lifestyle. It also focuses on cooperation and development of common goals between citizens, leading to stronger communities overall.”

Crucially, in the UK, these projects offer a way for citizens to drive the clean energy transition at a time when the government appears to have turned its back on the need to support renewables.

Can community energy help with the energy price crisis?

Energy prices have been soaring in the UK and across the world, driven by high gas prices. Home energy bills have almost doubled in the last year.

The crisis is caused by our overdependence on fossil fuels, subject to global price shocks such as those caused by Russia’s invasion of Ukraine. Transitioning away from fossil fuels is crucial to ensure the future resilience of our energy systems.

Wind and solar energy are now 50% cheaper to produce than from fossil fuel powered plants. Some renewable energy projects currently being built are expected to be nine-times cheaper than running a gas power plant. If we build renewable capacity in the UK, we can develop a more stable, cheaper energy supply. Community energy can therefore play a crucial long-term role in addressing energy bills, especially at a time of government inaction. 

Car park with large solar panel roofing
Local energy options e.g. solar panels in car parks

Can community energy lower bills?

Community generation projects can also directly tackle volatile energy bills. In Belgium, where energy cooperatives supply to 2% of households, some members have paid 50% less than those on the regular market during the crisis.

Projects can provide low-cost, clean energy directly to members or locals. Unfortunately though, they can’t offer an immediate fix. Generation projects usually take more than a year to plan and build.

In the UK, their potential to address rising energy bills is further limited by current legislation.

“If you want to buy your electricity from local renewable sources, such as the local school or sports hall that have solar panels on their roofs”, says campaign group Power for People, “you cannot.” Community energy projects are obliged to sell their energy to the UK grid, where it is then sold on to household energy suppliers like Octopus or SSE. This means that prices remain tied to general energy costs, determined by fossil fuels.

While organisations like Power for People are campaigning for this to change, most community energy projects cannot currently provide lower tariffs for the local people they serve. 

Some community energy projects are instead working to help tackle the crisis in other ways. Bristol Energy Network has been running information sessions on everything from financial support to how to communicate with your energy company. It has been running up-skilling sessions teaching DIY low-cost energy efficiency measures such as insulation and draught-proofing, as well as how to find grants for bigger changes. You might want to do an internet search and see whether community energy projects have any such initiatives in your area.

Is off grid energy cheaper?

Some energy projects allow communities to be 'off-grid', meaning that they are not connected to the national grid, the UK's centralised energy source, at all. 

Off grid community energy may be for a single house, a cluster of homes, a small community, or even a whole island of properties. They generate all their own energy and set their own prices.

Of course, setting up this kind of project depends on building and maintaining infrastucture, such as energy storage and backup generators. Although the price is more determined by local factors as opposed to national or global issues, it is not necessarily cheaper.

One example of successful community energy is the Scottish island of Eigg. They have been generating their own renewable energy to power all the homes and businesses on the island since 2008. They use a mix of wind, water and solar power and limit residential properties to 5kW of energy at any one time. This means people are a lot more aware of how much energy is used by different appliances, and are careful with their usage. (On mainland UK an average house uses around 8kW electricity a day.)

Can I get a community energy tariff?

For the reasons explained above, in the UK, most community energy projects cannot directly supply customers, so cannot offer their own tariffs. However, some projects are coming up with innovative solutions.

Energy Local is setting up Energy Local Clubs, which track the energy used by members and make sure that the money from this goes directly to local community generators. In return, customers pay the price of the local renewable production. The organisation is focused on local energy supply, so only neighbours of generation projects can currently get involved. But if you’re a member of a community energy project, or are considering setting one up, this could be a great model to ensure that local households can benefit.

Ripple is an energy company that allows consumers to invest directly in new wind farms, and become part of a consumer energy co-op. The returns from your investment are taken directly off your energy bill. When energy prices shot up, so did the savings made by Ripple members. The company says, “Owning a wind farm is an easy way to protect yourself from future wholesale electricity price rises.”

You can invest in Ripple’s wind farms from £25. Unfortunately, though, if you want to own enough of the energy from the wind farm to cover all your electricity demands, it’s likely to cost you over £1,500. (For a £1,700 investment to cover a three-bed house, they do estimate that you’ll make over £3,000 in savings during the turbine’s 25 year lifespan.) Ripple also isn’t allowed to be your direct energy supplier, so they have partnered up with major companies for your tariff. Some of these partners are still very much tied up with fossil fuels.

Some more conventional energy tariffs support community generation too:

  • Good Energy states that it buys directly from community generation projects, thereby supporting their work and expansion.
  • Co-op Energy also offers a Community Power tariff in partnership with Younity that is “100% powered by community-generated green electricity projects.” The renewable energy is purchased from Community Energy groups by Younity within an agreed Power Purchase Agreement mechanism. Younity also provide funding for new renewable energy projects to plug the initial funding gap for much needed local renewable energy generation. 

How can I support community energy?

You may not want to switch your energy tariff right now. Soaring costs means that you’re unlikely to find a cheaper option by moving, and may even end up paying more. So how else can you support community energy?

1. Write to your MP

Power for People has written a ‘Local Energy Bill’ asking for fair legislation and proper support for community energy projects. The Bill would establish a Right to Local Supply, and would make the costs of setting up and running a local project supplying to local people proportionate to the scale of generation.

The organisation says, “To see the Local Electricity Bill made law, we need the support of around 400 MPs (which is well over half the House of Commons)." So far, the Bill has gained the support of a cross-party group of 328 MPs.

They’re asking supporters to write to and visit your local MP, write to your local newspaper or council, or sign their petition. Lots of information is available on the Power for People website.

2. Join a community energy project

Community energy initiatives are always looking for new members to provide financial and other support.

The easiest way to get involved is to buy shares, if you have some cash to spare. You’ll usually get a good return on your investment too. (Check what is promised by the individual project).

Energy4All promotes regular share offers from projects, with initial investments usually starting at £100. With Ripple, you can become a member from £25 (although this does mean switching your energy supply, so check how this will work out financially overall).

You can also invest in some community energy projects through Ethex, which provides ethical investment options as well as innovative financial ISAs.

If you want to offer your time or organisational support, check out community energy projects near you. Community Energy England has a great map of projects in England and Wales, or you could do an internet search for those near you.

Useful resources for existing projects include:

Power for People have launched a new £10 million Community Energy Fund which will help community groups get new energy schemes started by covering costs like feasibility studies.

3. Set up a community energy project

The UK will need more and more community energy projects in years to come. Why not put your time and energy into setting up your own? Community Energy England has a how-to guide.

One benefit of avoiding the big energy companies

Buying into a community energy scheme also means you are not contributing towards the excessive pay for directors of big energy companies, or their massive profits.

Big energy companies and excessive pay at the top