Community energy groups can raise citizen finance for renewable energy projects at lower interest rates than from commercial lenders, but they often depend on price guarantee schemes. Policies providing price stability and business model innovations are needed to realize the sector’s potential contribution to the zero-carbon energy transition.
Messages for Policy
Schemes like the Feed-in Tariff provide price stability, thus de-risking community energy projects for citizen investors and allowing smaller projects to be funded by low-cost citizen finance.
Without some price support, only a minority of current community renewables business models are likely to still be viable.
Projects with an on-site customer for their power — typically solar rooftop photovoltaics on buildings with high daytime energy demand — are the ones that perform best without price support revenues.
Growth of the sector could be supported by encouraging, or even mandating, public-sector bodies to purchase community-generated energy on long-term contracts.
Alternatively, a floor price for exported electricity, or support for smaller projects in the UK power auctions scheme (Contracts for Difference), could provide price stability for community energy.
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References
Further Reading
Berka, A., Harnmeijer, J., Roberts, D., Phimister, E. & Msika, J. A comparative analysis of the costs of onshore wind energy: is there a case for community-specific policy support? Energy Policy 106, 394–403 (2017). Detailed comparison of the costs of developing community and commercial wind energy projects.
State of the Sector Report 2018 (Community Energy England, Community Energy Wales, 2018). The leading report on the latest trends in community energy in England and Wales.
Braunholtz-Speight, T. et al. The Evolution of Community Energy in the UK (UK Energy Research Centre, 2018). Highlights the key policy and other factors behind the emergence and growth of the community energy sector in the UK.
Nolden, C. Governing community energy - Feed-in tariffs and the development of community wind energy schemes in the United Kingdom and Germany. Energy Policy 63, 543–552 (2013). International comparative study of price support mechanisms for community energy in the context of wider policy and energy sector factors.
Community Energy Finance Roundtable: Final Report and Recommendations (Department for Energy and Climate Change, 2014). Policy report from the working group on community energy finance convened by the UK government.
Acknowledgements
This research was funded as part of the UK Energy Research Centre Phase 3 Research Programme (grant no. EP/L024756/1).
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Carly McLachlan is chair of the trustees of the climate change charity Possible (formerly 10:10) and a director of Community Energy North. Both of these roles are unpaid. Matthew Hannon is an unpaid trustee of South Seeds, Glasgow, a community environmental charity with a focus on energy. Jeff Hardy is a non-executive director of Public Power Solutions Limited, a renewable energy developer that has worked with community groups.
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Braunholtz-Speight, T., Sharmina, M., Manderson, E. et al. Price support allows communities to raise low-cost citizen finance for renewable energy projects. Nat Energy 5, 127–128 (2020). https://doi.org/10.1038/s41560-020-0556-2
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DOI: https://doi.org/10.1038/s41560-020-0556-2
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